According to Solidiance, although fintech has garnered considerable market attraction, barriers persist. Challenges including lack of regulatory clarity, capital limitation, management knowledge constraints, and trust issues which must be observed in Vietnam’s financial services industry. At present, the National Payment Corporation of Vietnam (NAPAS) is the sole payment service provider for fintech and e-commerce innovation in the country. Peer-to-Peer lending platforms are growing but only banks and credit institutions are legally permitted to operate in the lending business.
While Vietnam’s economy is dominated by SMEs with 90% of market share & acting enterprise growth at 10% year-on-year as of 2015, SMEs still face difficulties in accessing lending. Among 2,600 surveyed* SMEs in Hanoi, 70% of them struggled in accessing bank loans and had to seek loans from non-traditional, informal sources
The rising establishment of startups, with 39,580 market entrants in the first four months of 2017 (an increase of 14% from Q1-2016), has driven the demand for resources & capital. Fintech solutions can help ensure adequate capital sourcing for startup businesses, together with SMEs to facilitate and accelerate growth.
Vietnam’s fintech market is an interesting space both for investors and startups. With a large potential tech-savvy user base, active startup and investment community, increasingly supportive regulatory framework, and robust enabling environment, fintech applications will further penetrate Vietnam’s financial ecosystem and establish themselves as key go-to services across digital payment, personal finance, and corporate finance solutions. In addition, M&A opportunities are abundant with domestic and foreign investors active in the space seeking to gain exposure to the industry growth.
Moreover, underbanked populations are key drivers for non-bank institutions to take advantage of users’ unmet needs from traditional financial services. With the country’s large percentage of under-banked population and its growing middle class who will soon need new solutions to address their wealth management and banking needs, the future of Vietnam fintech looks bright.