Global consulting company EY has released a report in early April on Vietnam’s Fintech industry and says that almost $130 million USD was invested into Fintech companies and technologies in Vietnam during 2017.
“The ASEAN FinTech Census 2018” is based on a survey of more than 250 fintech companies across the region and states that: "With a population of young smartphone users, high consumer growth and low unemployment, Vietnam is becoming a promising market for FinTech developers."
Singapore is estimated to have the largest number of FinTech incubators, accelerators and innovation labs in the region. Vietnam is estimated to be in second place with 24 active FinTech companies operating in the country.
Related to Vietnam’s financial environment, the report states that approximately 90% of payments in the country were made in cash and that Vietnamese FinTech companies are focusing on the payments. It is estimated that 47% of Vietnamese FinTech companies are currently working on payment services, the highest rate in the region.
In order to develop the FinTech industry in Vietnam, a “FinTech Club” has been launched and both corporate entities and government ministries are now focusing on creating the legal framework for this service.
Nguyen Thuy Duong, of EY Vietnam is the Vice-Chairwoman and Deputy Director of the Vietnam Financial Technology Club. In a recent interview, Duong noted that Vietnamese
FinTech companies are currently small scale and policies for these companies are lacking.
EY’s report noted that many local banks are interested in “FinTech” but do not have enough information or technical background to accurately understand the technologies involved.
As an example, banks don’t realize that FinTech solutions can help them tap into the huge market of people who do not have bank accounts, but do have smartphones.
The two main challenges for the industry are the lack of government regulations and shortages in staff. Policy support from authorities will form the foundation for a FinTech ecosystem that encourages creativity and healthy competition and allows banks to deploy solutions within a transparent legal environment.
EY’s report notes that many banks want to utilize FinTech solutions and are open to working with FinTech companies to provide digital banking services, instead of developing solutions themselves. It also notes that, “Foreign investors are interested in buying Vietnamese FinTech companies due to the huge market potential."
From the perspective of the banks, outsourcing their requirements to local FinTech companies will will provide them with leading edge FinTech products and services that they can’t develop in-house.
One local banker noted, “We’re very interested in FinTech but aren’t sure what solutions or products we should offer. Many companies have approached us and talked in general terms but have been slow to provide proposals about how we should develop solutions. Without the guidance of the government, we’re not sure what we should invest in, so we urgently need government guidance and support.”
It seems clear that FinTech is a growing industry in Vietnam but that it will need help from the government, banks and technology companies to develop. There are “standards” for FinTech technology being set by global and regional regulators and it is hoped that the government will provide concrete guidance during 2018 so that the industry can continue to develop.