Key aspects
Key considerations


The State Bank of Vietnam has recently released a draft decree to regulate sandbox mechanism for fintech in the banking industry. If the government decides to bring this decree into effect, it will create a unique mechanism that has never been seen in any prior regulations in Vietnam banking laws. As such, this is a highly anticipated draft for many players in the banking industry, from service providers to credit institutions to investors. This article aims to give a broad overview of the draft decree.

Key aspects

The most important aspect in this draft is that the subjects of sandbox mechanisms are Vietnamese-established entities and operate within Vietnam territory, regardless of the percentage that foreign-shareholders are holding in such companies.

First, as an overview, the decree includes the following fintech solutions to be implemented using the sandbox mechanism:

  • the grant of credit on technology platforms;
  • credit scoring – a solution to apply an information technology system to score the credit reputation of an individual or legal entity to support credit granting decisions;
  • share data via application programming interfaces (APIs) – an interface provided by a computer system to allow other computer systems to request services or to allow data to be exchanged between these computer systems;
  • peer-to-peer lending – a technology-based lending activity designed and implemented based on financial technology applications performed by a peer-to-peer lending company with the role of an intermediary connecting borrowers with lenders;
  • the application of blockchain technology and distributed ledger technology (DLT) in banking activities; and
  • the application of other technologies in banking operations, implementing innovative business cooperation models.

The above is a broad range of technology, covering the majority of technologies available in the market, such as:

  • automatic credit scoring;
  • credit granting;
  • blockchain; and
  • DLT.

It is expected that allowing the implementation of these technologies in the banking industry will provide massive synergy with the large databases of customer information of credit institutions and will enable the institutions to deliver better and targeted services, as well as to limit credit risks. Finally, the use of broad wording in the draft, such as "other technologies in banking operations", will ensure that opportunities are not restricted to future technologies.

Key considerations

The key general regulations on the sandbox mechanism are provided under Chapter I of the draft. In particular, according to article 1, the scope of the draft applies to technological solutions:

  • to be applied in the banking sector by credit institutions in accordance with the provisions of the Law on Credit Institutions; and
  • applied in the banking sector that are supplied to the market by independent financial technology companies.

According to article 2, the draft allows credit institutions, fintech companies and organisations and individuals related to the sandbox mechanism activities in the banking sector to participate in the sandbox mechanism.

Meanwhile, Chapter II provides detailed guidance for the credit institutions and fintech companies to participate in the sandbox mechanism. According to article 9 and article 14, the subjects must be legally established and operate in Vietnam. Moreover, the subjects must prove in their application dossiers that the proposed fintech solution is, among other things, an innovative and feasible solution that brings benefits and added value to service users in Vietnam and has not been specified in any legal documents or current legal regulations.

In addition, according to article 9.3(d), one of the requirements for a fintech solution that is suggested for the sandbox mechanism is that it must be a solution that the organisation participating in the trial mechanism implements through measures that are fully reviewed and evaluated in terms of operation, function, utility and usefulness. However, the standard for evaluating "functions", "utilities" and "usefulness" are still vague. It is hoped that the State Bank of Vietnam would issue a detailed circular setting out the criteria and scoring that it aims to use to evaluate these factors.

An organisation needs to be granted a participation certificate by State Bank of Vietnam before participating in a sandbox mechanism under this draft. Despite the vague terminology, the barriers of entry into the sandbox programme are reasonable and only require subjects to have a legal establishment and operating entity in Vietnam, which is not complex to achieve.

According to article 12.1 of draft, the duration of a fintech sandbox mechanism is two years from the time the State Bank of Vietnam grants the participation certificate, depending on specific solutions and aspects.

Chapter III on monitoring the process requests that the participating credit institutions and fintech companies issue a quarterly report. At least 90 days prior to the end of the sandbox mechanism, the State Bank of Vietnam may, after reviewing the reports from organisations and comments from other ministries (if any):

  • decide to stop;
  • provide the certificate of completion; or
  • extend the duration of the sandbox. The extended duration shall not exceed one year and can be extended more than once.

Therefore, credit institutions and fintech companies should keep in mind that, by participating in the sandbox, they will have approximately a 33% chance to be granted an official operation license or an officially recognised fintech solution to supply to the market. However, the fintech solution under the sandbox should fall within an unconditional business line.

Finally, according to article 19 of the draft, customers participating in the sandbox mechanism shall have their rights protected. The most important of these rights is that the customer shall be compensated if there is any damage corresponding to the default of the organisation participating in the sandbox mechanism. This compensation requirement is a necessary requirement, but it could be a costly barrier for various fintech users and service providers.


The technical requirements of demonstrating innovativeness and feasible solutions are justified. It is expected that the majority of fintech providers will be fully capable of justifying the innovativeness of their solutions. Regarding feasibility, fintech providers may have to show how their systems can be incorporated with local credit institutions systems and the systems of other payment and payment intermediaries system providers; however, such issues should be possible to overcome.

Moreover, if the decree is brought into force, the State Bank of Vietnam would have to issue a further, detailed decree to offer guidance on the generalised requirements within the decree, including what "innovativeness" and "feasibility" mean, or what detailed reporting requirements will be imposed for each reporting entity. The decree is, so far, a good step forward for fintech products delivery in Vietnam.

For further information on this topic please contact Thanh Minh Vu or Bui Thi Thuy Duong at LNT & Partners by telephone (+84 24 3824 8522) or email ([email protected] or [email protected]). The LNT & Partners website can be accessed at