A draft decree on a regulatory sandbox for fintech has been submitted to the Government, which will provide framework for fintech solutions, including credit scoring, open application programming interface (API) and P2P lending. — Photo tapchitaichinh.vn

HÀ NỘI — The State Bank of Vietnam has submitted to the Government a draft decree on a regulatory sandbox for fintech in which the pilot implementation will be carried out for only three solutions, credit scoring, open application programming interface (API) and P2P lending.

After seven versions of the draft which have been developed since 2023, the latest version reduced the number of fintech solutions for the regulatory sandbox from six to three on limited resources for implementation.

Previously, six solutions were proposed which also included extension of credits on technology platform, technology-based solutions (including blockchain) and other banking support services in line with the sandbox programme.

The central bank said that the regulatory sandbox will be implemented for three solutions to ensure appropriateness to the resources. The implementation of the sandbox will last a maximum of two years.

The central bank will decide the scope of fintech solutions offered sandbox implementation, including but not limited to transactions limits and the number of participants.

The banking industry in recent years has witnessed a strong rise of new technologies application, the central bank said.

In Việt Nam, fintech development was robust with the participation of technology start-ups and non-bank organisations in the banking and finance sector through the provision of solutions to support banking activities without directly providing services to end-users or independently.

The fintech boom has pushed financial and monetary management agencies into difficulties in supervising risks such as money laundering and terrorist financing, in ensuring network security, protecting user data and rights of consumers and investors. The absence of regulatory framework poses challenges in harmonising the promotion of innovation and fair competition with traditional financial institutions, and put fintech companies into limbo.

The absence of regulatory framework also caused a number of problems.

For example, the emerging of P2P lending in Việt Nam recently with the lack of transparency and regulatory framework led to negative phenomena such as predatory lending and disputes.

Many countries have developed regulatory sandbox policies for fintech which will become a base to evaluate feasibility, benefit and risk of the solutions, to develop appropriate responses and decisions, the central bank said. — VNS