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FinTechs belonging to this category provide identification services, which are required for most banking services.
Introduction
Attitude of the country towards identification services
Identification (KYC) is a core process for banking service provision, and CIs, including banks, in Vietnam are required to strictly adhere to the KYC requirements during account opening and transaction execution. The government has demonstrated high regard for electronic identification solutions, both helping to enhance security and facilitating online financial transactions. Currently, there are many FinTech enterprises that provide identification solutions (identify-as-a-service) to CIs.
The demand for identification solutions increased recently due to the change of legal requirements (more stringent requirements) and the popularity of online banking services, which help boost partnerships between CIs and FinTech companies.
Legal affairs
Obligations and requirements to provide identification services
FinTech companies normally cooperate and provide platforms, software, and recognition algorithms to support CIs in implementing identification processes. Upon working with CIs, especially banks, FinTech companies will be subject to strict conditions imposed by law on third parties working with banks, and ensure that the following four principles will be maintained: (i) must not impair the organization's ability to provide continuous service to customers; (ii) must not compromise the organization's control over its business processes; (iii) must not alter the organization's responsibility for ensuring information security; and (iv) third-party IT services must comply with the organization's information security regulations. Additionally, FinTech companies must ensure the confidentiality of CIs’ customer information in accordance with legal regulations and are accountable for the outcomes of the CIs’ customer identification verification process if they conduct the verification themselves to support CIs.
Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area
Given the nature of data to be processed, both CIs and FinTech companies need to comply with a personal data protection regime and data protection regulations in general, such as the Data Law and Personal Data Protection Law. The regulators are also amending the Law on Cybersecurity, which also governs identification obligations of online service providers (including banks).
It can be seen that the regulators are actively preparing more guidance for the relevant data-related legislation which may have an impact on identification services. Companies are strongly encouraged to closely follow legal developments in this regard.
Economic conditions
Market size for identification services and biggest companies in this business area
The identification service market in Vietnam is expanding rapidly alongside the development of digital banks, e-wallets, and FinTech platforms. Some prominent companies in this field include: