Financial Technology companies, or well-known as fintech, are disrupting financial industry all across Asia by changing people’s banking behaviour. But, does it really disrupt Vietnam market?
A recent Vietnam Fintech Report by Solidiance mentioned the Vietnam fintech industry is leveraging access to the unbanked population. Last year, the country recorded US$ 4.4 billion in transaction value and is expected to reach US$ 7.8 billion by 2020.
The Vietnamese government also sets ambitious target to reduce cash transactions to only 10% of all payments by 2020.
However, Vietnam is unlike Indonesia. Supported with many digital innovations, such as ride-hailing services, smartphone banking and e-commerce, Indonesia fintech startups are able to capture opportunities by offering innovation, fast services and up-to-date technology.
So, what should fintech companies do in the Vietnamese market?
In terms of financial inclusion, Vietnam still lags behind other Southeast Asian countries.
With a significantly higher proportion of unbanked population, fintech in Vietnam can help fill in the market gap. Underbanked populations are key drivers for non-bank institutions to take advantage of users’ unmet needs from traditional financial services.
According to Solidiance’s report, in order to minimize the gap with other countries in the region, Vietnam’s government has approved a financial scheme for the development of non-cash payments in Vietnam effective from 2016–2020.
The ambitious plan aims to reduce the ratio of cash transactions to 10%, reaching 70% banked accounts by 2020. Fintech can also leverage rising bank penetration to accelerate value-added services. Currently, digital payment leads the fintech services market share at 89%. However, personal and corporate finance is expected to grow at a faster rate through 2025.
The current game for the Vietnam’s fintech players is to further penetrate Vietnam’s financial ecosystem and establish themselves as key go-to services across digital payment, personal finance, and corporate finance solutions.
M&A opportunities are also abundant with domestic and foreign investors active in the space seeking to gain exposure to the industry growth.
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