Vietnam's central bank proposes using credit scoring to manage banking activities

HANOI, May 22 (Xinhua) -- The State Bank of Vietnam has proposed using credit scoring to better manage the banking sector and promote the development of finance and fintech companies, Vietnam News reported Wednesday.

The newspaper cited Chau Dinh Linh, a lecturer at Ho Chi Minh City Banking University, as saying that the credit scoring model was a tool that helps lenders know when to lend, in what amount and what strategies to build to increase profits while still managing lending risks.

Credit scoring has many other direct benefits such as improving capital flow, improving liquidity, understanding customer behavior, diversifying financial products and determining banks' credit risk appetite, he said.

Nguyen Huu Huan, lecturer at Ho Chi Minh City University of Economics, suggested the management authorities should carefully select companies that are allowed to participate in the credit scoring sandbox to avoid the establishment of too many credit rating organizations, causing information confusion in the market.

The first credit scoring model in Vietnam following international standards was introduced by the National Credit Information Center in 2015.

In addition to the center's credit scoring model, Vietnam's commercial banks, financial and fintech companies currently use many different methods to score credit while there is a growing trend for using AI and big data in setting a credit score.