VNU UNIVERSITY OF ECONOMICS AND BUSINESS FACULTY OF FINANCE AND BANKING py GRADUATION THESIS SUPERVISOR: DR. NGUYEN TIEN CHUONG STUDENT’S FULL NAME: DINH NHU QUYEN STUDENT ID: 20050512 CLASS: QH 2020 E TCNH CLC 2 Hanoi — 10/2023 VNU UNIVERSITY OF ECONOMICS AND BUSINESS FACULTY OF FINANCE AND BANKING Cnn Á GRADUATION THESIS SUPERVISOR: DR. NGUYEN TIEN CHUONG STUDENT’S FULL NAME: DINH NHU QUYEN STUDENT ID: 20050512 CLASS: QH 2020 E TCNH CLC 2 Hanoi — 10/2023 COMMITMENT I pledge that the research topic "REGULATORY SANDBOX FOR FINTECH: INTERNATIONAL EXPERIENCES AND SUGGESTIONS FOR VIETNAM" is the result of my own research process. The study article's data was gathered and handled faithfully, and all referenced sources are mentioned explicitly.
The conclusions presented in this topic are my results with the help of my supervisor Dr. Nguyen Tien Chuong and have never been published in any work. I hereby declare that there is not a single copy of any prior work in this research study. ACKNOWLEDGEMENTS I would like to sincerely thank Dr.
Nguyen Tien Chuong who was my supervisor during the research period for all of his support and guidance in helping me to finish this study. This research would not have been completed without his support, who generously provided knowledge and expertise. Despite my best efforts, I was unable to completely prevent errors during the research process owing to several mistakes. Therefore, I look forward to receiving comments and suggestions from teachers so that I can further improve my research topic in the future.
I want to thank you very much again and send you my best wishes for success, happiness, and good health. Student’s signature Supervisor’s confirmation il ABSTRACT Vietnam's fintech market has rapid growth and has the potential to expand further in the future. However, this market has many potential risks due to the entry of many new fields, this fact has led to the need to establish a testing environment for these innovative projects. Through the topic “REGULATORY SANDBOX FOR FINTECH: INTERNATIONAL EXPERIENCES AND SUGGESTIONS FOR VIETNAM”, the research paper completes the following main contents: First, the study presents an overview of domestic and foreign research to identify specific research directions.
Second, the article systematizes the theoretical basis of fintech and regulatory sandbox for fintech. Third, the study analyzes the actual situation of the fintech market in Vietnam, including development trends, key players, opportunities and challenges. In addition, the article also systematizes the regulations of the fintech market in Vietnam and analyzes in detail the points in the draft decree on a controlled testing mechanism (regulatory sandbox) for Fintech activities in the banking sector. Fourth, based on the analysis of operations and the characteristics of the regulatory sandbox in the Thailand, Malaysia, Hong Kong and Singapore fintech markets, the study links with the draft decree in Vietnam to make recommendations for Vietnam developing testing mechanisms in the future.
Those suggestions include: (i) Revise the model over time, (ii) Build sandbox options for specific subjects and objects, (11) Requirements about risk management and customer protection measures, (iv) Open sandbox for more fields, (v) Simplify/Relax some procedures and (vi) Build financial support programs. 11 TABLE OF CONTENTS LIST OF ABBRICVIA TIONS. TH HH 0 g0i LIST OF TA BILEE.- << << I0 0080056 ii LIST OF FIGUIRES. HH 000040066000080 iii INTRODUCTION.
HỌC HH HH HH 0000040000050 1 1. Ti Hi II te 1 2. Research objectives And tasks. Research ObJ€CfIV€S.-- Ăn TH HH HH Hư 2 2.
HH nh HH 3 2. Research object And SCOPC .G- GHH nH Hgướt 3 4. Design Of the Study .scsccsscsssssssssccsscsssssscsssssccssssssssssesccsssssessssssessssssessasees 4 CHAPTER 1: LITERATURE REVIEW AND THEORETICAL BACKGROUND. TH TH HT ng, 5 1.
Overview of international Studies. Overview of research in Vietnam. LH HH HH Hiệp 10 1. Theoretical DŒCĐTFOLITHỂỶ.
Fintech regulatory sandbox .--- - + +< + svESeereeereeeeeree 21 CHAPTER 2: FINTECH MARKET AND THE PROCESS OF ESTABLISHING REGULATORY SANDBOX IN VIETNAM. Fintech market Situation in Vietnam ú. Overview of fintech market in Vietnam. Key players and emerging trendS.- ------s«++sss++++sex+eesesss 25 2.
Opportunities and challenges. The process of establishing fintech regulatory sandbox in Vietnam. Regulatory bodies and their rOÏ€S. Curent regulations governing fin(ech.
Building regulatory sandbox for fintech in Vietnam. 36 CHAPTER 3: INTERNATIONAL PRACTICE IN REGULATORY SANDBOX FOR EFINTTIECH. Fintech market in Thailand. Overview fintech-related sandbox models in Thailand.
Fintech market in MaÏayS1a. Overview fintech-related sandbox models in Malaysia. Fintech market in Hongkong. Overview fintech-related sandbox models in Hongkong.
Fintech market in Singapore. Overview fintech-related sandbox models in Hongkong. 57 CHAPTER 4: RECOMMENDATIONS FOR VIETNAM.0000004000 400000 80 65 LIST OF ABBREVIATIONS No. Abbreviations Original word 1 ASEAN Association of South East Asian Nations 2 SBV The State Bank of Vietnam 3 P2P Peer-to-peer 4 UK The United Kingdom 5 FCA Financial Conduct Authority 6 MAS Monetary Authority of Singapore 7 IMF The International Monetary Fund 8 US The United States 9 ESG Environmental, Social and Governance 10 Al Artificial Intelligence 11 ML Machine Learning 12 QR Quick Response 13 NFC Near-field communication 14 PwC PricewaterhouseCoopers 15 UOB United Overseas Bank 16 API Application programming interface 17 DLT Distributed Ledger Technology 18 CBDC Central Bank Digital Currency 19 KYC Know Your Customer 20 BNPL Buy now pay later LIST OE TABLES Table 1-1: Top 10 largest privately held fintech companies on earth up to 2023 13 Table 1-2: Fintech Regulatory Sandboxes across the Gblobe.- ------- 22 Table 2-1: P2P Lending Platform in VIefnaim.-- 5 5 «se sseeeseeske 28 Table 3-1: List of P2P Lending projects under testing in Thailand.
42 Table 4-1: Recommendations for Vietnam’s Regulatory Sandbox. 60 il LIST OF FIGURES Figure 1-1: Percentage of fintech companies that believe they are consumer- centric. 16 Figure 2-1: Number of fintech startups over the Y€aTS.- -- «+ s «<< e+s«2 25 Figure 2-2: Top e — wallets — Penetration rates (%) .---cc+«s+ssrsseessree 26 Figure 2-3: Fintech Vietnam startups map 2022 .- ---- ¿+5 «<< £+<£+scesc+ 27 Figure 2-4: Foreign direct investment capital in Vietnam.-- ---«+--««+ 31 Figure 3-1: Malaysia Fintech map 2Ô22. 9 re erske 45 Figure 3-2: Hong Kong Fintech startups map 2022 .-- --- + << c++sx+ssssxes 49 Figure 3-3: Distribution of technonlogies involved in HKMA’s sandbox.
53 Figure 3-4: Singapore deal value in Fintech SeCfOT.- -- << c+«<++scesces 55 Figure 3-5: Singapore Fintech map 2022 .- --- «c5 1k ng ngư 56 Figure 3-6: MAS Fintech Regulatory Sandbox options. Rationale In recent years, Vietnam’s fintech market has made very strong developments in terms of quantity, diversity in products and services as well as attracting investment capital. According to forecasts of Robocash Group, a financial group specializing in providing financial services in Asia and Europe, Vietnam is about to become a new Fintech center of Southeast Asia with a large consumer base. Vietnam is one of the leaders among ASEAN countries in the volume of financing for FinTech, second only to Singapore.
According to research by Solidiance - a leading strategic consulting company, Vietnam's Fintech market reached 4.4 billion USD in transaction value in 2017 and reached about 7.8 billion USD in 2020, equivalent to an increase by 77% within 3 years. The number of fintech companies in Vietnam is also increasing rapidly. According to statistics from the State Bank of Vietnam (SBV) as well as the Vietnam Fintech Market Report 2021, the number of Fintech companies has increased four times, from 39 companies at the end of 2015 to more than 176 companies by the end of 2022 (HyperLead, 2023). Among Fintech companies in Vietnam, about 70% are startups.
Vietnamese fintech companies operate in many different fields, but the two most focused areas are payment via e-wallets and P2P Lending. Linkage and cooperation between Fintech companies and banks is still the main and dominant trend in recent years in Vietnam. Cooperation between Fintech and banks accounts for more than 90% of the number of Fintech companies. For other fields, the cooperation between Fintech companies and banks is also very close based on the advantages of each party (provide quality products and services; better benefits and save more costs for customers).
Compared to other fintech markets in the world, Vietnam fintech is currently in the early stages of development and is considered to have many factors and potential to develop into the most attractive fintech market in Southeast Asia (According to a report by Robocash Group). Accordingly, Vietnam is a country with a stable economy and politics and has cooperative relationships with many countries and organizations around the world. Besides, the economic - monetary market and especially the stock market in 1 Vietnam are having certain developments and are receiving attention from the Government. In addition, Vietnam's population is large and young (nearly 100 million people in 2023) with a high rate of Smartphone users, along with the rapidly growing trend of the E-commerce industry.
Personal finance demand in Vietnam is expected to continue to grow in the near future. Also according to the State Bank's forecast, by 2025, personal credit will account for about 24% of the technology application market in financial services. This shows that the Vietnamese market has high development potential and can become a very attractive market for Fintech products. Along with development opportunities, fintech businesses in Vietnam are currently facing certain challenges.
A typical example is the limitations in the close connection and coordination between subjects (state management agencies, financial institutions, Fintech startups, technology development companies.) as well as the legal framework governing the Fintech sector is not synchronized. Therefore, Vietnamese Fintech companies today, especially new field development projects, are currently facing barriers in the process of entering the industry as well as the development stage. From the empirical evidence of the Fintech market in Vietnam, a regulatory sandbox for fintech is necessary in the current period. In 2022, the SBV proposed a draft decree on a controlled testing mechanism for Fintech activities in the banking sector.
The research article "REGULATORY SANDBOX FOR FINTECH: INTERNATIONAL EXPERIENCES AND SUGGESTIONS FOR VIETNAM" will focus on analyzing the current state of the fintech market in Vietnam as well as Sandbox mechanisms in the world, thereby providing recommendations to complete regulatory sandbox framework in Vietnam. Research objectives and tasks 2. Research objectives The study focuses on analyzing the operation and characteristics of fintech-related regulatory sandboxes in some markets around the world and then making suggestions for Vietnam regulators to complete the regulatory sandbox framework and develop the testing mechanism in the future. Research tasks e Systematize the theoretical basis of fintech and regulatory sandbox for fintech.
e Analyze fintech’s market development and the process of building a sandbox legal framework in Vietnam. e Analyze some cases of regulatory sandboxes around the world. e Suggest recommendations for regulatory sandbox in Vietnam from international experience. Research questions The research focuses on answering the following four questions: e What is the current situation of Vietnam's fintech market? e How is the Government building regulatory sandbox for fintech in Vietnam? e How do regulators around the world launch fintech-related regulatory sandboxes? e What steps should Vietnam take to complete and enhance the regulatory sandbox for fintech? 3.
Research object and scope 3. Research object The study focuses on subjects, including the Vietnam fintech market and fintech regulatory sandboxes in some countries around the world. Research scope e Content scope: characteristics and development situation of the fintech market; operation of the testing mechanism for fintech innovations. e Spatial extent: fintech market in Vietnam, Thailand, Malaysia, Hong Kong and Singapore.
e Time scope: research on regulatory sandbox in fintech markets during the period 2016 — 2023. Research methodolody The research article synthesizes secondary information from government information sites of various countries, articles and related research topics. To analyze the testing mechanisms, the paper uses a case study analysis method, collecting and 3 analyzing sandbox cases in four markets, including Thailand, Malaysia, Hong Kong and Singapore.