Financial Inclusion and Credit in Vietnam
About the author: Julie Gu is currently a second-year masters student at Stanford University in the Ford Dorsey Master’s in International Policy (MIP) concentrating in Governance and Development.
This past summer, I was interned at Nova Credit, a financial inclusion startup in San Francisco. The company works to help immigrants transport their credit history around the world by building integrations with credit databases internationally. Nova Credit’s mission can be summarized by the catchphrase: “People move. Credit history doesn’t. We are changing that.”
Ever since my internship at the company, I’ve been interested in official and alternative credit data and how these data are generated and used by financial institutions around the world. In particular, I wanted to learn more about the operations of credit agencies in Vietnam.
Thanks to the generous support of Ford Dorsey’s Masters in International Policy (MIP) program, I was able to meet with two separate credit agencies in Hanoi, Vietnam on December 24, 2018: Private Credit Bureau (PCB) and the Credit Information Center (CIC). PCB is Vietnam’s private credit bureau (hence the name) and has been granted the license to operate by the country’s central bank, the State Bank of Vietnam (SBV). On the other hand, CIC is Vietnam’s public credit registry and a government agency under the supervision of SBV.
Jointly owned by formal banks and consumer finance companies in Vietnam, PCB offers commercial and personal credit data to financial institutions at a cost. Similar to that of the United States, Vietnam’s law requires PCB to provide consumers with a copy of their credit report once a year for free.
Individuals would visit PCB’s office in the French Quarter of Hanoi to request a copy of their credit report. Identity is verified using solely Vietnam’s national ID card, which consists of a person’s name, gender, permanent address and a unique ID number. In recent months, PCB has been exploring facial recognition as a way to remotely verify the identity of a consumer and is looking to launch a pilot program in early 2019.
Moreover, PCB allows consumers to dispute the data on their credit report by calling or e-mailing the credit bureau. PCB then has ten business days to reach out to their source and return a response to the consumer. As for the actual credit report, PCB reports positive (tradeline and payment history) as well as negative (delinquency and default history) data.
Staffed with government officials, CIC collects, processes, stores and analyzes credit data with the goal of supporting SBV supervision functions. CIC’s immense database maintains credit data on over 30 million Vietnamese borrowers, which constitutes about a third of the country’s population. It was revealed at the meeting that CIC has been partnering with South Korea’s credit bureau called NICE (National Information and Credit Evaluation) Group to create a consumer score for the public credit registry.
CIC is also a participant in the Mekong Cross-Border Reporting Initiative that was launched in late 2016 under the leadership of the International Finance Corporation (IFC) and the Business Information Industry Association (BIIA). The Initiative aims to establish an exchange infrastructure for Southeast Asian countries like Vietnam, Thailand and Cambodia, to share credit data with one another. Yet, given all of the regulatory complexities involved with exchanging data across borders, the Initiative has been slow to progress.
Overall, I was grateful for the opportunity to gain a deeper understanding of the operations of credit agencies in Vietnam. It was exciting to be learning about what the Vietnamese government has been doing to try to address the financial needs of the country’s population.
