Recently, according to information from a reputable Vietnamese newspaper, CafeF, the State Bank of Vietnam (SBV) has issued an official dispatch on the Draft Decree regulating the Controlled Testing Mechanism in the banking sector. row.

Will the problems of P2P fintech be thoroughly resolved after this Draft? Let's find out with FinFan through the following article.

Peer-to-peer lending (P2P lending) and the problems it brings to the Vietnamese fintech industry

In articles about peer-to-peer lending (P2P (peer-to-peer) lending), FinFan has mentioned the concept of the industry as well as the problems that this method brings to the Vietnamese fintech market. including:

• Black credit

• Fraudulent fintech investment projects

• Cryptocurrencies are not protected by the government.

Read more:

• Fintech peer-to-peer lending in Vietnam – Is that a good investment banking fintech?

• Peer-to-peer lending and fintech serious trouble in Vietnam

In a country like Vietnam, where the level of technological and financial updates is not high (not including large cities and provinces), many people believe in peer-to-peer lending scams. and take on extremely large debts.

Very heartbreaking stories have happened a lot when lenders and borrowers did not fully understand the model and made unwise decisions.

According to the State Bank, by 2022 the number of companies operating or participating in providing services and Fintech solutions in Vietnam has increased rapidly from about 40 companies at the end of 2016 to about 200. The company at the present time has many different fields and activities such as payments, peer-to-peer lending, credit scoring, personal financial management...

Among them, the peer-to-peer lending (P2P Lending) field has about 100 companies with many units with foreign investment.

This number has also been increasing in the current difficult economic times affecting businesses.

The reality that Thanh Nien Newspaper has repeatedly reflected also shows that many people have encountered many risks with peer-to-peer lending services in recent times. These lending services use the tactic of announcing low loan interest rates but adding many fees, causing customers to pay more interest than principal. If the borrower fails to pay in time, they will be terrorized and threatened by debt collection services. For example, Moneyveo website announced the loan interest rate is 18.25%/year.

But when trying to choose a loan amount of 5 million VND within 10 days, the customer has to pay a consulting fee and interest rate of 1.4 million VND, equivalent to 28%. Thus, if you borrow longer, both fees and interest will have to be up to 84%/month.

Or the site robocash.vn announces an interest rate of only 18.3%/year but gives an example if you borrow 6 million VND in 180 days (6 months), the total amount the customer has to pay is 8.5 million VND. In which, LS is 540,000 VND, consulting fee is 600,000 VND and service fee is 1.36 million VND. So both fees and interest are equivalent to nearly 84%/year...

Actions of the State Bank to minimize and completely solve problems related to peer-to-peer lending (P2P lending)

To prevent the above situation, this draft of the State Bank on the issue of lending to banks will be clearer and more closely related to issues related to unsecured lending between members outside the banking organization (fintech companies, users, etc.).

According to the Draft, Fintech solutions in the banking sector are allowed to be tested at the Testing Mechanism including the following areas:

• Credit scoring.

• Share data via open application programming interface (Open API).

• Peer-to-peer lending (P2P Lending).

The Draft Decree regulates the conditions for participating in the Testing Mechanism for Fintech Companies in two groups: conditions apply to Fintech Companies registering to participate in testing the credit scoring solution and sharing data via open application programming interface (Open API), does not include peer-to-peer lending solutions and conditions apply to Fintech Companies that are Peer-to-Peer Lending Companies.

Specific, the regulations for this activity include conditions for being licensed for testing, services that are not allowed, or the need to have plans and implement measures to prevent and handle risks.

In particular, the draft clearly states that peer-to-peer lending businesses must disclose company information and deploy services; Fees, interest rates, principal and interest payment conditions; The customer's rights and responsibilities during the testing process (in which, the customer as the lender must commit to using their own legal sources of money to lend, and is responsible for losses if not recovered. receive principal and interest, and are responsible for fulfilling tax obligations according to the provisions of law; customers who are borrowers must commit to providing accurate and complete information about their identity, purpose of using loan capital, and commit to using legal loan capital, not borrowing to lend); regulations on ensuring information security, protecting customer data...

(Source: Thanh Nien Newspaper and CafeF)

FinFan's comments on the draft along with the future development of the peer-to-peer lending industry (P2P lending)

Is peer-to-peer lending (P2P lending) really bad?

Like other types of fintech related to domestic and cross-border payments, peer-to-peer lending (P2P lending) is also a field that supports underbanked and unbanked people to access financial services. (specifically, lending) to be able to skip the cumbersome procedures of traditional banking services, and it brings benefits to all three parties, specifically:

For the borrower:

• When borrowing using peer-to-peer lending applications, customers will not need to carry out cumbersome procedures such as proving assets or sending documents, proof of income, etc. to approval bank (all have been set up on the information system since the customer created the account using high-tech KYC and AML forms).

• Borrowing customers can be allowed to disburse the loan almost immediately rather than having to wait about 2-3 days for the money to reach or enter their account according to some disbursement processes of the bank.

• Borrowing customers may not have to pay fees arising from bank procedures such as application review fees, document appraisal,... and can choose or suggest loan needs: size, term, interest rate,... that they need.

With lenders:

• The lender has a profitable investment that matches his risk tolerance.

• Lenders have the opportunity to receive assets from borrowers when the borrower is unable to repay the loan.

• Lenders have the opportunity to receive reasonable financial advice from the peer-to-peer lending platform (P2P lending) about their loans.

For peer-to-peer lending platform providers (P2P lending):

• Receive commissions from lenders and borrowers.

• Increase brand recognition because the need for loans is always there compared to other needs related to finance.

• Receive money from the partner bank that sells certificates (notes) to the platform provider related to the loan.

The future development of the peer-to-peer lending industry in Vietnam after the bill is passed

Regarding the benefits that peer-to-peer lending platforms bring, along with the bills that the State Bank will pass in the near future, there will be more fintech businesses participating in this field not only domestically. but can also help Vietnamese people access loans from abroad.

One of them is FinFan with the advantage of more than 10 years of experience in the fintech field along with the advantage of being one of the first fintech companies licensed from the State Bank with License No. 973 of Accept and pay foreign currencies.

At the same time, FinFan also holds a technological advantage as one of the leading fintech companies in integrating and sharing data via open application programming interface (Open API) for payments of partners. international to Vietnam.

With all those years of operation, we have linked with more than 60 domestic and foreign banks through the NAPAS payment system. At the same time, we are also one of the first businesses in Vietnam that can create a system to connect domestic e-wallet (e-wallets aggregator) to the international payment system and also apply it to provide cross-border payment services.

Specifically, in less than 3 years of implementing the system, we have successfully supported more than 300,000 cross-border transactions directly into famous domestic e-wallets.

About FinFan

FinFan is a cross-border embedded financial services company, focused on mass disbursement, collection, card processing, IBAN, digital APM solutions, able to provide valuable input and integration above and for the same purpose.

FinFan has integrated with most famous MTO, PSP, switch and core fintech platforms in the world such as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal , Ripple, TripleA, FoMo Pay, Wings or Zalo.

For more information please contact us via:

🌐https://finfan.io

📞(+84) 2866 85 3317

✉ support@finfan.vn

LinkedIn: FinFan