A customer uses VNPTPay to make payments. — VNA/VNS Photo Minh Quyet

Duong Quoc Anh, deputy head of the Institute of Digital Economy Development Strategy, revealed that Viet Nam's fintech sector has about 40 heavyweights.

Around 72 per cent of firms in the sector partner with banks to improve their services, whereas 28 per cent either compete with banks or operate independently.

As fintech is growing at a breakneck pace in the country, laws are playing catchup with the technology. The regulatory gaps put investors at risk and expose the need for legal revision to mitigate the risks.

Le Duy Binh, director of Vietnam Economica, said free trade agreements had given fresh impetus to P2P transactions between foreign buyers and Vietnamese sellers.

However, laws in the country have not kept pace with the development of technology, leading to a situation in which various types of fintech transactions fall through the cracks.

Some countries have developed regulatory sandboxes to enable the testing of P2P lending in the real-life environment, but there is no such sandbox in Viet Nam to date.

The director called for regulatory reforms to fix the legal gaps, laying a solid groundwork for the development of fintech in the country.

Nguyen Quang Dong, head of the Institute for Policy Studies and Media Development, said the legal framework in Viet Nam had been slow in adapting to the fast-growing fintech sector. The resistance to change has reduced the sector's growth rate by half.

As such, he urged fintech firms to focus not only on the quality of their products but also on the legal aspect. He also called for the establishment of a legal department under the Vietnam Financial Consulting Association, which would be tasked with supporting fintech firms legally.

He also called on lawmakers to align the legal framework with international norms and standards to pave the way for a sound, up-to-standard fintech sector.

Nguyen Van Tuan, chairman of eCap Holding, said the consumer finance segment is lucrative because it has a potential revenue of VND43 quadrillion (US$1.8 trillion).

As the conventional financial system cannot single-handedly cover the segment, a portion of the pie has fallen to the unconventional one. For example, workers in need of money before payday usually rely on unofficial channels to pay their bills.

"That's when fintech firms come into play," said Tuan.

The chairman has an optimistic outlook on the fintech sector but is also concerned that the regulatory gaps have put obstacles in the way of fintech firms trying to go big.

He urged the establishment of a legal board to help fintech firms who are scratching their heads about the legal framework.

He also urged consumers to be more open-minded toward unconventional finance to give fintech firms more room to flourish. — VNS