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The rapid growth of financial technology is driving the emergence of digital-only banks as a new trend in Vietnam’s financial services sector. While this model offers opportunities for innovation and optimized user experience, it also presents complex legal challenges that legislators, regulators, and businesses must proactively identify and address.
What Is a Digital-Only Bank?
A digital-only bank is a banking model that operates entirely on digital platforms, without the need of establishing branch in Vietnam or transaction offices. All services—including account opening, identity verification, lending, payments, and customer support—are conducted online through mobile applications or websites.
In Vietnam, several commercial banks have begun launching independent digital banking models or integrating digital banking services into traditional systems. However, the legal framework for fully digital banks is still under development.
Nonetheless, if business needs more information on opening physical branches in Vietnam, read our Inquiry for establishing branch in Vietnam for more guidance.
Key Legal Challenges
- Licensing and Legal Recognition
Currently, Vietnamese law does not provide a formal definition or specific regulations for “digital-only banks.” This legal gap means that digital banks must operate under the existing framework for traditional banks, which is not designed to regulate fully online operations. - Electronic Know-Your-Customer (eKYC)
Allowing customers to open accounts and perform financial transactions entirely online places a high demand on electronic identity verification (eKYC) processes. While the State Bank of Vietnam has permitted the use of eKYC for certain services, detailed guidelines are still lacking, especially for complex cases involving corporate clients or foreign nationals. - Personal Data Protection and Cybersecurity
As digital banks rely entirely on digital infrastructure, protecting user data and ensuring system security is vital. However, the current legal framework for personal data protection is in transition. Decree No. 13/2023/ND-CP does not yet provide comprehensive guidance for sensitive sectors like finance and banking. - Dispute Resolution and Legal Liability
The absence of a physical presence complicates the determination of jurisdiction and legal liability among stakeholders (banks, customers, third parties), particularly in cross-border transactions or those involving foreign elements. - Regulatory Oversight of Digital Banking Activities
Regulators need to develop oversight mechanisms suited to fully online operations, including real-time data monitoring, early risk warnings, and compliance controls adapted to the digital environment.
Toward a Modern Legal Framework
To enable the sustainable and secure development of digital-only banks, Vietnam’s legal framework should evolve in the following directions:
- Establish a legal definition and operational standards specifically for digital banks.
- Improve eKYC mechanisms and regulations related to electronic signatures and electronic contracts.
- Issue detailed guidance on data security and technology risk management.
- Develop dispute resolution procedures tailored to digital transaction environments.
- Enhance regulators’ digital supervision capacity, including policy experimentation (sandboxes) and fintech assessments.
Conclusion
Digital-only banking is an inevitable step in the digital transformation of the financial sector. However, for this model to grow effectively and sustainably, Vietnam must swiftly develop a compatible legal framework that balances innovation with legal risk control.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for Banking & Financial Services. If you need any advice, please contact us for further information or collaboration.
