Open Banking Makes Inroads in Vietnam

Open Banking Makes Inroads in Vietnam

by March 8, 2021
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In Vietnam, banks are becoming increasingly aware of open banking and recognizing the need to embrace open APIs to keep up with the rapidly evolving financial landscape.

So far, at least two local banks have launched developer portals and are today providing open APIs this includes: Asia Commercial Joint Stock Bank (ACB); and Orient Commercial Joint Stock Bank (OCB), which launched its open banking platform in January 2020.

Saigon Commercial Bank (SBC) have shared plans to implement open banking practices, while Techcombank recently hosted a webinar to educate professionals on the merits of open banking.

Data from the State Bank of Vietnam (SBV) shows that 94% of banks in Vietnam have initially implemented or been researching and developing a digital transformation strategy, of which 35% of banks are implementing a digital transformation strategy.

While open banking is already a reality in jurisdictions such as the UK, the European Union (EU) and Australia where regulatory requirements are in force, the concept is still relatively new in Vietnam where little regulatory discussion has taken place so far. Instead, the central bank has been actively pursuing partnership opportunities to accelerate development.

In Vietnam, the SBV is leading the country’s push towards greater digitalization in the banking and financial services industry. The SBV Fintech Steering Committee was established in March 2017 to spur innovation particularly in electronic know-your-customer (eKYC), peer-to-peer (P2P) lending, digital payments, blockchain and open APIs. One of the core tasks of the committee is to research and develop an open API platform.

In October 2018, Vietnam signed a Memorandum of Understandings (MoU) with Korea’s National IT Industry Promotion Agency (NIPA) and Korea Financial Telecommunications and Clearings Institute (KFTC) to develop a standardized Open API in the banking sector.

SBV’s Information Technology Department, Korea’s National IT Industry Promotion Agency (NIPA) and Korea Financial Telecommunications and Clearings Institute (KFTC) sign MoU on Open API in the banking sector, Photo: SBV

SBV’s Information Technology Department, Korea’s National IT Industry Promotion Agency (NIPA) and Korea Financial Telecommunications and Clearings Institute (KFTC) sign MoU on Open API in the banking sector, Photo: SBV

A year later, the SBV inked a partnership with the Australian Department of Foreign Affairs and Trade (DAFT), and the Asian Development Bank (ADB) to promote the development of fintech, including open APIs, and a related legal framework to aid in the adoption of a new method of banking.

Deputy Governor Dao Minh Tu of the SBV, on behalf of the SBV Governor, signs a MoU on the development of the financial sector and financial inclusion with the representatives from the Australian DFAT and ADB, Photo: SBV

Deputy Governor Dao Minh Tu of the SBV, on behalf of the SBV Governor, signs a MoU on the development of the financial sector and financial inclusion with the representatives from the Australian DFAT and ADB, Photo: SBV

The central bank is now in the process of revising existing regulation to create a complete framework for fintech and support digitalization in banking, SBV governor Le Minh Hung said in September 2020.

The regulator is currently cooperating with related government agencies in drafting a new decree on fintech regulation sandbox in the banking sector, Hung said.

In addition to that, it will be revising existing legislations to support banks and financial institutions applying new technologies including new guidance in cashless payment, the adoption of remote verification process (eKYC), and the revision of the Law on Prevention of Money Laundering, among others.

Compared to Singapore, Malaysia, the Philippines and Thailand, Vietnam is lagging behind when it comes to open banking.

In the Philippines, the central bank released in December 2020 the first version of the draft Circular on Open Finance, a proposed framework to implement open banking in the country.

Meanwhile, Singapore has adopted an organic approach to open banking with adoption being nevertheless facilitated by the Monetary Authority of Singapore (MAS).

Similarly to Singapore, Malaysia has taken a market-driven approach to open banking with a non-mandatory guideline framework for working with open data and open APIs.

In Thailand, open banking has been largely driven by banks themselves, but the introduction of the Personal Data Protection Act (PDPA) last year suggest a move to open banking frameworks could be imminent.

 

Featured image credit: Unsplash

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