In Vietnam, a total of 154 Fintech companies are currently operating, according to a survey conducted by the Institute for Development and Research in Banking Technology under Vietnam National University of Ho Chi Minh City (VNUHCM-IBT). Among those Fintech firms, 37 companies operate in the field of payment services, 25 in lending and 22 in blockchain, crypto and remittance, while 70% of Fintech companies in Vietnam are startups that have raised funds from investors in Japan, the US, Canada, Australia, UK, Denmark, France, and neighboring countries such as China, Singapore and Malaysia. (VnExpress, 2019).
It can be seen that the collaboration between Fintechs and banks is a “ trend” in vietnam. Statistics show that currently about 72% of Fintech startups are partnering with banks(The World and Vietnam Report, 2019). An article Vietnamese Banks Ramp up Fintech Development from the Fintechnews Vietnam(2019) pointed out a number of leading Vietnamese banks in cooperation with Fintech. Typically, VietinBank announced its partnership with Opportunity Network (ON), a United Kingdom-based Fintech company, to offer VietinBank clients access to an innovative digital business matchmaking platform with over 15,000 businesses in 113 countries that are members of ON. Meanwhile, VIB partnered with Fintech Weezi Digital in 2017 to launch MyVIB Social Keyboard, an app that allows customers to transfer money on social networks. Besides, CIMB Bank unveiled its first Digital Lounge in Ho Chi Minh City along with the OCTO by CIMB mobile banking app for consumers. Techcombank also joined with Fintech Fastacash Company to introduce F@st Mobile feature, a fast way to transfer money via Facebook and Google+. Lotte Card, a subsidiary of Lotte Group Korea, a Fintech company in South Korea, has just acquired the acquisition of Techcom Finance, a subsidiary of Techcombank Vietnam, to develop the eKYC system to identify the borrower(FPT TechInsight, 2019).
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According to the Banking Times (2017), over the past few years, the SBV has been proactive in approaching problems and communicating with businesses in the field of Fintech, facilitating the Fintechs’ entry into the market. As of April 2020, the SBV has licensed 33 non-bank organizations to provide payment intermediaries.
Although the Government has been implementing advanced policies to promote growth in the Fintech sector, the regulatory framework of Vietnam is still incomplete and inconsistent for other financial fields, has only partially met the financial technology sector in payment. Moreover, the operation of Fintech companies in Vietnam is also still in the early stages, not diversifying products and services, most of which are payment activities. Despite the connection to supply products and services to consumers is primarily cooperation between Fintechs and banks, this cooperation is still limited, merely providing simple payment services, not providing other advanced services as well as receiving, feedbacking and sharing information about customers. Therefore, the SBV is facing an essential requirement which is to complete the legal framework with specific proposals and solutions to promote Fintech development in Vietnam in the future(Ha et al., 2018).
+ Experiences in Fintech- bank cooperation for Vietnam
According to the report EY' s FinTech Australia Census 2017, in Australia, to become one of the Fintech ecosystems that develop dynamically, competitively and sustainably in the world as currently, Australian regulators have focused on five pillars: (i) talent of founders and staffs; (ii) capital; (iii) demand(access to customers, market demand, distribution partners, Government);(iv) policy(policy, regulation and broader government support);(v) environment(accelerators and incubators, hubs, government support). Mr. Nghiem Thanh Son(2017)- Deputy Director General Payment Department, State Bank of Vietnam- emphasized in a publication on SBV's Banking Magazine that the key to the success of the Australian ecosystem is the ability to access, attract, train talented and knowledgeable experts in technology and finance, along with the support of the Australian Fintech business community, which has created co-working spaces with
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a common goal of building the best Fintech ecosystem in the region and in the world.
When issuing 2016 Fintech Regulatory Fintech Guidelines for limited target audience from financial institutions, Fintech firms to professional services firms partnering with or providing support to such businesses, The Monetary Authority of Singapore pointed out that the sandbox may not be suitable under the following circumstances:
- The proposed financial service is similar to those that are already being offered in Singapore unless the applicant can show that either (i) a different technology is being applied, or (ii) the same technology is being applied differently.
- The applicant has not demonstrated that it has done its due diligence, including testing the proposed financial service in a laboratory environment and knowing the legal and regulatory requirements for deploying the proposed financial service.
Besides, the main evaluation criteria which will be used by MAS to assess the application submitted by the applicant were outlined as:
- The proposed financial service includes new or emerging technology or uses existing technology in an innovative way
- The proposed financial service addresses a problem or brings benefits to consumers or the industry
- The applicant has the intention and ability to deploy the proposed financial service in Singapore on a broader scale after exiting the sandbox
- The test scenarios and expected outcomes of the sandbox experimentation should be clearly defined, and the sandbox entity should report to MAS on the test progress based on an agreed schedule
- The appropriate boundary conditions should be clearly defined, for the sandbox to be meaningfully executed while sufficiently protecting the interests of consumers and maintaining the safety and soundness of the industry
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- Significant risks arising from the proposed financial service should be assessed and mitigated
- An acceptable exit and transition strategy should be clearly defined in the event that the proposed financial service has to be discontinued or can proceed to be deployed on a broader scale after exiting the sandbox
On the other hand, in Nghiem(2017)’s press release, facing the rush of information technology in the digital age, in September 2016, Hong Kong Monetary Authority established Fintech Innovation - Innovation Center (aka Fintech Promotion Office - FFO) to promote the healthy development of Fintech ecosystem in Hong Kong and aimed to become a Fintech center in Asia. Mr. Nghiem Thanh Son also stated that the key to success for the development of Fintech ecosystem in Hong Kong is the supportive mechanism to encourage research and technology applications; ability to maintain close relationships with relevant ministries and agencies as well as the ability to achieve a balance between market development and consumer right protection.
In conclusion, in general, in order to have success in cooperation between banks and Fintech businesses, the most important thing is the support from the governments to create a favorable legal environment for Fintech businesses participating in and providing innovative financial services, as well as investing in financial infrastructure, attracting value talents and protecting consumers' interests(Nguyen, 2018).