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RegTech is composed of the words “regulatory” and “technology”. It is a collective term for the application of modern technologies, to get the increasing regulation in the banking- and financial sector under control both from an IT and a legal standpoint.
Introduction
Attitude of the country towards RegTech-services
In Vietnam, RegTech is not yet widely adopted, but it has been implemented in various forms through the application of digital transformation in management, supervision, and compliance activities in the financial sector. An SBV-conducted survey in June 2021 of 47 credit institutions (mainly banks) showed that “approximately 35% of them have a good understanding of and have already applied RegTech solutions”; “10.8% have a moderate level of understanding and have plans to develop RegTech applications”; and “27% are aware of the concept and have discussed RegTech implementation within their institutions”. “The remaining 27% either have no understanding of RegTech or have yet to develop any concrete implementation plans”. The regulator has therefore been actively organizing seminars and forums on or related to RegTech to clarify the nature of the service as well as defining its development orientation in Vietnam, and considers RegTech a noteworthy emerging trend in Vietnam.
Recognizing the importance of technology-driven financial solutions, the Vietnamese government has taken steps to support RegTech development. This is highlighted by Decision No. 810/QD-NHNN of the SBV dated 11 May 2021 on the Digital Transformation Plan of the banking sector by 2025, with a vision to 2030 (“Decision 810”), which outlines the development of RegTech at credit institutions. Specifically, Decision 810 sets out the requirement to promote the research and implementation of AI applications and digital technologies in the provision of banking products and services: analyzing and predicting customer needs, optimizing customer journey and experience; detecting fraud, storing information, analyzing data; optimizing internal operational processes, reducing costs, and providing real-time customer support services via virtual assistants and robots. Most recently, Vietnam has passed the Digital Technology Industry Law, a standalone law dedicated to the digital technology industry, laying a legal foundation for digital innovation, including AI. Efforts like these must be continued to create a more secure and predictable environment for tech-driven financial services, including RegTech services.
That said, according to ICT Vietnam, the development of RegTech services in Vietnam has experienced certain challenges, notably including identifiable risks such as cybersecurity risks; risks associated with the use of third-party services, new technology providers, and outsourcing; as well as challenges related to skills and resource availability, data quality, integration, governance, and accountability in the use of RegTech tools. Other concerns include a shortage of qualified personnel, limited technological expertise, and risks in applying AI.
Legal affairs
Obligations and requirements to provide RegTech-services