Vietnam Proposes Regulatory Sandbox for Banking Sector
The State Bank of Vietnam (SBV) has issued a draft decree proposing the establishment of a Regulatory Sandbox to regulate technology-based applications in Vietnam’s increasingly digitized banking and financial sector.
Overview of the Regulatory Sandbox
The Regulatory Sandbox will allow fintech companies and credit institutions to test innovative solutions in a controlled environment, with the goal of preventing risks such as money laundering and terrorist financing. The sandbox is expected to promote fair competition between financial institutions and non-banking financial companies.
Eligible Fintech Solutions
The draft decree outlines three fintech solutions that will be included in the Regulatory Sandbox:
- Credit scoring
- Open Application Programming Interface (API)
- P2P lending
These solutions must meet certain criteria, including being innovative, having a clear business model, and demonstrating potential benefits to customers and the economy as a whole.
Participation Requirements
To participate in the Regulatory Sandbox, companies must submit an application to the SBV, which will review their proposal and assess its compliance with existing regulations. The participating company will then receive a Registration Certificate and will be granted permission to operate within the sandbox for a maximum period of two years.
Obligations During Participation
During this time, the company is required to fulfill certain obligations, including:
- Providing customers with risk advisory guidelines
- Informing them of the solution’s usage under the Regulatory Sandbox
- Safeguarding the safety and confidentiality of customer information
- Establishing internal regulations and risk control measures to prevent unauthorized access, use of personal data, fraud, and personal information theft
Process for Extending or Completing the Regulatory Sandbox Period
Participating companies may request an extension if the official legal framework for their solution has not been established, but this will be limited to a maximum of two times, each not exceeding one year.
Completion Certificate
Upon completion of the Regulatory Sandbox, participating companies may receive a Completion Certificate, which will enable them to officially deploy their solution to the market.
Public Comment and Implementation Timeline
The draft decree is currently open for public comment and is expected to come into effect in the near future.