Solidiance, an APAC-focused consultancy firm, has reported that Vietnam’s Fintech market was valued at US$4.4 billion in 2017 and is forecast to topple US$7.8 billion by 2020, a growth rate of 77% over three years. The factors that are driving Vietnam’s Fintech growth include government regulatory efforts to reduce cash payments and increase the growth of digital payments; high Internet and smartphone penetration rates, an increase in the number of people using e-wallets and increases in e-commerce growth.
In order for Vietnam to realize the United Nations’ goal of promoting financial inclusion, the Vietnam government has rolled out regulations to increase banking penetration, to shift to a digital payment economy, where the cash to total liquidity ratio is 10% or less by 2020.
Vietnam’s economy has grown at an adjusted rate of 6% per annum during the past five years and the economy grew at a 7.08% in 2018. To support the government’s goals, the State Bank of Vietnam (SBV) has created a committee on financial technologies that will support the development of Fintech companies in the country.
Solidiance forecasts continued growth in e-commerce and projects that the number of e-commerce users will reach 42 million per year by 2021 and that average consumer will spend at least $96 USD per year. This compares to 35.4 million Vietnamese e-commerce users in 2017 with the average consumer spending $62 USD online.
The World Bank believes that Vietnam that the predicted growth of the e-commerce industry and the country’s policy to go cash-free will trigger the development and expansion of fintech solutions and that the country is capable of providing the necessary infrastructure and environment for Fintech services due to its high level of Internet and smartphone penetration rates.
Solidiance reports that based upon 2017’s Fintech market volume in 2017 digital payment services accounted for 89% of volume, personal finance was responsible for 9% of the volume, and corporate finance accounted for 2%. Solidiance predicts that personal and corporate finances will account for 24% and 6% of the total market volume by 2025.
In terms of personal finance, fintech solutions will be provided to respond to demand in the peer-to-peer (P2P) lending and consumer finance segment, especially in rural areas. Unlike traditional banking that relies on face-to-face interaction, Fintech solutions make financial transactions easier and faster for everyone and eliminate the need for face-to-face interaction.