Micro-finance has long been known as an important component of the financial system in many countries and is an eﬀective tool for poverty alleviation. Through microfinance, low-income groups and vulnerable groups in society have access to financial products and services. In the process of formation and development, operations and objectives of microfinance increasingly close to the goal of financial inclusion. Thus, microfinance has become an important element in achieving the goal of financial inclusion.
In other words, microfinance development is a precondition for financial inclusion because microfinance focuses on serving the vast majority of the population who are unable to access financial services which previously exclusively oﬀered by banks to high-income customers.
In the past few years, with the rapid change in technology, especially financial technology (also known as Fintech), the microfinance sector has also experienced significant changes as the microfinance institutions themselves also develop their products and services in new and innovative ways. Technology plays a key role in bringing financial services to rural and remote areas of a country where people can not or do not have access to traditional banking – financial services. As a result, transaction costs have fallen sharply and the distance to the point of sale is no longer a compelling reason for the underprivileged to have access to financial services. Financial technology solutions (Fintech) are changing the model of operation of financial service providers. Thus, the use of technologies and solutions for the application of digital technologies can help MFIs not only achieve their growth target by expanding their reach and improving their ﬂexibility but also reducing administrative and management cost which are already expensive. The application of technology and digital solutions helps the MFIs achieve their growth goals by enabling them to broaden their geographic reach, increase product penetration, and gain insights of the customers and improve the performance of product marketing/ service. The use of technology and solutions for digital technology not only helps MFIs achieve their growth goals by expanding reach and improving ﬂexibility but also allows them to reduce operating costs and organizational management.
In the context of Fintech development and the booming trend to promote financial inclusion, the Government and the state management agencies – first of all the State Bank of Vietnam (SBV) – has made a great eﬀort and played a significant role in establishing an appropriate ecosystem and legal framework, enabling MFIs to gradually integrate into the banking and finance system.
However, these eﬀorts have not yet caught up with the potentials, practical needs, and development growth speed in terms of Fintech application for MFIs in Vietnam. In fact, the legal framework for applying Fintech in microfinance activities is only in the first phase, which aims to focus on developing microfinance through a variety of schemes. On the contrary, financial capability, information technology as well as digital information knowledge and management capacity of MFIs are very limited, posing a huge barrier for these organizations to approach and participate in Fintech application field.
Based on these inadequacies, the research team selected the contents of the report to focus on the study of Fintech’s practical application in the operation of MFIs, thereby proposing a number of detailed and practical solutions along with recommendations with the hope to create a “push” to promote the ability of MFIs to apply Fintech in promotion of financial inclusion in Vietnam in the coming time.
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