Progress in promoting financial inclusion

Vietnam has made great strides in promoting financial inclusion, ranking 3rd in the ASEAN region (after Singapore and Thailand), and 14th in the world, in the 2024 Global Financial Inclusion Index by Principal Financial Group.

According to a report by the State Bank, currently about 87% of adults have payment accounts, up from 31% in the 2015-2017 period.

According to Ms. Nguyen Thuy Duong, Chairwoman of the Board of Directors, EY Consulting Vietnam JSC (EY Vietnam), Vietnam's financial inclusion journey has witnessed significant progress, driven by important initiatives and leadership from regulatory agencies, traditional credit institutions and innovative capacity from FinTech.

However, to move towards a deeper and broader financial ecosystem, concerted efforts among stakeholders need to continue to be promoted to address remaining challenges and appropriately apply emerging technologies and enhance financial education.

The report “Promoting Financial Inclusion in Vietnam and the Role of FinTech in Collaborating with Credit Institutions” (Report) recently published by EY Vietnam, citing data from the General Statistics Office on the socio-economic situation in the fourth quarter and 2023, shows that more than 62% of the population currently lives in rural areas and still has difficulty accessing credit from formal financial and banking services.

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Ms. Nguyen Thuy Duong, Chairman of EY Vietnam, shared about Comprehensive Financial Reporting in Vietnam.

According to a survey by EY Vietnam, 42% of respondents said they had used informal services such as borrowing from acquaintances, "hot" loans, playing "hui" (family association), etc. within the past year.

These individuals face high costs and significant financial risks. Micro-enterprises and sole proprietors also face difficulties in accessing capital from traditional banks due to insufficient collateral or incomplete credit records.

“Popularizing” banking services through FinTech

Mr. Vu Thanh Trung, Vice Chairman of the Board of Directors, Military Commercial Joint Stock Bank (MB) stated that the specific barriers that business households, micro, small, and medium enterprises face when accessing financial and banking products and services include: No collateral or lack of fixed assets of sufficient value for collateral; Incomplete or unclear credit records; Complicated procedures and requiring a lot of paperwork; Slow disbursement time. This makes borrowing difficult, affecting their ability to meet their working capital needs.

In this context, FinTech can help provide additional useful data sources for banks. From there, it helps banks build credit scoring models, provide appropriate and automatic credit limits.

“At MB, the activities that FinTech is coordinating with the bank to carry out are: sharing data on customers' shopping and payment behavior from e-commerce platforms; providing information on transaction history and interaction levels, helping the bank assess customers' income and cash flow more accurately,” said the Vice Chairman of MB's Board of Directors.

Sharing about the importance of cooperation between banks and FinTech companies, Ms. Nguyen Thuy Duong said: "In addition to remarkable achievements, financial inclusion still has a long way to go. Strengthening cooperation between traditional credit institutions and FinTech companies, deepening the open banking model, and improving financial literacy are urgent activities today. The legal framework needs to be strengthened and expanded, especially with the approval and implementation of a controlled testing mechanism (sandbox), to support innovation and manage risks related to new financial technologies."

FinTech with outstanding advantages in technology infrastructure, diverse products, ability to utilize data, streamlined payment system, effective business management tools, etc. is "popularizing" financial and banking services, helping to improve access to services for Vietnamese people, especially disadvantaged groups.

Mr. Nguyen Ba Diep, co-founder of MoMo e-wallet, commented that FinTech has become an important driving force in promoting financial inclusion, especially in Vietnam.

“FinTech has helped narrow the gap and expand access to financial and banking services to people, by expanding the scope of providing these services. At the same time, reducing the cost of use combined with creative and innovative solutions towards customer experience and increasing financial literacy,” said Mr. Diep.

An environment where traditional financial institutions cooperate with Fintech could be a promising direction for the financial market in the future. The goal is to build an inclusive financial system. In which, subjects such as low-income people, micro-enterprises and business households can actively and fully participate in the national financial system.