Institutional policy turning point

With the newly issued mechanism, financial technology (Fintech) solutions will participate in testing in an environment controlled by state management agencies, for example: Credit scoring, data sharing via open application programming interface (Open API) and peer-to-peer lending (P2P Lending).

In fact, in recent times, Fintech activities in Vietnam have developed rapidly in terms of quantity, diversity of products, services and investment capital. However, because these models do not have clear legal precedents, they pose potential risks to users, systemic risks and ethical risks if there is a lack of transparent and close supervision. Therefore, the implementation of Sandbox is considered to create a soft and flexible institutional framework to promote innovation.

According to regulations, the testing of Fintech solutions is limited to the territory of Vietnam, and cross-border testing is not allowed. In addition, Decree No. 94 also clearly states that the testing period for Fintech solutions is a maximum of two years, depending on the specific solution and field, from the time the State Bank of Vietnam issues a certificate of participation in the Testing Mechanism.

The testing period may be extended as prescribed. Credit institutions and foreign bank branches may be granted a certificate of participation in the Sandbox. In addition, Vietnamese Fintech companies are also allowed to participate in the mechanism when meeting the following conditions: No foreign investment capital, legal representative is a Vietnamese citizen, has at least two years of management experience in the financial and banking sector; technology system located in Vietnam, ensuring safety, security, technical backup and tested before operation. In particular, the Decree also clearly stipulates the criteria for testing the implementation of P2P Lending. The State Bank of Vietnam will supervise organizations participating in the assessment of testing activities and related Fintech solutions.

Thus, the Sandbox mechanism can be likened to a “policy laboratory” where new digital banking models, innovative Fintech products or blockchain-based payment solutions can be tested within a flexible but supervised legal framework. However, opportunities always go hand in hand with challenges. With the criteria clearly stipulated in the Decree, it shows that not all businesses are eligible to enter the Sandbox. The selection of testing subjects will be based on strict criteria of innovation, application potential and risk control level.

Large banks with strong digital platforms will have an advantage in proposing pilot models. In contrast, small Fintechs will be forced to demonstrate technological capabilities and compliance, or they will be eliminated from the game from the start. In particular, the new mechanism will require participating businesses to make clear commitments on user protection, data security, and incident handling capabilities. This forces both banks and Fintechs to seriously invest in technology infrastructure and risk management, instead of pursuing innovation at all costs.

Finally, although flexible, Sandbox cannot be a “gray zone” for law evasion. This experimental mechanism is only meaningful if it is supervised by a competent management system that both understands technology and maintains financial discipline. The issuance of Sandbox is a strong message showing that Vietnam is ready to approach the wave of financial innovation in a proactive and controlled manner. However, to avoid slipping off the safe orbit, close coordination between state management agencies, banks, Fintech and consumers is needed.

Source: https://nhandan.vn/buoc-ngoat-chinh-sach-mang-tinh-the-che-post880925.html