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Tuesday, July 16, 2024

Banks find it tough to apply blockchain technology

By Van Phong

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HCMC – Incomplete legal corridors, high investment costs, time-consuming data synchronization and a lack of qualified personnel have made it hard for Vietnamese banks to embrace blockchain technology.

Representatives of banks shared this information at a seminar on October 26.

Blockchain has become a pillar for technology in Vietnam with multiple interesting apps in different sectors such as letter of credit, performance and payment guarantee in banking, origin-tracing in agriculture, diploma management application in training sector.

Therefore, blockchain is gradually understood as technology, rather than bitcoin or digital currency as many were mistaken.

Bank for Investment and Development of Vietnam (BIDV) is one of the banks applying blockchain in trade finance, becoming the first Vietnamese bank to successfully apply blockchain in issuing letter of credit to an out-of-system advising bank. MB, VPBank and Vietcombank have also announced their blockchain application in financial transaction.

According to Nguyen Quoc Hung, general secretary of the Vietnam Banks Association, blockchain development in Vietnam is seeing multiple challenges as there are few experts in this sector, apart from limited awareness of this technology among residents and a lack of infrastructure.

One of the hurdles banks face when applying blockchain technology is the high research and infrastructure investment cost. Furthermore, they need to spend time integrating and synchronizing with other systems and infrastructure, said a representative of Vietcombank.

Commercial banks are currently applying blockchain technology on a trial basis as Vietnam is yet to have a complete legal framework for banking products and services to protect the interests of the transaction-related parties and reduce risks and disputes arising during operation.

Vu Cong Hung, a representative of the Information Technology Department under the State Bank of Vietnam, shared the same opinion, adding that high broadband and storage costs, low processing capacity, security risks and a lack of statutory regulations and qualified personnel are currently the challenges plaguing the application of blockchain.

Though the government has issued documents orienting and inducing the application of blockchain, a completely legal basis is still needed to develop this technology and drive the blockchain technology market appropriately.

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