The SBV said the rapid development of fintech posed many challenges to financial authorities worldwide as they have to fight illegal financial activities on a new front.

Numerous fields, notably peer-to-peer lending and data sharing via the application programming interfaces, are emerging without adequate legal frameworks established, putting stakeholders at risk.

“Most of these fields have not been fully regulated, posing new risks to healthy competition, financial stability, data security and client interests,” said the SBV.

Accordingly, the central bank has to develop a controlled testing mechanism to get first-hand experience in managing the sector and allow fintech firms to test their novel products in a regulatory environment.

Notably, the SBV will allow some risks in the sandbox to gain a better understanding of the dangers, thereby building a full-fledged legal framework that encourages innovation, prevents financial risk and promotes financial stability.

Additionally, fintech firms are required to test their products on a limited scale and under the supervision of the SBV to keep the risks under control.

According to the SBV, the number of fintech firms in Viet Nam has increased four-fold since 2016.

Around 76 per cent of the firms cooperate with banks, 14 per cent develop their own products and the rest are bank competitors.

BIDV has partnered with 24 fintech firms and 756 service providers to make over 1,500 financial services available to its clients.

MB and Boomerang Technology have cooperated to launch the eMBee fan page, allowing clients to check their bank balances, transfer money, buy insurance and take out loans by chatting with eMBee on Facebook Messenger.

Almost all Vietnamese banks are now rolling out e-wallets with the help of MoMo. 

Source: VNS