Digital economy ventures

Bold new approach for digital banking (source: freepik.com)

By Vu Thanh Minh and Ha Thanh An Lawyers, LNT & Partners

In addition to a number of notable changes relating to opening bank accounts, long-awaited reform via Circular 16 is the detailed regulation on opening individual payment accounts at credit institutions by electronic know-your-customer (eKYC). This is the first legal instrument that provides detailed guidance on its implementation.

The system is used to verify customer’s identity against the declared information in compliance with applicable laws and regulations, with support from video call and AI technologies such as face-matching for photos on ID card, or optical character recognition to read and extract information, instantly comparing personal information with a centralised database of user identity. Thus, bank account opening and customer onboarding become much easier, as customers do not need to go to a branch to open a bank account.

In the past, under Decree No.116/2013/ND-CP guiding the Law on Anti-money Laundering and the aforementioned Circular 23, the first meeting between the bank and client must be face-to-face if the latter wishes to open a bank account. However, reflecting the development of 4.0 technology, in November 2019 the government issued Decree No.87/2019/ND-CP detailing the implementation of a number of articles of the Law on Anti-money Laundering, of which Article 8.2 stated that the bank can “decide whether to meet the client in person when the relationship is first established”.

These developments are now mirrored in Circular 16, thereby allowing commercial banks to decide whether to meet clients in person when the latter wishes to open a bank account, and to decide which methods, forms and technologies it wishes to use to identify and verify a client.

However, the SBV also requires banks to adopt necessary technologies and procedures for risk management, and adequately store and manage information/data used for identifying clients. Regarding transaction limits, except for some cases where banks are allowed to apply a higher transaction limit, transactions made from an electronically opened account must not exceed VND100 million ($4,350) per month per customer in aggregate.

In addition to important regulations on eKYC, Circular 16 also provides for a number of notable changes relating to the opening of bank accounts.

Firstly, Circular 16 clarifies that a legal entity can represent a person to open a checking account. In such cases, documents that can be used to identify such legal entities must be included in the application to open a checking account.

Secondly, a bank or foreign bank branch is allowed to stipulate the components of the application dossier and prescribe the application form for opening a shared checking account. The bank or foreign bank branch is also entitled to agree with its client on whether or not foreign language documents included in the application must be translated into Vietnamese. This is a completely new addition to Circular 23.

Lastly, Circular 16 supplements regulation on the use of standard form contracts on opening and use of checking accounts. Accordingly, if the bank or foreign bank branch in question uses a standard form contract for the opening and use of checking accounts, it must make the standard form contract publicly available on its website, mobile banking app (if any), and its lawful transaction locations.

In light of the above, international and domestic banks in Vietnam are gearing up to boost their eKYC process to provide customers with a seamless on-board experience and reduce paper-based procedures. Indeed, a number of commercial banks such as HDBank, TPBank, VPBank, and Sacombank have applied eKYC to open accounts for customers.

Digital banking and non-cash payment are some of the goals that the laws of Vietnam are aiming for in the near future. In the first six months of 2020, non-cash payments increased by 180 per cent. This trend necessitates the completion of a sound legal framework. In this context, Circular 16 with the regulation on eKYC could be considered an important premise for development of digital payment and banking in Vietnam.

Slated to take effect on March 5, Circular 16 is expected to provide a legal platform for this, as well as paving the way for more foreign credit institutions, banks, and tech companies on eKYC to enter and develop the Vietnamese market.

Vietnam Maritime Commercial Joint Stock Bank choses Amazon Web Services, Inc as its cloud provider for TNEX, the first digital-only bank in Viet Nam. — VNS Photo

Vietnam Maritime Commercial Joint Stock Bank has chosen Amazon Web Services, Inc, a subsidiary of the internet giant, as its cloud provider for TNEX, the first digital-only bank in Viet Nam.

TNEX was developed by MSB in 10 months as a radically new mobile platform that brings all digital banking and lifestyle services under one umbrella through a super app.

It is designed with customer experience and data science at the centre of its products, services and features, and focused on addressing unmet customer needs by offering free, innovative and simple everyday banking products to the approximately 60 million Vietnamese who have no or limited access to banking and financial services.

TNEX offers its customers advanced digital banking services, supports their lifestyle needs such as food, education, travel, entertainment, health, fashion, and messaging and chat, and provides access to a digital eco-system populated by its merchant partners.

Consumers can directly buy products and services from the merchant marketplace with the TNEX app and pay digitally using QR codes.

By tapping the scalability of AWS cloud, MSB can monitor and ensure compliance.

Leveraging AWS’s broad and deep portfolio of cloud services including analytics, machine learning, and containers enables TNEX to develop better ways to serve customers by innovating and deploying new products faster and drive operational efficiencies.

Bryan Carroll, chief executive officer of the digital bank, said: “TNEX provides our customers with an entirely new banking experience that supports their daily spending and lifestyle needs. Through the development of our platform on AWS, we gained the speed and agility needed to build a full-service merchant marketplace in six months and an SME and consumer digital bank in only 10 months.

“By using AWS, we accelerated the delivery of the innovative financial services that our customers have been asking for and the tools and services that our merchants require to grow their business.”

A key segment for TNEX is Generation Z, the demographic that succeeded millennials. By 2025 Vietnam’s Generation Z of digital-first consumers with significant spending power is expected to comprise 25 per cent of the country’s labour force. — VNS

Vaccine passports – the future?, illustration photo, source: internet

At the end of December, thousands of Europeans received the first doses of the Pfizer-BioNtech COVID-19 vaccine after the company received authorisation in the EU. Since then, other countries such as the US, Israel, the UAE, Bahrain, India, and several Asian countries, including Vietnam, have also started to receive or order vaccines to prepare for mass vaccination programmes.

This has awakened optimism about an end to the pandemic and the idea of a vaccine passport.

A heated discussion

Some parts of the world, such as the Seychelles, Cyprus, and Romania, have begun to remove quarantine requirements for visitors who have been vaccinated. In early January, Denmark also announced that it would issue vaccine passports to citizens within the next three to four months.

To get digital vaccine passports, Danish citizens will have to declare their medical and vaccination status on a government-issued app. Owners of such passports will be able to return to Denmark without quarantine and receive access to bars, restaurants, and hotels.

Iceland became the first European nation to issue vaccine certificates in late January. While Greece also announced it will unveil a digital vaccination certificate for those who have received two doses of the vaccine, Israel recently announced that a so-called Green Badge will allow vaccinated people to go to restaurants, attend public events, and travel freely. Other countries that are currently issuing or waiting for vaccine passports include the Czech Republic, Estonia, Hungary, Italy, Poland, Portugal, Slovakia, Spain, and Sweden.

Despite being supported by several countries and seen as a necessary condition for freedom of movement, vaccine passports have received mixed reactions in many places. The UK, the first in the world to vaccinate people against COVID-19, had previously denied plans for vaccine passports to allow people to travel abroad, but they can ask for proof of vaccination in case they need to travel.

One of the reasons not to issue a vaccine passport is that COVID-19 vaccination is not compulsory in the UK, said MP Nadhim Zahawi. The EU is also divided over vaccine passports. Some, such as France, Germany, Belgium, and the Netherlands, as well as organisations like the World Health Organization and the European Commission, also argued that vaccine passports do not ensure safe travel.

In France, Health Minister Olivier Véran has repeatedly said it is too early to discuss vaccination passports since fewer than 2.5 million French people have received the first dose and because it is unclear whether the vaccine prevents transmission.

Meanwhile, Germany also advised not to loosen many of the restrictions. To date, the 27 EU member states have only agreed on mutual recognition of COVID-19 test results. The introduction of vaccine passports remains a story of the future, especially as more new coronavirus variants are discovered. The European Commission says it will not be rushed into a decision on passports while only 3 per cent of Europeans have been vaccinated.

The US also expressed caution with vaccine passports as President Biden asked government agencies to evaluate the feasibility of linking coronavirus vaccine certificates with other vaccination documents and producing digital versions of them.

Possible resurrection?

Although controversies abound, governments and technology firms around the world are leaning towards using vaccine passports to recover the economy and revive the tourism and entertainment industries.

Some companies and tech groups like IBM have also started to develop smartphone applications where users can upload detailed information about their tests and vaccinations to create a digital health certificate or use QR codes to display their vaccination status to the authorities without disclosing sensitive information.

Zurab Pololikashvili, secretary general of the UN’s World Tourism Organization, has called on the world to apply vaccine passports on a larger scale as an indispensable element for the tourism industry’s recovery.

“One key element vital for the restart of tourism is consistency and harmonisation of rules and protocols regarding international travel,” he said in an email. “Evidence of vaccination, for example, through the coordinated introduction of what may be called ‘health passports’ can offer this. They can also eliminate the need for quarantine on arrival, a policy which is also standing in the way of the return of international tourism.”

The International Air Transport Association (IATA) supports vaccine passports and also piloted their digital application called IATA Travel Pass piloted on Singapore Airlines flights late last year. IATA said it could expand the programme to other destinations if the pilot is successful.

Singapore Airlines also plans to incorporate health certifications into a mobile app in mid-2021. Passengers who have tested for COVID-19 at clinics designated by the airline will be issued an electronic certificate with a QR code or a paper health certificate.

Some airlines, like Qantas, said they would make vaccine documentation mandatory on all flights while Gulf Air, Emirates, and Etihad will test a travel pass designed by the IATA.

In Vietnam, the first batch of vaccines was imported a few days ago as the first happy signal for reopening. Once the country is truly safe from the pandemic, ministries and departments will study to issue a passport similar to the vaccine passports.

However, tourism expert Truong Nam Thang, a member of tourism research projects of the Tourism Advisory Board and the Vietnam National Administration of Tourism, said that by December, the nation will temporarily achieve herd immunity in key economic and tourism cities. By June 2022, Vietnam hopes to reach herd immunity across the country.

Thus, it will not be until the end of the second quarter of 2022 that Vietnam can normalise international trade as well as gradually restore tourism and international travel.