Vietnam will implement a population database for the country’s banking sector, which is aimed at easing personal identification and e-Know Your Customer ( e-KYC ) processes. 

The decision by the State Bank of Vietnam ( SBV ), the central bank, is in line with the country’s national digital transformation plan for 2030. 

The database plan, which spans from 2022 to 2025, seeks to drive the digital transformation of the banking sector, particularly in improving legal frameworks for cashless payments and e-KYC. 

SBV governor Nguyen Thi Hong says the central bank will coordinate with relevant ministries and agencies to revise and improve the existing draft decree on cashless payments. The SBV will also release a circular that will serve as guidance for its implementation.

Over time, the SBV hopes to integrate the national population database with the central bank’s public services, utilizing it for anti-money laundering measures. The SBV will also develop a related national database of state officials and civil servants working in state agencies.

Online payments

Once the national population database is in place, payouts for government beneficiaries can also be coursed through digital means “to facilitate efficient and transparent disbursement of government benefits”, SBV says.

In an earlier conference organized by the SBV and the Ministry of Public Security, the two agencies discussed the importance of keeping the national population database secure. 

Lieutenant General Nguyen Duy Ngoc, deputy minister of the Ministry of Public Security, notes that while the database can enhance the digital economy, there is also a need to ensure safe banking operations.

Nguyen highlights the need for close coordination between the SBV and the Ministry of Public Security “to ensure the safety and security of banking activities and the National Population Database, and to improve the legal frameworks for effective implementation”.

Meanwhile, the central bank chief says digitalization has changed the structure of financial services, “providing new and modern products and services” that facilitate people's access to finance and banking services.

Coordination between the SBV and the Ministry of Public Security has already kicked off with the implementation of a public service system that ensures safe data handling, the clearance and verification of customers' credit information, and the pilot provision of e-KYC solutions using chip-based ID cards for transactions at banks, SBV’s Nguyen says.

Lagging behind

While still lagging a bit behind its Southeast Asian neighbours, Vietnam has experienced significant growth in digital banking in recent years, aided by the rapid development of technology and increasing internet penetration. 

The government’s National Financial Inclusion Strategy for 2020-2025 aims to further improve access to and usage of financial services for all segments of the population, including women, low-income households, and rural communities.

The government has also established a legal framework and regulatory environment to support financial inclusion and promote innovation in financial services. However, despite the current efforts of regulators, the country still lags behind neighbours when it comes to open banking adoption.

With the national population database, Vietnam’s socio-economic development can be accelerated, the SBV says. While the pandemic sped up digital adoption in the country, data from the World Bank's Global Findex Database indicate that only approximately 40% of Vietnamese have a formal bank account.

Under the government’s national population database plan, the SBV aims to issue chip-based ID cards and electronic IDs, which can be used to support banking operations, such as opening bank accounts digitally.