Fintech is gaining popularity around the world including in Vietnam where experts and industry observers predict strong growth, driven by the country’s low banking penetration and young and increasingly affluent population.
“Vietnam has strong growth potential for fintech development, and technology startups specializing in financial services are emerging, led by those offering digital payment services,” rating agency Moody’s said in a report released in November 2018.
About 80 fintech companies have sprung out in Vietnam in the past years, most of which operating in the digital payments space. These raised just US$3 million in funding in 2017 but strong growth is expected in the years to come. Some of Vietnam’s most notable digital and mobile payment platforms and startups include MoMo, 123Pay, Mobivi, NganLuong, and Payoo.
2 Million Wallet Customers for MoMo
MoMo, by M_Service, is the largest mobile wallet provider in Vietnam with two million registered users, accounting for approximately between 70% and 80% of the total mobile wallet market as of end of 2016, according to the Asian Banker.
MoMo customers comprise roughly 50% mobile wallet users and 50% over-the-counter clients served by its agent network of over 5,000 independent agents. It plans to grow its network eventually to 11,000 agents and more than seven million active e-wallet users.
The development of fintech is in line with the government’s push towards digitalization and its promotion of non-cash payments.
“The Vietnamese government is keen to facilitate fintech innovation as part of their efforts to improve financial inclusion and to turn the economy into a cashless one by 2025,” Moody’s said. “To this end, the State Bank of Vietnam in March 2017 established a steering committee tasked with formulating a strategy for accelerating fintech development and a legal framework for fintech companies.”
Though fintech is poised to transform the Vietnamese financial landscape, Vietnam’s banks have been slow to adopt digital transformation, lagging behind peers in the region, Moody’s said.
“So far, banks have focused on enhancing their online and mobile banking platforms to enable existing customers to handle more transactions online,” the report said. “Banks that have dealt with legacy problems will have capacity to build digital services on their own or in partnerships with fintech firms.”
Still, several banks have reacted to the trend and launched initiatives. Banks such as VPBank, Maritime Bank and VIB are collaborating with fintech firms to build their own digital propositions.
Digital “only” Banks in Vietnam
VPBank has been leveraging digital banking platform Timo to provide financial services to younger demographics. The bank operates the entire back-end operating platform while Timo drives the value proposition at the front-end.
In September 2018, VPBank launched its own stand-alone digital bank called YOLO that comes with traditional banking services like savings accounts, and loans, but also provides daily services such as taxis reservations, movies, hotel bookings and food and beverage orders. The idea behind YOLO is to offer a digital ecosystem with diversified services combined with a bank.
Maritime Bank is collaborating with MEED, a US-based technology company that provides a global platform for financial institutions. MEED provides the mobile banking platform for Maritime Bank.
Fintech Partnerships in Vietnam
VIB partnered with Vietnamese fintech Weezi Digital in 2017 to launch MyVIB Social Keyboard, an app that allows customers to transfer money on social networks.
Last year, VietinBank announced a partnership with Opportunity Network, a leading UK fintech, to create a digital platform for small and medium-sized enterprises (SMEs) to acquire funding more quickly.
Shinhan Bank Vietnam is reportedly in talks with fintech companies including M_Service, VNPay and Payoo about possible collaborations. In an interview with VIR, Shin Dong Min, CEO of Shinhan Bank Vietnam, said that incorporating digitalized tools in retail banking was the way to go for the bank in Vietnam’s market.
Meanwhile, CIMB Bank unveiled last month its fist Digital Lounge in Ho Chi Minh City along with the OCTO by CIMB mobile banking app for consumers. The launch marked the beginning of bank’s digital banking proposition.
New Rules of Success for Corporate & Retail Banks Events in HCMC and Hanoi
On January 17, 2019, American multinational computer tech firm Oracle will be holding an event at the Sheraton Saigon Hotel and Towers, in Ho Chi Minh City. Participants will hear industry leaders and innovators share how they are utilizing core, digital and new payments platforms to acquire new customers faster and scale their business.
Featured image: Street in Hanoi, Vietnam, by a_brlnr, via Flickr.