Was it true that foreign financial technology companies (fintech) set up branches, cooperate with domestic legal entities to compete with Vietnamese banks?
Fintech and the trend of ‘digital life’
The fact that Grab was embarking with Singtel Telecommunications Group of Singapore for the license to provide digital banking services, and the upcoming Singapore approval, was posing a lot of speculation about the strategy of the enterprise in Vietnam market. In fact, Grab’s Grab by Moca e-wallet had quickly owned millions of customers and had the potential to expand into a digital bank if licensed.
Talking to reporters of the Investment Review Newspaper, Claude Spiese, digital technology consultant of GrantThornton Company, said that fintech becoming an independent digital bank was an increasingly clear trend. In many countries and regions in Asia such as Hong Kong, Singapore, Malaysia, fintech often cooperated with major financial groups or telecommunications companies to form digital banks.
Prior to Grab, five years ago, in China, Tencent Group and Alibaba were licensed to set up virtual banks, namely Webank and Mybank. In Europe, the popular fintech N26 was also licensed to operate digital banking in many countries. The common point of these virtual banks was that there were no branches, ultra-fast approval online, targeting consumer loans and small and medium-sized businesses, gaining market share very quickly.
In Vietnam, Nguyen Hoa Binh, Chair of NextTech Group, said that it was very difficult for Grab or any e-wallet licensed to establish an independent bank in Vietnam. However, there was a possibility that Grab or any other digital wallet would be licensed to set up a digital bank abroad, then under international cooperation agreements to open branches or banks in Vietnam.
Binh recommended some foreign enterprises were researching on this issue. Thus, the management agencies needed to study carefully, avoiding the domestic financial market belonging to the foreigners.
The leaders of some e-wallets were also worried, with the trend of being licensed as an independent bank, more and more foreign fintech would reach out to penetrate the Vietnam market in many forms. That would greatly threaten not only young domestic fintech but also experienced banks.
The market was wide open with fierce competition
Coincidentally, when talking to reporters of the Investment Review Newspaper, both the general director of an electronic wallet and the Chair of the Board of directors of a bank had repeatedly proposed the State Bank of Vietnam (SBV) to cooperate with a Chinese virtual bank to provide services to Chinese people coming to Vietnam for tourism, work, study, and vice versa. Still, this proposal had not yet been approved. This showed that banks and fintech had all noticed the heat of foreign fintech.
According to Claude Spiese, Vietnam could be proud of the excellent domestic digitisation level of banks, and technology had been not inferior to developed countries in the world. However, that did not mean Vietnamese banks could ignore their competitors, especially the fintech from foreign countries.
In fact, despite the big digitisation, banks were losing their special position. More and more domestic and foreign fintech were allowed to enter the market, the regulations were also more open, allowing fintech to provide more financial and banking services. Accordingly, in addition to payment, the two fields almost exclusively provided by banks, credit and deposit mobilisation, would also appear more and more opponents, such as P2P lending, crowdfunding. Besides, Mobile Money also could join this playground shortly.
It was common for foreign fintech to enter Vietnam quietly in the form of ride-hailing, delivery, food delivery, etc., then gradually invading the financial market. In 2018, a foreign fintech had launched a loan service with a driver, fined hundreds of millions of dong by SBV. That might happen again with the influx of foreign fintech into Vietnam, where the non-cash payment was becoming a trend.
