The Government issued Decree 94 on April 29 on the controlled testing mechanism (sandbox) and financial technology (fintech) solutions in the banking sector.

Accordingly, one of the fintech solutions approved by the Government for testing is peer-to-peer lending (P2P Lending). Peer-to-peer lending companies are only allowed to provide testing solutions when licensed by the State Bank.

Peer-to-peer lending is a form of direct connection between lenders and borrowers through an online platform, without the need for traditional financial intermediaries such as banks.

The P2P Lending pilot will be licensed for 2 years, but not applicable to foreign banks. Credit institutions and financial technology companies are allowed to participate in the review of the pilot mechanism, but this does not mean that they will meet the business and investment conditions as prescribed by law. The pilot results are the basis for management agencies to research, develop and perfect the legal framework related to this lending sector.

Vietnam currently has about 100 companies operating in the field of peer-to-peer lending with many foreign-invested units. The State Bank has assessed that some agreements between the parties involved in the P2P Lending model lack transparency, and there is no mechanism to monitor the use and management of loans of this type, which can lead to disputes between the parties. It is necessary to establish principles and regulations for controlled testing of peer-to-peer lending fintech.

Along with P2P Lending, Vietnam has about 200 fintech companies and 90% of them operate in the banking sector (payment, rating applications, credit scoring...). In this Decree, the Government also allows piloting other fintech activities, including credit scoring, data sharing via open application programming interface (Open API).

The objective of this fintech services testing mechanism, according to the Government, is to promote innovation and modernization of the banking sector and help people and businesses use transparent, efficient financial services at low cost. In addition, the creation of a testing environment aims to evaluate costs, benefits and help limit risks for customers when using these solutions.