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Technology and product development - Long-term goal to develop FINTECH  in the future

Technology and product development - Long-term goal to develop FINTECH in the future

Friday 21, 08 2020
In recent years, Fintech activities in Vietnam have grown rapidly in terms of both quantity, variety of products and services, attracting investment capital.

●     Fintech contributed to changing the face of the banking and financial sector

Currently, in Vietnam, there are more than 150 Fintech businesses operating in many different fields such as Payment; peer-to-peer lending; providing banking solutions such as electronic authentication; blockchain application; personal financial services ... Mainly in Fintech activities is still payment, there are 32 intermediary payment organizations licensed by the State Bank (SBV), most of which are e-wallet organizations, gateways. electronic payment, support for collection and payment, electronic money transfer ... P2P Lending (peer-to-peer lending) with a number of about 40 companies; Other Fintech companies develop solutions to support banking operations without directly delivering services to end-users.
Fintech operating model is mainly cooperation between Fintech companies and banks. According to the preliminary survey, cooperation between Fintech and banks accounts for more than 90% of the number of Fintech companies; Specifically, for the intermediary payment sector, 100% of the intermediary payment companies licensed by the State Bank cooperate with banks in the process of providing services.
The cooperation between Fintech and the bank is considered a prerequisite for users to improve access to financial and banking services in Vietnam. In addition to the new services that the Fintech wave brings, the banking cooperation - Fintech will turn Fintech into a bridge of banks to those who do not have an account in traditional banks or those who have not. access to traditional services, bring good, flexible, and convenient experiences to customers, effectively support the broader financial inclusion, significantly contribute to economic development. society. When technology companies linked to banks will have many products launched to diversify financial services, customers can choose many products, helping to disperse risks and help reduce shocks. finance. Fintech in the past time has been and is an "extended arm" of the bank because in order to pay for transactions, all transactions must be through banks and Fintech is a partner to bring customers to the bank. This cooperation also helps the bank and Fintech take advantage of each other's strengths to provide better, safe, and convenient services and solutions for banking and finance.
In the field of Fintech, for many years, the State Bank has been proactive and pioneered in researching, directing as well as orienting financial technology activities in the banking sector. Fintech activities have been contributing to changing the "appearance" of the financial and banking sector through the application of modern technologies in financial products and services or improving traditional banking processes. thereby improving service quality, enhancing customer experience, and cutting costs.
The operation of intermediary payment service providers in Vietnam, a form of Fintech in the field of payments, has basically been regulated in the Law on State Bank 2010, Decree 101/2012 / ND-CP dated November 22, 2012, on non-cash payments (being revised in the draft Decree replacing) and Circular 39/2014 / TT-NHNN dated 11/12/2014 on intermediaries pay.
According to the Payment Service (SBV), the main intermediary payment services include

  • Electronic payment infrastructure services, including Financial switching, electronic clearing, electronic payment gateway;

  • Support services for payment services, including Support for collection and payment on behalf of, Support electronic money transfer;

  • E-wallet service.


●     Foreign investment capital into Fintech accounts for the main proportion

According to recent research and statistics, due to market characteristics in Vietnam, payment is still an important area, with 32 companies licensed to operate and only water investment. outside the intermediary payment company has accounted for about 90% of the total foreign investment capital into Fintech. Among more than 150 Fintech enterprises, 70% are foreign-invested start-ups, many foreign-invested enterprises have exceeded 49%, even 60-70%.
Regarding the proportion of venture capital poured into Vietnam's Fintech businesses according to the latest report "Fintech in ASEAN: From start-up to expansion" by UOB Bank, PwC and Singapore Fintech Association announced, Singapore is the country with the largest rate of investment in Fintech in ASEAN (51%) and the amount of capital invested in the Fintech market in Vietnam accounts for 36%.
With nearly 32 payment intermediaries licensed by the SBV, most of them are e-wallet organizations, of which, most of the e-wallets with the largest market share are already in the hands of foreign investors. Not only that, recently, but the e-wallet market has also appeared in deals of acquisitions and acquisitions by large foreign corporations. A source from Reuters said that Alibaba - China's e-commerce giant is pouring capital into buying a large stake in eMonkey (eM), the electronic wallet of M-Pay Trading Services and Technology Joint Stock Company. In early November 2019, - Alibaba's e-commerce site in Vietnam also announced the launch of its e-wallet called eMonkey. Previously, Moca sold its shares to Grab; Airpay sells a 30% stake to Sea Limited - the company whose largest shareholder is Tencent Group, a rival of Alibaba; Standard Chartered Private Equity (SCPE), Goldman Sachs and Warburg Pincus are holding the majority of Momo's capital; True Money (Thailand) holds 90% capital of 1Pay; Payoo sells 64% capital to NTT Data Group (Japan) ...
Fintech experts and enterprises all said that Fintech is a new industry in Vietnam and to thrive, it is necessary to have investment capital to develop markets and users, in which foreign capital plays the role important, even crucial.

●     Intended modification of the foreign ownership ratio in payment intermediaries

Faced with the above situation, recently, the State Bank has informed about the regulation on foreign investors' ownership limit at payment intermediaries. In the draft Decree to replace the Decree 101/2012 / ND-CP on non-cash payment, the opinion that has stated that the capital contribution ratio of foreign investors is 49%, only applies to Payment intermediary activities (not all Fintech companies).
The SBV has received many comments from organizations and individuals about this regulation in the Draft Decree. In addition to the support, there are also many concerns that the intermediary payment service is a new type of service based on the application of technology achievements, so foreign investment plays a rather important role. , if the limitation can affect the attraction of foreign investment into the payment intermediary sector in particular, Fintech in general. In addition, the fact that there are a number of large intermediary payment organizations that have been licensed and have a foreign capital contribution ratio exceeding 49%, may also affect operations. of these businesses.
According to the State Bank, before the development of technology and the trend of global integration of the economy, to meet the requirements of reality and improve the efficiency of state management in payment activities, regulations are required. current non-cash payments are required to continue to be supplemented, modified, and improved. At the same time, on the basis of research, fully and comprehensively absorbing issues, comments as well as international commitments to which Vietnam is a participant; analyzing and evaluating the impacts of this policy in the current context, the State Bank is expected to submit to the Government not to include a limited rate (49%) in the Draft Decree.
Fintech businesses are very excited with the above information, however, according to experts and experienced Fintech enterprises in this field, investment capital is needed but not at any time. is the number 1 priority, instead, the development of new technology and products is the biggest and long-term problem.
In fact, Fintech enterprises need capital to invest in technology and other issues but also need to be proactive in operation. The expansion of foreign investment capital (removing the maximum rate of 49%) in the short term is effective, but in the long term, Vietnamese Fintech enterprises may have to share operating power with investors and may also lose the initiative in management. Therefore, the race of Fintech enterprises today is a race of technology, not a race of pouring capital. In the long term, in order to develop sustainably and expand markets, Fintech businesses in Vietnam need to pay attention to improving the level of science and technology, training skilled technical human resources, and strengthening security. security, quality of service, ensuring the legal interests of customers.
In order to encourage Fintech to develop, innovate, and aim to improve service quality, on the legal framework, the State Bank has completed the Project on Fintech (Regulatory Sandbox) Pilot Management Mechanism (Regulatory Sandbox) to submit to the Prime Minister. The goal of the project is to realize the solutions of the project "Supporting a national innovative and innovative start-up ecosystem to 2025" approved in Decision No. 844 / QD-TTg dated May 18 / 2016 of the Prime Minister and also the task stated in Decision 999 / QD-TTg of the Prime Minister approving the Project to promote the sharing economy model. The State Bank of Vietnam plans to study and apply the management method according to the regulatory sandbox in accordance with international practice and practice, towards the issuance of a legal framework and official management.
On the basis of the Prime Minister's direction, the State Bank will build a legal framework for the Pilot Management Mechanism to create a framework for Fintech startups and banks to participate in testing new products and services.

Complied by Vietnam Credit


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