The development of internet banking in vietnam,graduation thesis

ABSTRACT Internet banking was firstly introduced in Vietnam in 2004 and since then, it has become one of the favorite banking services of customers and brought considerable income for

STATE BANK OF VIETNAM BANKING ACADEMY

FACULTY OF FOREIGN LANGUAGES

GRADUATION THESIS

THE DEVELOPMENT OF INTERNET

BANKING IN VIETNAM

Supervisor Can Thuy Lien

Hanoi, May 2017

STATE BANK OF VIETNAM BANKING ACADEMY

FACULTY OF FOREIGN LANGUAGES

GRADUATION THESIS

THE DEVELOPMENT OF INTERNET

BANKING IN VIETNAM

Supervisor Can Thuy Lien

Hanoi, May 2017

DECLARATION

I declare that this graduation thesis entitled “The development of Internet banking in Vietnam” is original piece of work of my own The thesis has not been submitted previously for any degree in any other university All the sources used have been indicated and acknowledged

Signature: Tran Thi Ngoc Hoa Date: 23/05/2017

Secondly, I would like to thank all lecturers at Banking Academy, especially lecturers of the Faculty of Foreign Languages for providing me useful experience and precious knowledge during the past four years

Finally, I wish to express my deep appreciation towards my family and friends for their understanding and encouragement

Tran Thi Ngoc Hoa

ABSTRACT

Internet banking was firstly introduced in Vietnam in 2004 and since then, it has become one of the favorite banking services of customers and brought considerable income for Vietnamese commercial banks However, in order to make this service develop sustainably and effectively, banking and finance industry in general, banks in particular should have the suitable solutions towards the goal of technologizing customer service Having realized the necessity of this issue, this study presented the reality of Internet banking in Vietnam during the period from 2011 to 2015 and considered challenges against its sustainable development to recommend solutions to develop sustainably this service

2 Objectives and questions of the study 7

3 Scope and subject of the study 8

5 Significance of the study 8

6 The structure of the study 9

2.1 Favorable conditions for developing Internet banking in Vietnam 22

2.1.1 Legal framework and regulations 22 2.1.2 Technology infrastructure 27

2.2 Internet banking at Vietnamese commercial banks 30

2.2.2 Internet banking at some typical banks 34

2.3 Challenges in the development of Internet banking 37

2.3.1 The perceived attitude of the public 37 2.3.2 The habit of using cash in payments 41

3.1 Recommendations at the macro-management level 46

3.1.1 Raise the public’s awareness about cybersecurity 46 3.1.2 Improve the legal framework 47 3.1.3 Strengthen the government’s management 48 3.1.4 Enhance technology infrastructure 49 3.1.5 Increase international cooperation in cybersecurity 49

3.2 Recommendations to Vietnamese commercial banks 50

3.2.1 Invest in the infrastructure of technology and security 50 3.2.2 Improve the quality of human resources 51 3.2.3 Enhance the quality of Internet banking services 51 3.2.4 Reinforce the effectiveness in marketing and advertising 52

LIST OF ABBREVIATIONS

ABA American Bankers Association

ATM Automated Teller Machine

CBS Core-banking System

COD Cash on Delivery

e – banking Electronic banking

e – commerce Electronic commerce

e – transaction Electronic transaction

EFTPOS Electronic Fund Transfer at Point of Sale

FFIEC Federal Financial Institutions Examination

Mbps Megabit per second

PIN Personal Identification Number

SBV State Bank of Vietnam

SFNP Security First Network Bank

Techcombank Vietnam Technological and Commercial Joint Stock Bank VIB Vietnam International Bank

Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam VietinBank Vietnam Joint Stock Commercial Bank for Industry and Trade

LIST OF FIGURES AND TABLES

Figure 1.1: Electronic banking – Definition and relationships ……… 13

Figure 1.2: Some channels of e-banking ……….……… 15

Figure 2.4: Customers’ concerns when using online banking services ………… 40

Figure 2.5: Payment methods ……….……… 41

Table 2.1: Update on Vietnam legal framework for developing Internet banking in

2015 ……… 23

Table 2.2: Internet users in Vietnam (2011 – June 30, 2015) ……… 29

Table 2.3: The number of banks providing Internet banking over the years ……… 31

Table 2.4: F@st i-bank – Internet banking service of Techcombank ………… … 32

Table 2.5: Techcombank’s Internet banking fees (F@st i-bank) ……… 38

Table 2.6: The average Internet connection speed of countries in the Asia Pacific …

……….… 39

Table 2.7: 7 popular risks of security ……….… 43

INTRODUCTION

1 Study rationale

In the 1990s, with the non-stop evolvement of technology and computer science, Internet and World Wide Web were created The appearance of Internet plays an important part in opening a new era, the era of information technology and digital world Because of the Internet, the geographical distance between nations and regions have been narrowed down Today, millions of people from all over the world can connect to each other to share information and knowledge of economics, politics and culture in an easier and more flexible way Once again, the importance of the Internet in everyday life has been re-emphasized by Bill Gates, one of the leaders of the computer industry

He said: “The Internet is becoming the town square for the global village of tomorrow.”

In the past decades, we have witnessed the rapid advances in telecommunication and computer technology development This has led to the Internet becoming the fastest growing marketplace in the world It has emerged as the leading medium, and innovative distribution channel for business (Hua, 2009) The Internet has transformed traditional face-to-face banking into Internet banking where everything is done by just a click It is one of the useful e-commerce tools that is applied in the banking industry and its value has been clearly proved by improvements and achievements in banking services recent years The advantages it has been bringing to both customers and banks are huge and this has led to the increase in customers’ demand for using this service Thus, the trend

in the utilization of Internet banking has shown a rapid growth in developed countries

At the same time, in developing countries, there is also a trend toward the adoption of Internet banking

Following the worldwide trend, Vietnam officially welcomed the appearance of the Internet in 1997 After that, e-commerce and Internet banking have been gradually developed Especially in recent years, commercial banks in Vietnam have made big progress in enhancing the quality of e-banking in general and Internet banking in particular These improvements have been clearly expressed in the upgrade of

infrastructure, advanced technology, human resources and so on Internet banking is expected to develop more and more in the future as information technology in Vietnam

is under great progress and demands from customers are growing Nevertheless, going along with improvements are threats and challenges that this kind of service is facing Being aware of the necessity of this issue, the researcher decided to choose the topic: The development of Internet banking in Vietnam

2 Objectives and questions of the study

v Objectives

This research focuses on three main purposes:

Ø Firstly, the research aims to provide basic and necessary conceptual framework

of e-banking services in general and Internet banking services in particular

Ø Secondly, the research offers an in-depth view into the growth of Internet banking in Vietnamese market in the period from 2011 to 2015 as well as challenges against the sustainable development

Ø Finally, after explanation and evaluation, recommendations to specific entities are presented in order to improve the quality of Internet banking services and help to make significant changes in the process of sustainable development

v Questions

This research aims to provide questions to the following questions:

Ø What are the favorable conditions for developing Internet banking in Vietnam?

Ø What are the challenges against the sustainable development of Internet banking services in Vietnam?

Ø How to overcome these obstacles? What are feasible recommendations for Vietnamese government, commercial banks and customers?

3 Scope and subject of the study

Ø Subject of the study: theoretical framework and practices related to the development of Internet banking at commercial banks in Vietnam

Ø Scope of the research: the research is limited to Vietnamese banking system in the period from 2011 to 2015 with the supplement of typical examples of some commercial banks in Vietnam

4 Study methodology

This study will utilize both quantitative and qualitative data collection tools, but is rooted in a quantitative position to further investigate the development of Internet banking in Vietnam during the period from 2011 to 2015 as well as study the obstacles that it has to face in the process of sustainable development In terms of data collection, secondary data collection is applied More specifically, statistics are collected from reliable sources such as reports, articles, available researches, books, websites which are clearly referred in the research’s references

5 Significance of the study

Internet has played an important part in the revolution of banking system It helps to reduce the stress of traditional brick-and-mortar banks by creating a new trending kind

of bank called Internet banking Following the world’s trend, Vietnam in recent years has been promoting the development of e-banking services This has led to the increase

in the number of research on e-banking However, there are not many studies on Internet banking in Vietnam, one of the e-banking services, and previous studies on this topic only introduced basic information as well as provided general solutions for its growth However, this study concentrates on analyzing the real situation of Internet banking in Vietnam during the period from 2011 to 2015 as well as challenges that this service is coping with The findings of this study are expected to help customers and scholars have

an in-depth view into the development of Internet banking in Vietnam as well as provide

Vietnamese bank managers and policy makers with knowledge of issues affecting the quality and the adoption of this service Therefore, this helps them to devise appropriate solutions and strategies for better developing e-banking in general and Internet banking

in particular

6 The structure of the study

This graduation paper is divided into three parts: Introduction, Development, and Conclusion The Development includes three main chapters as follow:

Ø Chapter 1: theoretical framework: introducing the overview of e-banking in general and Internet Banking in particular

Ø Chapter 2: analyzing the development of Internet banking in Vietnam during the period from 2011 to 2015

Ø Chapter 3: providing recommendations to specific entities for improving Internet banking in Vietnamese market

LITERATURE REVIEW

In the past ten years, the research into the development of Internet banking has attracted many researchers and practitioners Some researchers have approached Internet banking by analyzing the development of e-banking For example, Quynh (2015) applied the model of SWOT analysis on the growth of e-banking services including Internet banking in Vietnam, Long Nguyen and Tarlok Singh (2015) focused on each channels of e-banking services in the context of Vietnam’s financial development On the other hand, some authors directly addressed the Internet banking issue by investigating the effect of transaction risk on its sustainable growth (Thuy, 2008; Vu, 2015) or evaluating the role of online banking services in Vietnamese banking system (Quan and Quang, 2016)

Based on the researcher's observation and analysis, there are some gaps in the previous studies First, regarding the approaches to the problem, some past studies mentioned above did not directly analyze the development of Internet banking in Vietnam Instead, they put Internet banking under the evolvement of e-banking services Although this approach gave readers a general view into all e-banking channels, it failed

in providing an in-depth view into the current state and challenges of Internet banking

in Vietnam Second, when mentioning the obstacles hindering the development of Internet banking, the majority of previous studies focused too much on security risks and its consequences on the operation of Vietnamese commercial banks They did not take into account other obstacles such as customers’ awareness and the dominance of cash payment in Vietnam

Consequently, from the limitations of previous studies, the researcher has seen an opportunity to dig deeper into the problems that these studies have overlooked Therefore, this thesis will take advantage of this opportunity to further study the development of Internet banking in Vietnam in the period from 2011 to 2015 and focus

on three main issues: the favorable conditions for the growth of Internet banking, commercial banks and their achievements in deploying Internet banking services, and

the challenges against its development in Vietnamese market Based on that, the thesis will suggest practical recommendations for each entity involved to overcome the obstacles

CHAPTER 1 THEORETICAL FRAMEWORK

1.1 Overview of e-banking and its services

1.1.1 E-banking definition

Since the 1990s, electronic banking (e-banking) has played an important role in transforming the traditional brick-and-mortar banking system and become a new delivery channel for banking services Most people often confuse the term “e-banking” for the use of Internet banking only However, the range of services of e-banking is broader than that E-banking refers to several types of services through which customers can request information and implement most retail banking services via computer, telephone or mobile phone

Researchers have found many ways to describe the term “e-banking” In a simple form, e-banking refers to the supply of information or services by a bank to its customers, via a computer or television (Allen, 2001) Keivani et al (2012), for example, has

another different explanation for e-banking and describes it as “an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution” At an advanced level, e-banking is called

transactional online banking because it provides customers the opportunity to gain access to their accounts, execute transactions, and obtain information on financial products and services through a public or private network, including the Internet (Sathye, 1999) Despite the diversity of definition, most specialists agree that e-banking ensures 24-hour-a-day, 7-day-a-week accessibility through a type of advanced information system

Figure 1.1: Electronic banking – Definition and relationships

(Source: International monetary fund)

1.1.2 E-banking services

As mentioned in the first part, e-banking is a broad term which represents an automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels Since the main purpose is to provide the readers with the general view of e-banking, only some of the most important e-banking services are selected and presented in following sections

a Electronic Fund Transfer at Point of Sale (EFTPOS)

EFTPOS is an electronic payment system which involves electronic funds transfers based on the use of payment cards, such as credit or debit cards It allows funds

to be directly transferred from a cardholder’s bank account to the retailer and it is applied when customers make purchases at physical point of sale At supermarket, for example, every time a purchase is made, a payment card would have to go through a card reader After the cardholder authentication by a signature or Personal Identification Number (PIN), the card reader is responsible for processing the coded information on the back

of every payment card and then send that information to a Processing Center After the

customer then dials into the bank with his or her modem, downloads data, and runs the programs that are resident on the customer’s computer Currently, many banks offer PC banking systems that allow customers

to obtain account balances and credit card statements, pay bills, and transfer funds between accounts

Internet banking, sometimes called online banking, is an outgrowth of PC banking Internet banking uses the Internet as the delivery channel by which to conduct banking activity, for example, transferring funds, paying bills, viewing checking and savings account balances, paying mortgages, and purchasing financial instruments and certificates of deposit An Internet banking customer accesses his or her accounts from a browser— software that runs Internet banking programs resident on the bank’s World Wide Web server, not

on the user’s PC NetBanker defines a “ true Internet bank” as one that provides account balances and some transactional capabilities to retail customers over the World Wide Web Internet banks are also known as virtual, cyber, net, interactive, or web banks

4 History of Electronic Banking

While financial institutions took steps to implement e-banking services in the mid-1990s, many consumers were hesitant to conduct monetary transactions over the web It took widespread adoption of electronic commerce, based on trailblazing companies such as America Online, Amazon.com and eBay, to make the idea of paying for items online widespread By 2000, 80 percent of U.S banks offered e-banking Customer use grew slowly In 200, Bank of America became the first bank to top 3 million online banking customers, more than 20 percent of its customer base In comparison, larger national institutions, such as Citigroup claimed 2.2 million online relationships globally, while J.P Morgan Chase estimated it had more than 750,000 online banking customers.

5 Impact of E-Banking on Traditional Services

One of the issues currently being addressed is the impact of e-banking on traditional banking players After all, if there are risks inherent in going into e-banking there are other risks in not doing so It is too early

to have a firm view on this yet Even to practitioners the future of e-banking and its implications are unclear

It might be convenient nevertheless to outline briefly two views that are prevalent in the market The view that the Internet is a revolution that will sweep away the old order holds much sway Arguments in favour are

as follows : E-banking transactions are much cheaper than branch or even phone transactions This could turn yesterday’s competitive advantage - a large branch network, into a comparative disadvantage , allowing e- banks to undercut bricks-and-mortar banks This is commonly known as the "beached dinosaur" theory E- banks are easy to set up so lots of new entrants will arrive ‘Old-world’ systems, cultures and structures will not encumber these new entrants Instead, they will be adaptable and responsive E - banking gives consumers much more choice Consumers will be less inclined to remain loyal E-banking will lead to an erosion of the

‘endowment effect’ currently enjoyed by the major UK banks Deposits will go elsewhere with the consequence that these banks will have to fight to regain and retain their customer base This will increase

63

process is finished, a coded certificate is sent from the card owner’s bank to the merchant through the Processing Center, thus allowing the transaction to go through (Sethi and Bhatia, 2007, 60)

b Automated Teller Machine (ATM)

One of the most visible and dominant e-banking services is the ATM It allows customers to withdraw money from their accounts without the help of bank employees

An ATM is able to recognize a client using his PIN If the ATM card is lost or the PIN

is revealed, the client will be highly exposed to risks Thus, in order to avoid losing money, card owner and his bank are able to set and adjust the limit of the amount of money withdrawn each day, depending on the remaining balance of the account ATMs can provide 24-hour access to routine banking transactions such as cash withdrawals, checking remaining balance, checking transactions made in recent months, print out small bank statement straight from the ATM (Sethi and Bhatia 2007, 56.)

c Phone banking

Phone banking is a service provided by banks or other financial institutions which allows clients to make financial transactions either through landline or mobile phones Users are able to check their balances, transfer money from account to account, paying monthly bills only with the use of their phones As most banks offer phone banking on

a 24-hour basis, clients are now becoming less and less dependent on bank branches Thus, phone banking has helped increase banking effectiveness and reduce the amount

of time spent visiting bank branches and ATM (Sethi and Bhatia, 2012)

Figure 1.2: Some channels of e-banking

(Source: http://en.alsoft.cz/products/ebanking.aspx )

1.2 Internet banking

Beside EFTPOS, ATM, and phone banking, Internet banking is also an e-banking service which plays a significant role in transforming the traditional banking system and contributes to the long-term survival of banks in the world of electronic commerce

1.2.1 Definition

Internet banking or online banking can be defined as a facility provided by banking and financial institutions, that enables the user to execute bank related transactions through Internet Users are offered access to banks’ online facility on a 24-hour basis regardless of where they are as long as they have access to the Internet To activate online banking service, customers are obliged to complete the registration process with their banks Clients must set their own passwords for the purpose of customer verification and safety reasons Every client is provided with a unique customer reference number in the process Accessing online banking service requires a client to

go to the bank’s website and log in using the given customer reference number and

password Additional security processes have been set up by some financial institutions

to guarantee safety for clients However, these processes differ from bank to bank without any standard set (Sethi and Bhatia, 2012)

Services offered by Internet banking:

- Checking current balance, interest rate, recent transactions.


- Transferring money from account to account.


- Paying bills

- Downloading information and data straight from website.


- Downloading monthly bank statement straight from website

- Editing contact information and address

Sometime in the 1980s, banking and finance organizations in Europe and United States started suggestive researches and programming experiments on the concept of

“home banking” Initially in the 80’s when computers and Internet were not so developed, “home banking” basically made use of fax machines and telephones to facilitate their customers The widespread of Internet and programming facilities created further opportunities for development of home banking

well-In 1983, the Nottingham Building Society, commonly abbreviated and referred to as the NBS, launched the first Internet banking service in United Kingdom and called it

“Homelink” Connecting via a television set and a telephone to send transfers and pay bills, this service formed the basis for online banking as we know it today This facility was not very well-developed and restricted the number of transactions and functions that account holders could execute The facility introduced by Nottingham Building Society is said to have been derived from a system known as Prestel, that is deployed

by the postal service department of United Kingdom

In January 1994, online banking was built into Microsoft Money personal finance software 100,000 households began accessing bank accounts online (Online Banking Report, Jan 2012) 9 months later, in October 1994, Stanford Federal Credit Union became the first financial institution in the U.S to offer Internet banking to all of its customers A year later, Presidential Bank became the first bank in the country to offer customers access to their accounts online Internet banking systems began to catch on

as many other banks soon followed Presidential Bank’s lead At the same time, the defunct Security First Network Bank (SFNP) became the first dedicated online bank in the U.S SFNB opened its virtual doors for business with basic offerings for national online banking, including no-fee checking and an ATM card

now-In the period from 2001 to 2009 the world witnessed the boom of now-Internet banking Specifically, in December 2001, eight US banks had at least 1 million online users each Moreover, the number of US households accessing bank accounts online reached 19 million, according to Online Banking Report in January 2012 As banking moved online, rules also shifted with times in order to ensure the efficiency of the service The Federal Financial Institutions Examination Council (FFIEC) announced rules and regulations for financial institutions At the same time, direct banks (banks that operate without a physical branch) such as ING Direct, PC Financial (Canada), and First Direct (UK) began to offer their services primarily online In 2007, Apple launched the iphone and a shift from banking via personal computer to banking via smartphone began The year

2009 marked the number of 54 million US households accessing bank accounts online Meanwhile, bank branches were consolidating Ratio of the US population to bank

branches decreased from 9,340 in 1970 to 3,684 in 2009 Branches were increasingly less important to customers and banking moved to kiosk and online solutions

In 2011, online banking went mainstream and even late adopters chose to bank online Additionally, according to the American Bankers Association (ABA), the majority of Americans aged above 55 preferred online banking to visiting a branch or ATM Since then the number of Internet banking users has been significantly increasing According to the 2015 survey conducted by the Federal Reserve Bank, 74% of Americans had used Internet banking and 35% had used mobile internet banking

1.2.3 Advantages and disadvantages

• Service and product diversification

With the growing number of Internet users worldwide and the development of advanced technology, banks are trying their best to update features and create more and more new Internet banking services to satisfy customers’ demands This has led to banking services becoming more popular and diverse

• The expansion in market share and the increase in competition ability

Online banking is a solution of commercial banks to improve service quality and operation efficiency, thereby enhancing the competitiveness of commercial banks The more important thing is that online banking also helps commercial banks perform the “globalization” project without opening any branch else in the country as well as abroad

• Improvement in the efficiency of capital use

In terms of the bank's business, Internet banking will help to improve the efficiency of capital use because of payment orders are done quickly This makes the capital circulation process operate faster and more effectively

• Improvement in customer care and the growth of new customers

Due to facilities gained from technology application, software, network service providers, Internet banking attracts and retains customers using transactions with the bank, making them become loyal customers With the modern banking model like this, the ability of providing various customer services to many individuals and corporates of online banking is very high

v To customers

• Convenience

Once there is a phone or laptop with Internet connection and web browser, customers can do many transactions anytime and anywhere they want Moreover, Internet banking is available 24/24 hours, 7 days/week This is especially significant for customers having not much time to go to the bank directly to make deals, small and medium-sized customers or individual customers having not many transactions with bank, or not big number of transactions These are benefits that traditional banking transactions are difficult to achieve

• Cost-saving

The cost of online transactions is much less than the cost of direct transactions at physical banks because customers do not have to worry about travel expenses

• Access to packages service

One more feature of Internet banking is to provide package service Accordingly, banks can be associated with insurance companies, stock company and other financial companies to provide synchronized service to meet the basic needs of a customer or a group of customers for services relating to banking, insurance, investments, stock market

on the commercial banks themselves but also on the country’s infrastructure Thus, before deciding to invest in Internet banking, banks often have to consider whether the benefits provided by this service outweigh its initial cost or not

• Risks

Internet banking provides many benefits but it also contains risks, especially transaction risk This is also one of the main problems preventing both clients and banks from choosing online banking services

v To customers

• Time-consuming registration process

In order to activate Internet banking service, customers may have to provide their IDs and fill in application form at a physical branch Also, customers may have difficulty in logging into bank’s website for the first time as they have to spend their time and efforts on the instruction before using the service

• Lack of trust

Many people are not confident in using Internet banking and they often question about its reliability: “Was my transaction successful?” or “Did I pressed the transferring button once or twice?” Therefore, the best advice is to print transaction records and keep them with other banking documents until all transactions’ information is updated on the client’s personal account or monthly bank statement

• Unstandardized transactions

There are many unstandardized transactions which cannot be sorted out unless there is a face to face discussion with the manager that is not possible through Internet banking Solving specific issues and complaints requires physical visit

to the bank and cannot be achieved through the Internet Online communication

is neither clear nor pin pointed to help resolve many complex service issues Certain services such as the notarization and bank signature guarantee cannot be accomplished online

1.3 Summary

The main objective of this chapter was to shed light on the theoretical background for the thesis First, the chapter started from the general view of e-banking and its services Then, it went deeply into Internet banking by providing the definition, explaining the worldwide development of online banking over years, and analyzing both advantages and disadvantages of this service All these knowledge and information has presented readers with an insight into Internet banking before they enter chapter 2: the development of Internet banking in Vietnam

CHAPTER 2 THE DEVELOPMENT OF INTERNET BANKING IN VIETNAM

2.1 Favorable conditions for developing Internet banking in Vietnam

2.1.1 Legal framework and regulations

Before the year 2000, e-commerce and Internet banking were new terms in Vietnam The regulations on these terms by Vietnamese legal system could not clearly express the nature and importance of e-commerce in general and Internet banking in particular

At the same time, the Ministry of Commerce and the Ministry of Justice made some researches and proposed policy for the development of legal framework to Vietnamese government However, there was no legal document of the government or the Prime Minister that could become the legal basis for the development of e-commerce and Internet banking At that time, decision No 196/TTg dated 01/04/1997 and decision No 44/2002/QD-TTg dated 21/03/2002 by the Prime Minister on “the use of electronic vouchers and signature as accounting and payment documents of banks and credit organizations” could be considered as the first legal documents regarding Internet banking in Vietnam

In the period from 2000 to 2005, some bylaw documents in the banking sector provided specific regulations on e-transactions Nevertheless, due to the insufficient understanding of e-commerce, these legal documents still lacked specific legal foundations

On March 1st, 2006, the Law on Electronic Transactions officially came into effect, which opened a new era for Internet banking as electronic transactions were recognized and protected by Vietnamese law At the same time, in June 2006, the National Assembly passed the Law on Information Technology (IT Law) which later came into effect in January 2007

The year 2006 witnessed the issuance of Decree No 57/2006/ND-CP on commerce This was the first decree to guide the law on e-transactions, which marked a

e-big step in completing legal framework of e-commerce This decree acknowledged the legal value of electronic documents in commercial activities, which laid the groundwork for enterprises and customers to carry out e-transactions, including Internet banking

In the 2011 – 2015 period, the legal framework related to e-commerce has been basically completed, towards the direction of clearly defining the enterprises’ obligations, while enhancing the management of government units from the central to local level Many legal documents related to e-commerce in general and Internet banking in particular have been issued The following table updates the basic legal framework for e-commerce and Internet banking activities in Vietnam in 2015

Table 2.1: Update on Vietnam legal framework for developing Internet banking in

29/11/2005 Law on Electronic Transactions

29/06/2006 Law on Information Technology (IT Law)

23/11/2009 Law on Telecommunications

19/6/2009 Law on amending and supplementing several

articles of the Penal Code, No 37/2009/QH12 21/6/2012 Law on Advertising

19/11/2015 Law on Network Information Safety (take effect

on July 1st , 2016) 24/11/2015 Civil Code (take effect on January 1st, 2017)

27/11/2015 Penal Code (take effect on July 1st, 2017)

Decree to provide guidance on law

15/02/2007 Decree No 26/2007/ND-CP guiding the

implementation of the E-transaction Law on digital signature and C/A services

E-transactions Law

23/02/2007 Decree No.27/2007/ND-CP on electronic

transactions in financial activities

E-transactions Law

08/03/2007 Decree No.35/2007/ND-CP on electronic

transactions in banking activities

E-transactions Law

28/8/2008 Decree No 97/2008/ND-CP on The management,

provision and use of Internet services and electronic information on the Internet 13/06/2011 Decree No 43/2011/ND-CP detailing regulations

on the provision of online information and services on websites or e-portals of State agencies

IT

23/11/2011 Decree No 106/2011/ND-CP amending and

supplementing Decree No 26/2007/ND-CP on Digital Signature and Certification Authority services

E-transactions

22/11/2012 Decree No 101/2012/ND-CP on non-cash

payment (supersedes Decree No.64/2001/ND-CP

on payment operations via the payment service providers)

IT Law

16/5/2013 Decree No 52/2013/ND-CP on E-commerce E-transactions

15/7/2013 Decree No 72/2013/ND-CP on management,

provision and use of Internet services and online information

IT Law

13/11/2013 Decree No.170/2013/ND-CP amending,

supplementing some articles of Decree No.26/2007/ND-CP dated 15 February 2007 of the Government detailing on implementation of Law on Electronic Transactions on Digital signature and certification services of digital signature services and Decree No.106/2011/ND-

CP dated 23 November 2011 of the Government amending and supplementing some articles of Decree No.26/2007/NDCP dated 15 February

2007

E-transactions

Decree on handling administrative violations

10/04/2007 Decree No 63/2007/ND-CP on providing for

sanctioning of administrative violations in the domain of information technology

20/03/2009 Decree No 28/2009/NĐ-CP on sanctioning of

administrative violations in the management, provision and use of Internet services and online information

20/09/2011 Decree No 83/2011/NĐ-CP on sanctioning of

administrative violations in telecommunications

Circular guiding the implementation of some provisions in the decrees

21/07/2008 Circular No 09/2008/TT-BCT on providing

guidelines on the e-commerce decree regarding the provision of information about contracts and entering into contracts via commercial Website 15/09/2008 Circular No.78/2008/TT-BTC guiding the

implementation of several provisions of Decree No.27/2007/ND-CP of 23 February 2007 on e-transactions in the financial activities

Decree No 27/2007/ND-CP

02/03/2009 Circular No 03/2009/TT-BTTTT stipulating the

codes of management and the certification templates of these code for e-mail, messages and Internet messages advertisement service

providers

Decree No 90/2008/ND-CP

9/11/2010 Circular No 23/2010/TT-NHNN stipulating the

managements, operations and use of inter-bank electronic payment system

Decree No 35/2007/ND-CP

15/11/2010 Circular No 25/2010/TT-BTTTT stipulating the

collection, use, share, safety assurance and protection of personal information on websites or e-portals of State agencies

Decree No 64/2007/ND-CP

21/09/2011 Circular No 29/2011/TT-NHNN defining safety,

confidentiality over provision for banking service

on the Internet 05/12/2014 Circular No.47/2014/TT-BCT stipulating on the

management of e-commerce websites (replaced Circular No.12/2013/TT-BCT stipulating the procedures for notifying, registering and

Decree No 52/2013/ND-CP