Vietnam’s fintech market is estimated to increase from $4.4 billion last year to $7.8 billion by 2020, driven by rising bank penetration, according to research of Solidiance.
According to the white paper “Unlocking Vietnam’s Fintech Growth Potential” released recently by the APAC-focused consulting firm, Vietnam’s fintech market is poised for growth thanks to surging internet and smartphone penetration, burgeoning e-commerce sector, an increasingly supportive regulatory environment, and improvements in telecom infrastructure.
Fintech is disrupting Vietnam’s financial services ecosystem. As the country aims to move towards a cashless society, Vietnam’s government targets to reduce cash transactions to 10 per cent and increase bank accounts in the population by 70 per cent in 2020.
Although bank penetration in Vietnam is consistently growing, it still trails other Southeast Asian nations in the region. Vietnam’s ratio of banked citizens only reached 59 per cent in 2017 while Thailand and Malaysia accounted for 86 per cent and 92 per cent respectively in the same year. As Vietnam catches up with other neighbouring countries, increasing internet and smartphone penetration, improvements in telecommunication infrastructure (3G & 4G), and growing income levels from the middle-class have significantly given rise to opportunities in Vietnam’s fintech space.
Among the three different fintech product segmentsdigital payment, personal finance, and corporate financedigital payment solution leads the fintech service market share at 89 per cent. However, personal and corporate finance is expected to grow at a faster rate through 2025.
Vietnam’s burgeoning e-commerce sector with growing order value has further promoted intermediary payment platforms and digital payment services. Currently, there are some 35.4 million online shopping users and it is expected to accelerate to some 42 million, accounting for 42.5 per cent of the projected population by 2021. The average spend of $62 online will grow to $96 by 2021 and Cash on Deliverythe major means of paymentis expected to be replaced by digital payments & other modern payment methods, signifying ample opportunity for fintech firms to tap into.
According to Solidiance, although fintech has garnered considerable market attraction, barriers persist. Challenges including lack of regulatory clarity, capital limitation, management knowledge constraints, and trust issues must be observed in Vietnam’s financial services industry. At present, the National Payment Corporation of Vietnam (NAPAS) is the sole payment service provider for fintech and e-commerce innovation in Vietnam. Peer-to-Peer lending platforms are growing but only banks and credit institutions in Vietnam are legally allowed to operate in the lending business.
Furthermore, many local fintech companies are largely lacking capital resource to carry out their business plan. Operational and management capabilities are hindered by knowledge constraints, especially for fintech start-ups. Building a strong reputation around an unknown brand like a start-up can be slow to build and may take significant investment, time, and energy.
http://bizhub.vn/tech/viet-nams-fintech-industry-to-reach-nearly-us8bn_295107.html
