Vietnam has launched a two-year fintech sandbox, effective July 1, to foster innovation in digital lending, credit scoring, and data sharing. This regulatory testing ground aims to generate new financial products that can enhance traditional banking operations.
The sandbox, unveiled on April 29, specifically focuses on credit scoring tools to improve access for the underbanked, secure and standardized data sharing between banks and vendors, and peer-to-peer lending platforms. Fintech companies can test their offerings in a controlled environment with relaxed central bank regulations, though foreign financial institutions are excluded.
While the sandbox won’t directly impact traditional banks, analysts view it as a positive step towards a more evolved regulatory mindset. Andy Tran, CFO at Zalopay, noted the historical tight control over Vietnam’s financial sector and welcomed the shift.
However, some, like Khanh Ngo, CEO of Liobank (a digital bank in Vietnam), believe more regulatory work is needed. He advocates for transparency and broader access to banking services, suggesting Vietnam should consider issuing dedicated digital bank licenses, similar to the Philippines and Thailand. Currently, Vietnamese digital banks operate under the same licenses as traditional banks, necessitating partnerships and reliance on them for capital. Ngo highlighted the success of standalone digital banks in the Philippines, which have achieved significant scale, and hopes for similar developments in Vietnam.
Liobank, for instance, uses its own proprietary credit scoring model based on app behavior to assess borrowers, particularly addressing the challenge of providing credit to individuals with limited or no credit history.
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