E-wallets actively seek for foreign investment

22-Aug-2019 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

Experts said that the restriction of foreign investment in the field of Fintech was particularly concerned because the development of Fintech businesses was still largely based on foreign investment.

There are 27 e-wallets licensed to operate in Vietnam.

Fintech has been developing strongly in recent times, changing the appearance of Vietnam’s financial and banking system. Currently, the State Bank of Vietnam (SBV) has licensed more than 30 enterprises to provide payment intermediary services, in which 27 intermediary organisations are allowed to provide e-wallet services in the market. There are 76 organisations that have deployed payment services via the Internet while 44 organisations have developed mobile payment services.

The transaction value via mobile phone channel reached 1.7 million dong by the end of June 2019, up by 161 percent compared to the same period in 2018.

However, when Fintech thrives, facilitating transactions, but it also exposures to various risks, especially the ability to be exploited to serve illegal activities and transactions.

The management policy for Fintech does not keep up with its expansion pace. If policies and regulations were tightened, setting many restrictions for Fintech, it would slow down the development in this field. In contrast, if it was too relaxed, it would lead to risks, damaging to the finance and banking industry. So what is the equilibrium to harmonise opportunities and risks in this area?

Sandbox mechanism is said to be where this balance will be found. SBV submitted the Regulatory Sandbox to the prime minister in May 2019. The objective of the project is to realise solutions in the project “Supporting ecosystems for national innovation to 2025″ approved in Decision No. 844/ QD-TTg dated 18/5/2016 of the prime minister and the Decision 999/ QD-TTg approving the Scheme on promoting shared economic models.

Through Sandbox will promote innovation, creativity and modernisation of banking activities, thereby boosting the goal of financial universalisation for people, creating a test environment to develop financial technology solutions in line with the market demand for legal framework. Notably, the risks for customers using unlicensed Fintech services will be limited.

Varun Mital, vice Chair of Fintech Singapore Association, and Head of Fintech Consulting Services in new markets of Ernst & Young Singapore, said Vietnam has 27 e-wallets, this number was only higher than Singapore (26 e-wallets), but much lower than Indonesia (35), the Philippines (43) and Malaysia (44).

Regarding Fintech’s management policy, Varun points out some remarkable points. In particular, the limit for e-wallet is inadequate.

“We need to have a limit for e-wallets, but it should be based on user activity. For example, a person who buys a different should be different from one that buys a cup of coffee. Therefore, it should not be a general limit for everyone and every transaction,” he said.

In addition, according to him, the anticipation of limiting foreign investment in the field of Fintech is also particularly worrisome because the development of Fintech enterprises is still largely based on foreign investment.

Varun said: “Start-Ups in this area require investment in technology, market and personnel, while domestic resources are not yet met. In addition, foreign investment allows Vietnamese enterprises to access new technological achievements, especially in the big data fields or artificial intelligence (AI), which are of particular importance to build products and solutions for Fintech.”

In the same view, Phung Anh Tuan, vice ChairSecretary general of the Association of Financial Investors (VAFI) also noted about opening up for foreign investors in the field of Fintech. According to Tuan, in new trade agreements such as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or EU-Vietnam Free Trade Agreement (EVFTA), Vietnam has committed to open the financial sector with a very wide range of scope. Specifically, it includes all payment and money transfer services, provision and transfer of financial information, and the handling of financial and software data related by financial information providers and transferors and handling financial and software data related by other financial services providers; consultants, intermediaries, and other auxiliary financial services.

Therefore, Tuan said that policy-making agencies should pay attention to avoid violating Vietnam’s international commitments, leading to undesirable consequences such as recent foreign investment lawsuits.

VAFI Association said that the government allowed 100 percent foreign-owned banks (branches) to operate and consider loosening room for commercial banks. Therefore, it was not possible to take the current banking investment limit (30 percent) as a precedent for Fintech.

It is known that SBV wants to limit foreign investment in payment intermediaries to stabilise and secure the national monetary policy, to avoid manipulation of foreign investors and to ensure national ownership in financial banking activities, which enable domestic investors to seize opportunities.


Category: Finance, Vietnam

Print This Post