Lao Dong Newspaper would like to introduce the speech of Associate Professor, Dr. Dang Ngoc Duc - Director of the Institute of Financial Technology, Dai Nam University at the Workshop on Cross-border Payment and Online Loan - Digital Utilities for Business and Consumption organized by Lao Dong Newspaper in coordination with the State Bank of Vietnam.
Advantages of online lending
Online lending is a product or result of the digitalization of traditional lending processes of commercial banks. Thanks to the application of technologies such as electronic customer identification (eKYC), application of artificial intelligence (AI) in credit rating, Big Data analysis, electronic contracts... online lending completely automates the stages of credit appraisal, approval and disbursement, thereby saving time on loan application processing, reducing operating costs and expanding access for borrowers.
Online lending in today's era has many advantages. First, online lending helps commercial banks expand their retail credit market share. Online lending allows commercial banks to reach individual customers, small and micro enterprises, which is a very potential and large-scale market in the economy of every country. Online lending allows banks to reach new customers, especially the younger generation, those who prefer to use high technology and individuals who have never used traditional banking services. Online lending helps remove geographical barriers and administrative procedures, especially useful for customers who have no credit history or live in remote areas.
Second, optimize operating costs and improve lending efficiency of commercial banks. Many commercial banks use an automatic loan opening system (RLOS), allowing for application processing in a very short period of time, even just a few minutes. This not only improves customer experience but also reduces operating costs, human resources and paperwork.
Third, based on the exploitation of big data (DA), the support of artificial intelligence (AI) and the Internet of Things (IoT) has helped the risk management of commercial banks become more effective. Online lending is essentially a digitalization of the lending process, but it is also a change in the way credit risk is measured and assessed. Instead of relying on paperwork and passed data, online lending with the support of new technology, banks can not only analyze consumer behavior, transaction history, social network data to assess the ability to repay debts in real time but can also predict the potential risk level of each customer, allowing personal loans with the most suitable conditions and risk management methods.
Fourth, online lending plays an increasingly important role in promoting the comprehensive financial strategy of countries, especially in developing countries. Online lending contributes to promoting financial inclusion an important goal in sustainable economic development of almost every country.
Fifth, online lending will contribute to raising awareness of personal responsibility and community spirit of people as well as businesses.
Current situation of online lending development in Vietnam
In recent times, especially in the past 10 years, online lending has become one of the fastest growing segments in the global financial industry. According to the global analysis and forecast report for the period 2019-2029 of Mordor Intelligence (2024), the scale of the global digital lending market (including online lending from commercial banks and P2P lending) is expected to reach 889.99 billion USD by 2029, up from 507.27 billion USD in 2024, with an average annual growth rate (CAGR) of 11.9%. Agreeing with the above report from Mordor Intelligence, reports from McKinsey (2024) and Ernst & Young (2023) also show that in the context of strong digital transformation taking place in almost all countries, consumers increasingly expect a digital experience, while banks need to restructure operating models to compete with financial technology companies (Fintech). Accordingly, commercial banks have increased the use of data and artificial intelligence to personalize financial services in general, including online lending.
With the State Bank's orientation to increase online lending, it can be expected that this type of lending will continue to be expanded, especially in the field of consumer loans, SMEs and MSMEs loans, especially non-guaranteed loans. The trend of online lending is not only an opportunity, but also a strategic solution for commercial banks to approach and dominate the market segment with the largest scale and potential of the Vietnamese economy in the digital financial era.
The legal basis for online lending of Vietnamese commercial banks is gradually being completed, creating a solid foundation for the widespread implementation of credit granting in the digital environment. The two most important legal documents can be pointed out, Circular 06/2023/TT-NHNN issued by the State Bank, amending and supplementing Circular 39/2016/TT-NHNN, in which for the first time specifically regulating lending activities by electronic means. Second, Decision 810/QD-NHNN on digital transformation of the banking industry by 2025, with a vision to 2030, also plays a strategic orientation role, setting a target of having at least 50% of retail loans implemented in the digital environment by 2025. The completion of this legal corridor helps commercial banks feel secure in implementing digital credit products, while ensuring transparency, safety and efficiency in credit granting activities.
It can be seen that these are important legal bases, creating a corridor for commercial banks to implement completely digital lending processes, including eKYC, electronic contracts, and online disbursement... allowing credit institutions to lend online without having to meet customers directly. The loan contract can be signed electronically, using a digital signature or electronic signature. The lending process includes: eKYC, automatic application approval, and disbursement via digital account. Expanding the lending scope to serve living needs such as buying a house, renovating a house, and transferring land.
The report of the State Bank of Vietnam (2024) shows that as of March 2024, credit institutions have implemented online lending, with an approval period of only 13 days, in which some typical products are provided by commercial banks. Vietnam in the period of 2021-2025 shows that commercial banks have digitized the process of implementing online unsecured loans, installment loans, savings books... with a completely online process. The demand for online loans is increasing, as people are increasingly familiar with digital transactions, especially young customers, small businesses and freelancers.
By 2025, online lending has become an indispensable part of the digital financial ecosystem of commercial banks. Many banks recorded outstanding growth rates from digital channels far exceeding expectations, while expanding the scope of service to rural areas and remote areas - places that previously had difficulty accessing traditional financial services. Integrating artificial intelligence (AI), Big Data and machine learning into the credit approval process helps reduce risks, speed up file processing and improve customer experience. It can be said that the period of 2021-2025 is a pivotal period, laying the foundation for a stronger, more transparent and comprehensive digital credit market in the coming years.
According to the State Bank's Report by the end of 2024, there are only less than 20 credit institutions implementing online lending, of which Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam Prosperity Joint Stock Commercial Bank (VPBank), Military Commercial Joint Stock Bank (MB), Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV) and Vietnam Industrial and Commercial Joint Stock Bank (VietinBank) are the pioneers. Strong growth in online lending thanks to digital transformation of the online banking industry has become one of the bright spots of the digitalization of the financial - banking industry in Vietnam and the forms of online lending implementation are increasingly diverse when compared to online lending models in Vietnam.
There are many challenges and difficulties
Analysis of the online lending situation of Vietnamese commercial banks shows that although it has been identified as an inevitable trend, with a rapid development rate in the period of 2021-2025 and there is still a lot of potential/ space for development, online lending of Vietnamese commercial banks is still facing many difficulties and challenges, which need to be identified as follows:
First, legal challenges and risk control requirements. Circular 06/2023/TT-NHNN is considered an important milestone in legality, but many regulations related to electronic contracts, dispute handling, personal data protection and customer authentication have not been fully issued, so the determination of legal responsibility when a dispute arises is still vague.
Second, the lack of data and technology to analyze customer behavior, high credit risk and fraud. One of the advantages of online lending is the ability to serve customers who do not meet normal lending standards in terms of both collateral and credit history. While the credit scoring system of many banks still only relies on traditional data, it has not effectively exploited non-financial data such as consumer behavior, social networks or telecommunications data. This reduces the accuracy of online application approval.
Third, awareness and limitations of customer trust. In Vietnam, in addition to customers who are not well aware, many customers are very hesitant/concerned about the legality of electronic contracts, the security of personal information and the ability to support when disputes arise, because as mentioned above, there are currently no detailed regulations on electronic contracts, digital signatures, and online loan data storage.
Fourth, competitive pressure from Fintech companies and non-bank financial institutions. Providing online lending services, electronic payments and invested finance, Fintech Vietnam companies such as MoMo, Tima, or P2P Lending platforms are developing strongly, providing fast, flexible loan products, without collateral. This creates great pressure for commercial banks that have a strict risk control process and strict compliance with the regulations of the State Bank.
Completing legal procedures and increasing investment in technology application
To promote the sustainable, effective and safe development of online lending, Vietnamese commercial banks need to have synchronous solutions between technology - engineering and finance. Based on the difficulties and challenges presented above, 5 key recommendations can be studied and implemented by management agencies and commercial banks to remove existing barriers and facilitate the development of online lending for Vietnamese commercial banks in the coming time as follows:
First, perfect the legal framework and promote a controlled testing mechanism: Supplement regulations related to electronic contracts, customer authentication, data storage, dispute handling and personal information protection. The issuance of a separate legal framework for the P2P Lending model is also a necessary step to facilitate the commercial banks to expand to a new form of credit granting. Although there is a controlled testing mechanism (sandbox) according to Decree 94/2025, there should be detailed instructions and a strict monitoring mechanism while encouraging commercial banks to participate in testing new digital lending models, thereby assessing risks and effectiveness before mass deployment.
Second, increase investment and application of digital technology in the entire lending process: MVs need to upgrade the core banking system, integrate AI, Big Data, machine Learning, Blockchain, AI and IoT to automate the approval process, risk management and personalization of loan products.
Third, proactively and actively cooperate strategically with reputable Fintech: commercial banks strengthen linkages with technology companies to take advantage of platforms, algorithms and data to optimize the lending process. The multidimensional connection will help the bank expand the market and improve operational efficiency. On that basis, develop a digital financial ecosystem to integrate online lending with other services such as payment, insurance, and investment to create a seamless (comprehensive) experience for customers. This helps increase the retention rate and expand the transaction value with customers of the Bank and Fintech's customer platform to increase market share on the basis of clear cooperation in security, authentication and data sharing.
Fourth, enhance communication activities, raise awareness of customers.
Fifth, training and retraining to develop human resources to meet the requirements of online lending development. Bank branches need to focus on improving professional capacity, digital thinking and online credit system management skills for banking staff, from management level to professional staff. At the same time, form a workforce capable of interdisciplinary coordination between finance, technology and risk management on the basis of training and retraining human resources.
Online lending is an important step forward in the process of financial digitalization, bringing many benefits in terms of time savings, costs and especially increasing financial access.
However, to make this form truly effective and sustainable, there needs to be synchronous adjustments in legal and state management, infrastructure investment strategies and technology application in lending activities of commercial banks. Moreover, the development of online lending cannot rely solely on technology, but must be placed in a safe, transparent and responsible digital financial ecosystem.
Therefore, the development of online lending needs to be carried out with strict control of personal data security and transparency of the credit approval process based on the responsible application of technology, avoiding unconscious favor and ensuring fairness in access to capital.
Finally, the formation and development of a team of personnel with the ability to deploy and operate the online lending system effectively, safely and creatively is still a decisive factor, not only minimizing operational risks, fraud and errors in the digital credit granting process but also rapidly increasing the speed of new product implementation, improving customer experience and enhancing the competitiveness of commercial banks in the digital era.
