General regulatory model
Mobile money
P2P lending
Mobile payment solution
Sandbox mechanism

eKYC use in banking industry


Currently, the fintech legal framework in Vietnam is still in its infancy (except for certain areas, notably e-wallet and payment intermediaries services). Initially, there was only a basic proposition to implement the fintech legal framework plan in Vietnam. To comprehensively modernise the State Bank of Vietnam's (SBV) management activities and realise the goal of financial inclusion and sustainable development based on promoting new technologies, the SBV has proposed a plan to expand the legal framework and create favourable conditions for the digital transformation process in the banking industry.

This article is part of a series on fintech in Vietnam.(1)

General regulatory model

Step by step, the aim is now to create a solid legal foundation for the formation and development of digital banking models. The first step is to research and understand issues that need to be legislated and adapt them to reality. The priority is the development of regulations on:

  • non-cash payment and management of payment supervision activities;
  • automated lending activities in the lending process of credit institutions with customers;
  • new digital technology applications, such as cloud computing, big data, blockchain and artificial intelligence in banking activities;
  • developing open banking and diversifying the banking ecosystem;
  • regulations on electronic transactions in the banking industry;
  • regulations on security, safety and provision of services in the digital environment;
  • regulatory fintech sandbox; and
  • digital currency (bitcoin).

Decree No. 87/2019/ND-CP amends and supplement several articles of:

  • Decree 116/2013/ND-CP, guiding the Law on Money Laundering Prevention and Control; and
  • Circular No. 16/2020/TT-NHNN, dated 16 December 2020, on amendments to Circular No. 23/2014/TT-NHNN, dated 19 August 2014, on providing guidelines for the opening and use of checking accounts at payment service providers.

Decree No. 87/2019/ND-CP has provided regulation on the implementation of electronic know-your-customer (eKYC). It now allows the bank to decide whether to meet with customers for the first time when performing transactions related to new technology.

Banks have responded to this in rapid terms. However, the intermediary employed to verify the client's identity shall be selected according to regulations of the law on anti-money laundering. In December 2020, the SBV governor signed Circular 16/2020/TT-NHNN, amending and supplementing a number of articles of Circular No. 23 guiding the opening and use of payment accounts at service providers. Notably, article 14a of Circular 16/2020/TT-NHNN regulates the opening of personal payment accounts electronically (through eKYC). eKYC technology, with the integration of many advanced technologies, creates a secure online customer identification process with high accuracy. The time to complete procedures and customer records is also shortened, and these are processed in the shortest time, allowing banks to automatically store customer information.

According to data from the SBV payment department, there are currently 15 banks that have implemented eKYC technology, and 340,000 new accounts have been opened via eKYC. Four commercial banks and the Ministry of Public Security have signed an agreement to exploit citizen identification data to serve the banks' digital transformation strategy. For example, in Hanoi, on 20 June 2021, there was a ceremony to announce the decision to establish the Center for Research and Application of Population Data and Citizen Identity (CRAPDCI) under the Ministry of Public Security. The Bank for Agriculture and Rural Development of Vietnam and the CRAPDCI subsequently signed a strategic cooperation agreement on digital transformation for 2021-2026.

Nevertheless, to be able to implement eKYC effectively, one of the essential conditions is to have a national data system. According to the prime minister's direction, the Ministry of Public Security must complete the construction of the national data centre on population, and issue identification numbers to citizens by 1 December 2020. It shall also complete the entire project before 30 April 2021.

Mobile money

On 9 March 2021, the prime minister approved the two-year pilot application of mobile money, which allows the use of mobile phone credit to pay for small-value goods and services under Decision 316/QD-TTG. The most significant difference compared to e-wallets is that, unlike e-wallets, mobile money does not require a bank account to use the service and pay. In return, a maximum transaction for each mobile money account is 10 million dong per month for all transactions – including withdrawals, transfers and payments – while the e-wallet limit is 10 times higher (100 million dong per month). Mobile money will only be applicable for domestic transactions and will not be available for cross-border services.

To be eligible to participate in the pilot, businesses need to have:

  • licences to provide intermediary e-wallet payment services;
  • licences to establish a public mobile terrestrial telecoms network using radio frequencies; or
  • subsidiaries with permission from the parent company to use telecoms, network and data infrastructure.

The first licence does not impose a limitation on the capital contribution of a foreign-invested enterprise. However, to obtain the second licence, a foreign investor must enter into joint ventures with licenced telecoms service providers in Vietnam, and the capital contribution must not exceed 49% of the legal capital of the joint venture according to the World Trade Organization commitments. Thus, a foreign-invested enterprise will be eligible to perform a mobile money pilot in Vietnam if it holds a maximum of 49% of the joint venture's capital with a licenced telecoms service provider in Vietnam. Three carriers have announced their participation in the pilot in Vietnam: Viettel, VNPT and Mobifone.

P2P lending

The activities of P2P lending and blockchain are currently not governed by specific legislation in Vietnam. However, in practice, fintech companies operating P2P lending or blockchain platforms are still obliged to comply with general laws such as the Civil Code, the Law on Investment, and the Law on Enterprise. Fintech companies usually obtain enterprise registration certificates with general business lines of support for financial services that have not yet been classified to conduct their business under the Law on Investment. The parties shall agree upon the lending interest rate in civil transactions through P2P lending. However, it must not exceed 20% per year of the loan under the Civil Code 2015.

According to the new draft decree providing a controlled testing mechanism (sandbox) for fintech activities in the banking sector in 2020, P2P lending is part of a two-year fintech regulatory sandbox activity pilot. P2P lending companies operating in the market before the pilot is deployed must register to operate following the regulations of the new pilot mechanism. Otherwise, they will be suspended.

However, due to the absence of a specific legal framework, the SBV is still uncertain when it comes to assessing dossiers submitted to apply for the specific business line of P2P lending, which is usually pending or refused.

Mobile payment solution

A mobile payment solution is a solution to support customers in card payment activities through a card acceptance device at a merchant, not an intermediary, payment service. The players providing this service must have responsibilities for compliance with regulations of laws on foreign exchange management, personal data protection, privacy, security of documents, card information, card transactions and accounts of cardholders, and prudential measures in card usage.

Sandbox mechanism

Ministries and branches have repeatedly discussed the draft decree that would provide for a controlled testing mechanism (sandbox) for fintech activities in the banking sector by the SBV. However, the parties' cautiousness has left the draft decree incomplete. Facing this situation, experts have estimated that the official testing mechanism for the new sandbox may not be issued and enforced until the end of 2021.

eKYC use in banking industry

The Ministry of Public Security announced that it has almost completed the objectives of a project to build a national database on population and a project to produce, issue and manage identity cards – these two systems became officially operative from 1 July 2021.

In addition, the Ministry of Public Security has completed a draft circular stipulating that services can exploit and use information in the national population database to collect opinions from agencies, organisations and individuals. The draft circular provides the rights to credit institutions, organisations offering telecoms and mobile services, organisations offering digital signature and electronic identification certification services, notary organisations, and bailiffs and other organisations to exploit and use services for the purpose of accessing information in the national database. This is done through the national public service portal by requesting in writing to provide services or by other means determined by the Ministry of Public Security.

Following the above updates, four commercial banks in Vietnam have signed the agreement to exploit identity card data with the Ministry of Public Security. This critical change will also serve the digital transformation plan of the banking industry. During covid-19 pandemic, instead of having to go to the bank and show ID documents, eKYC will identify customers remotely by electronic methods based on technology such as biometric authentication, customer identification via artificial intelligence, and personal information linked to a centralised database of customer identifiers.

For further information on this topic please contact Net Le or Thanh Minh Vu at LNT & Partners by telephone (+84 28 3821 2357) or email ([email protected] or [email protected]). The LNT & Partners website can be accessed at


(1) For the first and second articles in the series, please see "Fintech in Vietnam: overview" and "Fintech in Vietnam: business models".