Women entrepreneurs in Viet Nam have an estimated 1.2 billion USD, but few banks have taken active measures to pursue this market opportunity. (Photo: ADB)

Hanoi (VNA) - The Asian DevelopmentBank (ADB) and Switzerland have signed a cofinancing agreement of up to 5million USD to develop financial technologies (fintech) that can help addresslow financial inclusion in Vietnam, particularly among small and medium-sizedenterprises (SMEs).

This funding,along with a 2 million USD contribution from the Japan Fund for Prosperous andResilient Asia and the Pacific, financed by the Government of Japan, willsupport a technical assistance (TA) project that aims to expand inclusive and climatefinance in the country.

Fintechhas been at the center of the Vietnamese government’s plans to expand financial servicesto consumers and SMEs. The TA will help the State Bank of Vietnam (SBV) tostrengthen the regulatory framework for digital finance, build the capacity ofgovernment and other industry stakeholders, and assist financial institutionsto develop digital banking.

ADB DirectorGeneral for Southeast Asia Winfried Wicklein said financial institutionsrely heavily on collateral-based credit decisions. This disadvantages SMEs,which typically have little or no collateral. Banks also often centralize theircredit processes, making it relatively more expensive to process smaller loans. ThisTA can help find solutions such as alternative credit scoring and introducingdigital lending.

Almost 80% of Vietnam’s population is unbanked or underbanked. Microenterprises and SMEs areparticularly affected, with their unmet financing need estimated at 500trillion VND (around 21 billion USD). Women-owned and women-led SMEs (WSMEs)are even more adversely affected. Women entrepreneurs in Vietnam have anestimated 1.2 billion USD, but few banks have taken active measures to pursuethis market opportunity.

TheTA will help advance women’s financing access, including through the provisionof training opportunities on fintech and green banking best practices to SBVstaff, targeting 25% female participation, as well as consulting services toWSMEs on preparing green loan applications.

Itwill also help SBV refine its policies on green banking and communicate them tofinance sector stakeholders. Green banking is poised to help Vietnam achievethe 11 billion USD annual financing needed to reach net-zero carbon emissionsby 2050.

൲ Headof Economic Cooperation and Development at the Swiss State Secretariat ofEconomic Affairs (SECO) and Switzerland’s Governor to ADB Dominique Paravicini said by enhancing the regulatory environment for innovative fintechsolutions and building capacities of market players in digital finance,Switzerland supports Vietnam in fostering the digital transformation of itsfinancial sector. Ultimately, this will help SMEs in Vietnam to better accessfinance and expand their businesses./.