personal process report currently the state bank of vietnam is in the research phase of digital currency issued by the central bank cbdc

NATIONAL UNIVERSITY — HO CHI MINH CITY UNIVERSITY OF LAW AND ECONOMICS

PERSONAL PROCESS REPORT

Subject: Digital Bank

Supervisor: PhD Lé Due Quang Tu Student: Lé Minh Tu

ID number: K204041254

Ho Chi Minh City, January 19, 2024

NATIONAL UNIVERSITY — HO CHI MINH CITY UNIVERSITY OF LAW AND ECONOMICS

PERSONAL PROCESS REPORT

Subject: Digital Bank

Supervisor: PhD Lé Due Quang Tu Student: Lé Minh Tu

ID number: K204041254

Ho Chi Minh City, January 19, 2024

CONTENTS

Question |: Currently, the State Bank of Vietnam is in the research phase of digital currency issued by the central bank (CBDC) As a fintech expert, please give recommendations on which CBDC design architecture is most suitable based on Vietnam's socio-economic situation and conditions? 0 0.cccccccccceesecetsceeenteeeseeeesaes 1 Question 2: Currently, bank - fintech cooperation is increasingly popular in the world However, cooperation between banks and fintech in Vietnam is still quite limited What is the reason for this limitation? As a banking and fintech consultant, you often make some recommendations to help promote this cooperation -< 2 1 Some reasons why cooperation between banks and fintechs in Vietnam 1s still quite I0 — B 2 2 Recommendations promote the cooperation between bank and fintech 4 Question 3: With the payment segment becoming increasingly competitive with the entry of new e-wallets and the digital transformation of traditional financial institutions, the market share of Viettelpay e-wallet is facing many challenges As an expert in e-wallet development strategy, please give some recommendations based on Viettelpay's experience and practical situation to help Viettelpay increase its competitiveness and sustainable developrmeiit - - + - c5 22 2222212221221 2212211512 5

Question 1: Currently, the State Bank of Vietnam is in the research phase of digital currency issued by the central bank (CBDC) As a fintech expert, please give recommendations on which CBDC design architecture is most suitable based on Vietnam's socio-economic situation and conditions?

As a fintech expert, recommendations on appropriate CBDC design architecture based on Vietnam's socio-economic conditions and conditions:

With current socio-economic conditions, not most people trust and are willing to use digital currency Digital currencies have a low level of acceptance compared to traditional, fiat currencies According to UNFPA, Vietnam is in the period of "golden population structure" with 70% of the population in the age group from 15 to 24 years old This is a group that is willing to innovate and absorb technology products, not including those in areas with limited exposure to technology Therefore, the number of Vietnamese people willing to use CBDC is quite small and not yet popular The majority of people have faith in commercial banks and commercial banks play the role of connecting the Government's policies and innovations to the people Therefore, issuing CBDC from the Central Bank and distributing it through commercial banks is necessary, helping to increase trust as well as support the popularity of this currency among the people We can learn from the 2-level issuance and distribution of DCEP: (1) The first level will be the issuance of DCEP from the Central Bank to commercial banks and non-financial organizations such as Alibaba, Tencent and UnionPay ( intermediary organizations) (2) The second level will be the distribution of DCEP from the above-mentioned intermediaries to end users such as companies and individuals (Li and Huang, 2021)

The need for online, non-cash payments has become popular in recent years, especially after the Covid-19 period Since then, the trend of people paying through bank transfers and scanning QR codes with phones connected to the internet has become increasingly popular Therefore, CBDC also needs to have features like Vietnamese electronic currencies to meet current innovation needs However, there are still a large number of people who are loyal to offline payments CBDC's ability to include offline payments will completely satisfy the two customer flows mentioned above In addition, the State also needs to create a certain connection between the digital currency issued by the State and the current currency to ensure stability for the economy when deploying two different types of currencies

In recent years, it can be seen that Vietnam is increasingly exporting to foreign countries, especially in the manufacturing and service sectors The fact that domestic businesses conduct goods and service transactions with countries around the world

contributes to raising and promoting the need for currency exchange between businesses and individuals in different countries Therefore, the CBDC needs to be designed to be able to operate as a cross-border currency independent of the SWIFT system

With increasingly diverse investment needs, CBDC also needs a system to transfer money directly and quickly between fields from banking to securities, insurance, etc This helps improve utility and meet the needs of customers meet the needs of the people

It is necessary to upgrade the national digital infrastructure to be compatible with the issuance of CBDC in Vietnam Learning from countries that have piloted and launched CBDC is especially useful for Vietnam, to minimize difficulties and obstacles during the research and development stages of CBDC In addition, improve the level of science and technology, improve the level of management using information technology in management, in banking service activities, and payment services in social life

It is necessary to develop digital currency development policies and legal policies on digital currency management It is necessary to have a legal policy according to a step-by-step roadmap, specifically identifying, defining and recording in the law on digital currency; recognizing digital currency as a new asset class, with unique characteristics; develop financial policies related to digital currency such as tax policy and digital currency circulation policy; develop a policy to control transactions in digital currency

Question 2: Currently, bank - fintech cooperation is increasingly popular in the world However, cooperation between banks and fintech in Vietnam is still quite limited What is the reason for this limitation? As a banking and fintech consultant, you often make some recommendations to help promote this cooperation

1 Some reasons why cooperation between banks and fintechs in Vietnam is still quite limited

According to Nguyen Hong Nga, 2020 In Vietnam, the majority of commercial banks have signed agreements with a few fintech companies to provide payment and money transfer services to customers such as: money transfer service on phones provided by Joint Stock Commercial Bank The army combined with Viettel to implement; Many commercial banks link with Momo wallet to develop e-wallets;

VPBank cooperates with VNPay, Bankplus, to promote online payment and banking transactions; VietinBank cooperates with 7 Fintech companies to provide products and services with outstanding modern technology However, the cooperation between banks and fintechs in Vietnam still has many limitations, due to:

In terms of policies and regulations: Currently, Vietnam does not have appropriate management policies and orientations from the state to promote financial technology companies to operate in a healthy environment, promoting finance comprehensive, sustainable finance Meanwhile, in Singapore there is a SandBox mechanism (area for testing new business models and ideas) to create conditions for fintech startups to test operations When these startups prove effective, the state and large banks quickly license and acquire these solutions to bring to market The legal and financial regulatory system in Vietnam can create barriers to cooperation between banks and fintechs The lack of clarity and flexibility in regulations can make it difficult for both parties to implement joint projects

Regarding security and risk management: Banks often give high priority to the security of banking information, customer information, and ensuring internal network security Fintech, with new methods and technologies, may have difficulty meeting the security and risk management requirements set by banks The challenge of security and safety of banks in this cooperation is emphasized more than ever

Regarding technology integration capabilities: Banks often use long-term, complex systems and technologies that are difficult to integrate with new fintech technology platforms This can slow down the process of cooperation and implementation of joint projects In the process of cooperating with fintech, it is necessary to integrate some technology software between the bank and fintech May lead to changes in personnel and management structure; restructuring the human resources team and innovating internal management

Regarding organizational culture and attitude: Fintech has a difference in organizational culture compared to banks Banks have a strict, rule-following work culture that can clash with the flexible, innovative and agile culture of fintechs

Psychologically: Fintech has now appeared and penetrated many areas of banking activities Among them, two prominent areas are lending and payment, focusing mainly on individual and corporate customers, which are the strengths of the banking industry In addition, many financial technology companies today have built high trust from customers Therefore, Fintech can be a direct "nval" of banks Competition between fintech and banks can create a sense of non-cooperation

between these two organizations

It can be seen that banks are considered reputable financial intermediaries for customers, have large customer data, have long-standing brands, have enough finance and operating experience in the field Meanwhile, Fintech companies have advantages in technology, innovative ideas, flexible organization, and infrastructure, but fintech companies often lack the ability to expand their customer base and lack reputation brand to quickly develop the market However, if the cooperation between banks and Fintech companies does not create a big difference, positive results for the bank's customer group; Customers do not really use Fintech services every day, this is also one of the reasons leading to limited cooperation between these two organizations

In addition, a small number of financial technology companies believe that the scale of the companies is too small compared to banks, the legal system is not really complete, and complex cooperation procedures are also one of the problems Bankers limit the cooperation process of both

2, Recommendations promote the cooperation between bank and fintech To promote banking - fintech cooperation, the State Bank's Fintech Steering Committee needs to have projects to test the operation of financial technology in the banking sector, need to perfect the ecosystem and create favorable conditions conditions for this cooperation Besides, it is necessary to have strategies, development orientations and encourage cooperation and healthy competition between banks and Fintech; It is necessary to have a connection standard between these two organizations

Because information security is still one of the limitations of cooperation between banks and fintech companies Therefore, banks need to have plans to ensure customer data and information provided to fintech companies, monitor data sources and have strict policies to secure customer information Fintech companies need to put issues related to customer information security first Ensuring information security helps the parties strengthen their reputation and trust with customers, and this is also the premise and foundation to help the parties participate in cooperation

In recent years, hundreds of cases involving hackers taking over through cyber attacks have involved fintech In addition, the explosion of 5G and loT technology means that the risk of attacks on 5G devices and networks is present Therefore, fintech companies need to ensure that they limit and overcome crimes related to cybersecurity, enhance and improve the quality of risk management and contribute to national financial stability

We need a team of staff with multi-disciplinary skills and knowledge, capable of working closely and effectively The staff is not only highly specialized in the banking field but also knowledgeable and can apply technology to create positive values for this cooperation, increasing convenience for the bank, Fintech companies and customers Training and improving human resource qualifications is essential to help support the results of cooperation between banks and fintechs

Understanding, accepting and being flexible about organizational culture from both sides is important in the cooperation process Dp attitudes and organizational culture can slow down this collaborative process, especially when one party is unwilling or unwilling to adapt to change

Be aware of the effectiveness and positive results for both banks and Fintech companies, ignore the psychology of not wanting to cooperate because they think both are competitors It is necessary to have specific strategies and cooperation plans, to set and jointly realize common profit goals

Question 3: With the payment segment becoming increasingly competitive with the entry of new e-wallets and the digital transformation of traditional financial institutions, the market share of Viettelpay e-wallet is facing many challenges As an expert in e-wallet development strategy, please give some recommendations based on Viettelpay's experience and practical situation to help Viettelpay increase its competitiveness and sustainable development

Some recommendations to help Viettelpay increase competitiveness and develop sustainably as it faces increasingly fierce competition with the entry of new e- wallets and the digital transformation of traditional financial institutions:

Viettelpay's product development and improvement is an important factor to increase competitiveness This will help promote advantages when this is a product with a variety of outstanding and outstanding features:

(1) The supply process is easily accessible to all citizens

(2) Electronic identity authentication (eK YC) and anti-fraud Al methods (3) Simple and quick access

(4) Analyze customer behavior, needs and take better care of customers through the application of Machine learning and Chatbox solutions, etc In addition, creating an exclusive feature, completely different from all other e-wallets will also be a factor to help attract Viettelpay customers

It can be seen that Viettelpay can make default payments for business areas under Viettel group Besides, connecting payments to other units also helps increase competitiveness between Viettelpay and other competitors Viettelpay needs to provide more comprehensive payment solutions such as payment for educational services, hospital bill payments, e-commerce platforms, national service payment gateways, public services, and management fees apartment, condominium

Currently, Viettelpay has features that meet customer needs related to many fields: telecommunications, money transfer, finance, insurance, shopping and entertainment, bill payment, travel and tourism However, in order to increase competitiveness, maintain old customers, and attract new customers, Viettelpay needs to learn and develop more features to meet the diverse needs of today's customers, keeping up with trends customer oriented

Enhance promotions: When customers pay via Viettepay, they give customers Incentives and promotions with Viettel products This will motivate customers to use Viettelpay services, besides, customers can experience other Viettel products:

(1) Receive voucher for payment after paying for products and services through Viettelpay

(2) Allows customers to experience packages when they use Viettelpay's services

(3) Upgrade product and service packages that customers are using but prices do not change

Upgrading customer care services also contributes to customers’ positive view of Viettelpay Need a variety of contact methods: chat, hotline, and free; The staff is on duty continuously so as not to hinder customers’ needs to answer questions

Currently, it can be seen that Viettelpay is also creating breakthroughs to improve consumer experience This will contribute to improving Viettelpay's competitiveness with other e-wallets:

(1) Online shopping with a special interface, customers do not have to remember the location of the stalls but can easily search on "Market Street"

(2) Besides, Viettelpay also has a "virtual" assistant feature that reminds you, limiting the situation of forgetting to pay bills or missing voucher deadlines,

(3) In particular, one of the highlights of Viettelpay is transferring money via syntax and does not require an internet connection This brings convenience to most users in remote areas or users with little network comnection In addition, there is now an additional feature of transferring