As of September 30, Vietnam ranked second in ASEAN in terms of fintech funding, attracting 36% of the region’s fintech investment in 2019, second only to Singapore (51%), according to a joint report by PricewaterhouseCoopers (PWC), United Overseas Bank (UOB), and the Singapore Fintech Association.
Vietnam saw a sharp increase in funding in 2019 attributed to two large deals going to payments companies VNPay (US$300 million) and MoMo (US$500 million). The two deals were the top largest and third largest funding rounds of the region, as of September 30, 2019, the research says.
In Vietnam, investors favor payments, which is common for economies in the early stages of developing a fintech sector. Payments companies took 98% of total fintech funding amount in Vietnam in 2019.
According to the report, interest in investing in Vietnam’s fintech companies, and most particularly those in the payments space, is driven by the business potential in the market’s large and unbanked population as well as the high mobile and Internet penetration rates.
The trend coincides with the government’s push to turn Vietnam into a cashless economy and promote mobile and digital payments. According to the State Bank of Vietnam, as of March 31, 2019, the number of financial transactions conducted on mobile phones almost doubled from 2018. The Vietnam mobile payments market is projected to reach US$70.9 billion by 2025, up from US$16 billion in 2016, according to Allied Market Research.
Vietnam’s fintech startup landscape
As of September 30, 2019, there were 136 fintech companies incorporated in Vietnam, making Vietnam the smallest fintech industry, way behind Singapore (1,157), Indonesia (511), and Malaysia (376).
Unsurprisingly, payments is the most advanced segment, counting some 35 companies, according to the Fintech Startup Vietnam Map 2019. Notable ventures and platforms include MoMo, a mobile payments platform by M_Service and one of the most well-funded fintech startups in Vietnam, Moca, a mobile payments service integrated into super-app Grab, and ZION, the company behind Zalo Pay, a service integrated into Vietnam’s popular messaging platform Zalo.
Peer-to-peer (P2P) lending is another popular segment, counting more than 20 companies, among which Tima, a consumer financial marketplace and P2P lending platform, Growth Wealth, a P2P lending platform for small and medium-sized enterprises (SMEs) in Vietnam, as well as TrustCircle, and Vay Muon.
Fintech developments in 2019
2019 saw several fintech developments taking place in Vietnam with the government showing its commitment to developing a favorable environment and regulatory landscape for the country’s fintech industry to thrive.
These include for example the development of the National Financial Inclusion Strategy, which focuses on enhancing accessibility and utility of financial services and improving financial knowledge and skills of consumers, new regulations set to boost non-cash payments development and adoption, promotion of a basic standard for QR code payments, as well as a pilot project for mobile payments through telecommunication accounts.
The State Bank of Vietnam (SBV) has also been working on establishing a fintech regulatory sandbox which would allow financial services companies and startups to test innovative solutions and business models in a controlled environment. Plans also include developing regulatory guidelines, notably in the field of P2P lending, and incentives to encourage the sector’s growth.
Until then, the SBV had taken a cautious approach to fintech regulations, granting only about 30 payments licenses to non-banks so far, but the numerous initiatives triggered in 2019 had demonstrated that the government is ready to take a more pro-active role in the future of the domestic fintech industry for the years to come.
According to Pham Xuan Hoe, deputy director of the Banking Strategy Institute, Vietnam’s fintech market will be worth US$9 billion in 2020, making it ASEAN’s fourth-largest market.
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