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The rise of digital-only banks is ushering in a wave of innovation in Vietnam’s financial and banking sector. While the model holds significant potential in expanding financial inclusion and reducing operational costs, it also raises complex legal questions related to regulatory frameworks, consumer rights, and the state’s supervisory capacity.
Expanding Access to Inclusive Financial Services
Branchless digital banks offer banking services to users across all regions — including rural areas without access to traditional bank branches. With just a mobile application, users can open accounts, transfer money, save, or apply for loans entirely online.
This model enables banks to minimize overhead costs related to real estate, staffing, and operations, allowing them to offer more competitive financial products. Integration of technologies such as AI, big data, and eKYC also enhances user personalization and strengthens fraud detection capabilities.
Legal Framework Lagging Behind Technological Advancements
Vietnam currently lacks a specific legal instrument governing fully digital, branchless banks. Existing regulations are still based on the Law on Credit Institutions and supporting documents originally designed for traditional banks with physical branches.
This regulatory gap creates legal uncertainty in areas such as full online customer identification, remote credit approval, and operational risk management on digital platforms. As a result, digital banks are often forced to operate under a “pilot-and-seek-approval” approach or are subject to traditional banking compliance burdens, despite their distinct operational model.
Personal Data Protection and Consumer Rights
In a fully digital environment, personal data becomes a core asset — and a primary target for cybercrime. Ensuring customer data security, preventing cyberattacks, and managing data risks are top priorities for digital-only banks.
From the consumer’s perspective, the absence of physical branches can lead to difficulties when platforms malfunction, are interrupted, or when disputes arise. Currently, Vietnamese law provides no specific guidance on resolving disputes related to non-traditional digital banking models, creating challenges for both regulators and customers.
Toward a Future-Proof Legal Framework
As the digitalization of finance becomes inevitable, Vietnam needs to establish a dedicated regulatory sandbox for branchless digital banks. Such a framework would allow controlled experimentation, provide regulators with real-time insights, and support timely policy refinement.
Additionally, foundational laws — including the Law on Credit Institutions, the Law on Electronic Transactions, and the Law on Personal Data Protection — should be revised to accommodate the realities of modern banking. Issuing specialized regulations will not only create legal clarity but also foster innovation and protect end-users in the evolving digital banking landscape.
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].
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