Vietnam’s fintech market to reach $7.8 billion in value by 2020

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As financial technology startups, or fintechs, keep disrupting Vietnam’s financial services industry, their market value is expected to reach $7.8 billion in just two more years, according to a new report Disruption by fintech: Transforming Vietnam’s Financial Services Ecosystem released by Asia-focused consulting firm Solidiance.

The paper, exploring key drivers current trends of fintech adoption in Vietnam, as well as the key barriers and the future outlook of the industry, said the fintech market in the country already reached $4.4 billion by 2017 and is estimated to accelerate to $7.8 billion in 2020 due to rising banking penetration. 

Among the three different fintech product segments, which are digital payment, personal finance and corporate finance, digital payment leads the fintech service market share at 89 per cent. However, personal and corporate finance is expected to grow at a faster rate through 2025.

As the country aims to move towards a cashless society, Vietnam’s government seeks to reduce cash transactions to ten per cent and encourage the currently unbanked part of population of 30 per cent to open bank accounts.

Vietnam’s burgeoning e-commerce sector with its growing order value has further promoted intermediary payment platforms and digital payment services. Currently, there are around 35.4 million online shopping users, and the number is expected to quickly rise to about 42 million, accounting for 42.5 per cent of the projected population by 2021. The average spend of $62 per online transaction is expected to grow to $96 by 2021, and cash on delivery, currently the major means of payment, would be replaced by digital payments and other modern payment methods, bringing ample opportunities for fintech firms to tap into.

With its large potential tech-savvy user base, an active start-up and investment community, increasingly supportive regulatory framework, Vietnam is seen as an “Asian Silicon Valley” for fintechs.

The country’s government plays a crucial role in facilitating a conducive environment for fintech to flourish. The FinTech Steering Committee, which was established in March 2017, advises the government on the development of the financial services ecosystem, including a legal framework to ensure market growth. Government associations such as the National Technology Innovation Fund and other accelerators and incubators have also made efforts to address current difficulties in order to support and promote Vietnam as a tech-hub in the region by providing valuable opportunities for start-ups in research and development, capital and professional expertise.

As a result, Vietnam is currently ranked second in the number of incubator, accelerator and innovation labs in the region, behind only Singapore.

Meanwhile, Asian Development Bank (ADB) president Takehiko Nakao said that fintechs in Asia-Pacific were crucial for financial inclusion of the population and asked policymakers in each regional country to consider methods of improving existing regulations.

“Governments in the region can improve financial inclusion by broadening access to basic digital infrastructure and providing an enabling environment for innovators and entrepreneurs,” he said.

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Reading Time: 2 minutes

As financial technology startups, or fintechs, keep disrupting Vietnam’s financial services industry, their market value is expected to reach $7.8 billion in just two more years, according to a new report Disruption by fintech: Transforming Vietnam’s Financial Services Ecosystem released by Asia-focused consulting firm Solidiance.

Reading Time: 2 minutes

As financial technology startups, or fintechs, keep disrupting Vietnam’s financial services industry, their market value is expected to reach $7.8 billion in just two more years, according to a new report Disruption by fintech: Transforming Vietnam’s Financial Services Ecosystem released by Asia-focused consulting firm Solidiance.

The paper, exploring key drivers current trends of fintech adoption in Vietnam, as well as the key barriers and the future outlook of the industry, said the fintech market in the country already reached $4.4 billion by 2017 and is estimated to accelerate to $7.8 billion in 2020 due to rising banking penetration. 

Among the three different fintech product segments, which are digital payment, personal finance and corporate finance, digital payment leads the fintech service market share at 89 per cent. However, personal and corporate finance is expected to grow at a faster rate through 2025.

As the country aims to move towards a cashless society, Vietnam’s government seeks to reduce cash transactions to ten per cent and encourage the currently unbanked part of population of 30 per cent to open bank accounts.

Vietnam’s burgeoning e-commerce sector with its growing order value has further promoted intermediary payment platforms and digital payment services. Currently, there are around 35.4 million online shopping users, and the number is expected to quickly rise to about 42 million, accounting for 42.5 per cent of the projected population by 2021. The average spend of $62 per online transaction is expected to grow to $96 by 2021, and cash on delivery, currently the major means of payment, would be replaced by digital payments and other modern payment methods, bringing ample opportunities for fintech firms to tap into.

With its large potential tech-savvy user base, an active start-up and investment community, increasingly supportive regulatory framework, Vietnam is seen as an “Asian Silicon Valley” for fintechs.

The country’s government plays a crucial role in facilitating a conducive environment for fintech to flourish. The FinTech Steering Committee, which was established in March 2017, advises the government on the development of the financial services ecosystem, including a legal framework to ensure market growth. Government associations such as the National Technology Innovation Fund and other accelerators and incubators have also made efforts to address current difficulties in order to support and promote Vietnam as a tech-hub in the region by providing valuable opportunities for start-ups in research and development, capital and professional expertise.

As a result, Vietnam is currently ranked second in the number of incubator, accelerator and innovation labs in the region, behind only Singapore.

Meanwhile, Asian Development Bank (ADB) president Takehiko Nakao said that fintechs in Asia-Pacific were crucial for financial inclusion of the population and asked policymakers in each regional country to consider methods of improving existing regulations.

“Governments in the region can improve financial inclusion by broadening access to basic digital infrastructure and providing an enabling environment for innovators and entrepreneurs,” he said.

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