Facial scan to buy banh mi? That’s not too far off in Vietnam

For the past two weeks, Vietnamese bank users have been grappling with a new payment rule that requires facial scans for domestic bank transfers exceeding 10 million dong (US$393).

This confusion led consumers to flock to their local branches as some banking apps either crashed or displayed errors. Some users even reported fooling facial biometric authentication systems using photos instead of their real faces.

Facial scans, though expected to raise costs for all financial institutions, will likely hit smaller fintech players harder, according to industry players speaking to Tech in Asia. Concerns also linger about how this new biometric data will be handled.

Night time view of Ho Chi Minh City, Vietnam / Photo credit: Shutterstock

More trust, more business?

Vietnam’s biometric authentication process compares a user’s facial scan from their smartphone with a national identification database. If the scans match, the transaction is authenticated and approved.

This is considerably safer for users and yet more onerous for banks than, for example, Apple’s Face ID, says Christian Nguyen, CEO of Wee Digital. Whereas each iPhone uses Face ID to authenticate one user as the owner of a phone, banks have to check a database of millions of possible account holders.

While the new regulation has brought the tech into the spotlight in Vietnam, Nguyen says his company has been providing banks with facial verification services for the last six years. “We are shifting the responsibility that the device has, and that Apple has, to the banks, and that is a huge concept,” he explains.

According to Nguyen, Face ID and similar services only confirm that the phone’s owner is trying to make a transaction, whereas Vietnam’s new regulation requires verifying the actual account holder for each transaction. This difference is crucial, he says, as the former leaves greater room for fraud.

Online fraud was estimated to cost Vietnamese consumers up to 10 trillion dong (US$393 million) in 2023, one of the main reasons behind the State Bank of Vietnam’s new biometric authentication requirement. An appeal court in the northern province of Bac Ninh recently ruled against a woman who sued Vietcombank and Techcombank for negligence after she was defrauded of more than US$1 million by a scammer.

Biometric authentication can add “a little bit of friction” for banks and require consumers to do more work, but “it’s in the best interest of the financial system,” says Niraan De Silva, CEO of fintech company VNLife.

The firm runs VNPay, which provides several Vietnamese banks with a facial authentication solution used in the electronic know-your-customer process.

(right) Niraan De Silva, CEO of fintech company VNLife/ Photo credit: Tech in Asia

VNPay’s solution is also being used by financial institutions to authenticate transfers above 10 million dong, De Silva says.

Ongoing concerns persist