Hanoi (VNA) - More organisations are offering new financialproducts and services that are changing the form and nature of the market andare shaping the future of financial inclusion.

This rapid change presents challenges in termsof management, monitoring and risk of information and system security, saidNguyen Thi Hong, Deputy Governor of the State Bank of Vietnam.

“Therefore, it is critical to harmonize thegoals of financial innovation, integration and consumer protection to maximizethe benefits of financial inclusion,” Hong told the Asia-Pacific FinancialInclusion Summit 2017 held in Hanoi on March 21.

Despite great progress made over the pastdecades in financial inclusion worldwide, some two billion adults remainedunbanked, more than half of them in the Asia-Pacific region, she said.

The two-day event brought together over 450 keystakeholders, leaders and practitioners to further the financial inclusionagenda in the region.

Now in its second year, the Summit is organizedby the Citi Foundation and the Foundation for Development Co-operation (FDC) inpartnership with the Banking with the Poor Network and The Economist Group. This year the State Bank of Vietnam (SBV) isofficial host of the summit.

Themed “Advancing Financial Inclusion in aDigital Age”, the summit explored the opportunities and challenges of the nextgeneration of financial inclusion, and showcased the latest technology andinnovations in financial products and services for the unbanked andunderserved.

The deputy governor said Vietnam had been active in common efforts of the internationalcommunity to promote financial inclusion.

“Vietnam will continue to create a morefavourable environment to help people and businesses easily and effectivelyaccess financial services, contributing to economic development and sustainablepoverty reduction,” she said.

She added that in the process of buildingnational strategy on inclusive finance, the Government has focused on women,farmers, small-and-medium-sized enterprises and micro-scale businesses.

Michelle Curry, CEO of FDC called the impactof the digital age on financial inclusion “arguably the greatest financialreform of our time” and added that it was “both encouraging and inspiring tosee such dedication to reform evidenced by the large number of attendees atthis sellout summit”.

“The inclusive finance ecosystem is evolving toinclude not only financial service providers, both banks and non-banks, but newplayers, like mobile money providers and e-money operators, to name a few,”said Brandee McHale, President of the Citi Foundation and Director of CorporateCitizenship at Citi.

“What we will explore at this year’s summit isthe need to balance new innovative technological advances and creativepartnerships with policy that will continue to not only help drive financialinclusion for low-income populations but also protect vulnerable populations,”she added.

Vietnam’s efforts to provide preferential creditto the agricultural sector were also discussed at the summit, as was the factthat few households are eligible for bank loans due to lack of a legalframework for the development of microfinance institutions to help poor peopleaccess financial resources.

Pham Xuan Hoe, Deputy Head of the SBV’s BankStrategies Institute, said microfinance institutions were extremely importantto the country’s agriculture and rural development.

The Government proposed a 100 trillion VNDcredit package by mobilising from commercial banks to support businesses,high-tech agricultural projects and clean agricultural products withpreferential lending conditions.

"However, access to the loans is stilllimited since banks consider their profits while farmers and households oftensuffer weather disasters," he said. "Vietnam only has five licensedmicrofinance institutions while it has more than 12,000 communes."

Hoe said the Government should complete a legalframework to create favourable conditions for development of microfinanceinstitutions.

Le Thi Lan, Director of Community FinanceResource Centre (CFRC) agreed, adding that black credit has been reduced where microfinanceactivities are available.

“However, the number of institutions has beenmodest because of capital shortage, an unsuitable legal framework and a lack ofspecial principles for their operation,” Lan said.

For example, the requirement for high liquidityrate is not suitable to microfinance as most loans are small, and bad debts arefewer. High liquidity requirements would burden capital returns.

She suggested policies to help microfinanceaccess by both local and foreign credits, as well as land and technical supportpolicies.-VNA