ADB, Switzerland provides US$5 million to support Vietnam to improve fintech
Women entrepreneurs in Vietnam have an estimated US$1.2 billion, but few banks have taken active steps to pursue this market opportunity. (Photo: ADB)
This funding, along with a US$2 million contribution from the Japan Fund for Prosperous and Resilient Asia and the Pacific, funded by the Government of Japan, will support a technical assistance (TA) project aimed at expanding inclusive and climate finance in the country.
Fintech has been at the center of the Vietnamese government’s plans to expand financial services to consumers and SMEs. The TA will help the State Bank of Vietnam (SBV) strengthen the regulatory framework for digital finance, build the capacity of government and other industry stakeholders, and help financial institutions develop digital banking.
ADB Southeast Asia Director Winfried Wicklein said financial institutions rely on collateral based on credit decisions. This is to the disadvantage of small and medium-sized businesses, which usually have little or no security. Banks also often centralize their credit processes, which makes it relatively more expensive to process smaller loans. This TA can help find solutions such as alternative credit scoring and the introduction of digital lending.
Almost 80% of Vietnam’s population is unbanked or underbanked. Micro and small and medium enterprises are particularly affected, with their unmet financing needs estimated at VND 500 trillion (around USD 21 billion). Women-owned and women-led SMEs (WSMEs) are even more negatively affected. Women entrepreneurs in Vietnam have an estimated US$1.2 billion, but few banks have taken active steps to pursue this market opportunity.
TA will help promote women’s access to finance, including by offering training opportunities in fintech and green banking to SBV staff, targeting 25% female participation, as well as consulting services to WSMEs on the preparation of green loan applications.
It will also help SBV improve its guidelines for green banking and communicate them to stakeholders in the financial sector. Green banking is poised to help Vietnam achieve the US$11 billion annual financing needed to reach net zero carbon emissions by 2050.
Head of Economic Cooperation and Development at the Swiss State Secretariat for Economic Affairs (SECO) and Switzerland’s Governor to the ADB Dominique Paravicini said that by improving the regulatory environment for innovative fintech solutions and building the capacity of market players in digital finance, Switzerland is supporting Vietnam in to promote digital transformation of the financial sector. Ultimately, this will help SMEs in Vietnam to better access financing and expand their business./. VNA
