The Fintech startup ecosystem in Vietnam has grown strongly in recent years, becoming a potential field of the digital economy. Fintech combines technology and finance, optimizing payment, lending and financial management services. This development has promoted the digital economy and expanded people’s access to financial services, making Vietnam an attractive Fintech market in Southeast Asia, attracting much attention from domestic and foreign investors [1].

The development status of startup in Fintech in Vietnam

According to a report by Economy and Forecast Review, Vietnam’s Fintech market has grown rapidly, with the number of Fintech companies increasing from 39 in 2015 to 260 in 2022. [2]The market is diverse, covering areas such as e – wallets, P2P lending, online insurance (Insurtech), etc[3].

E-wallet

E-wallet is an electronic wallet, an application that allows users to store, manage and pay money quickly and conveniently through mobile devices. E-wallet is a fast-growing area in Fintech in Vietnam, with platforms such as MoMo, ZaloPay, ShopeePay and Moca dominating the market and changing payment habits. By the end of 2023, the number of active e-wallets had reached 36.23 million, showing strong growth, contributing to the promotion of cashless payments [4].

QR code payments have become more common in Vietnam

Source: Dantri

Peer-to-peer lending (P2P Lending)

Peer-to-peer lending is a form of direct lending between individuals or businesses through an online platform, bypassing traditional financial intermediaries such as banks. According to the State Bank in 2023, the peer-to-peer lending (P2P Lending) market in Vietnam is growing rapidly with about 100 companies, including names such as Fiin, Tima, Trust Circle, Vaymuon [5]. The development of Fintech and the competition between Fintech companies and traditional financial institutions pose great challenges for regulators in maintaining a balance between promoting innovation, ensuring fair competition and protecting consumers. ^[6]

The InsurTech

Insurance technology (InsurTech) is the application of technology in the insurance industry to improve operational efficiency, optimize processes, and deliver better customer experiences through solutions such as digital insurance, artificial intelligence, and data analytics which are developing strongly in Vietnam including a number of companies such as TheBank, Bolttech, Global Safe, eBaohiem, Bihama, Eroscare, Papaya, 9Lives, etc. The InsurTech market currently has 20 operating companies with impressive revenue growth of up to 255% in the period 2018-2022, attracting large investments [7].

Papaya provides employee benefits solutions

Source: Brands Vietnam

The growth potential of startup in Fintech in Vietnam

Vietnam’s Fintech market is witnessing explosive growth, with total transaction value increasing from 22.6 billion USD in 2022 to 27.2 billion USD in 2023 and expected to reach 31.6 billion USD in 2024 (according to BDA Partners)[8]. There are three key factors driving this growth potential:

Young population and the growth of mobile technology

According to We Are Social and Hootsuite in February 2023, the smartphone ownership rate among the young population in Vietnam (15-35 years old) is estimated to reach about 94% by the end of 2023[9]. The Vietnamese market is emerging as an attractive destination for Fintech products, especially in the field of personal credit. The State Bank forecasts that by 2025, personal credit will account for 24% of the market applying technology in financial services, affirming the great potential of this market.

Young people and the trend of cashless payments

Source: Vnexpress

Government Support

Vietnam has recently taken proactive measures in managing and supporting the Fintech sector through specific legal documents. The Governor of the State Bank of Vietnam (SBV) issued Circular No. 16/2020/TT-NHNN on December 4, 2020, allowing the application of electronic Know Your Customer (e-KYC) technology for opening small-scale payment accounts (under 100 million VND per month). Subsequently, Circular No. 06/2023/TT-NHNN, issued on June 28, 2023, permits banks to carry out electronic lending activities for small-value loans (under 100 million VND). Additionally, the Government issued Resolution No. 100/NQ-CP on September 6, 2021, approving the proposal to draft a Decree on a controlled testing mechanism for financial technology (Fintech) activities within the banking sector. These actions demonstrate Vietnam’s proactive and committed approach to fostering innovation in the Fintech industry[10].

Regional and international integration

Vietnam has signed many trade agreements such as EVFTA, creating conditions for domestic Fintech businesses to expand into international markets [11]. In addition, regional integration also attracts strong foreign investment flows, helping Fintech companies have the opportunity to develop and expand their scale.

Opportunities for foreign investor in fintech industry in Vietnam

The fintech industry in Vietnam is currently an attractive market for foreign investors, driven by rapid digital transformation, a young tech-savvy population, and supportive government policies.

MoMo, a leading e-wallet in Vietnam, secured $200 million in its Series E funding round led by Japan’s Mizuho Bank, alongside investors like Ward Ferry, Goodwater Capital, and Kora Management. The investment aims to strengthen MoMo’s position as a super app by enhancing financial services for its 31 million users and expanding digital solutions for small and micro-enterprises[12].

MoMo received investment capital of $200 million from Mizuho and global investors

Source: Baotintuc

Additionally, Japan’s Sumitomo Mitsui Bank has invested $9.2 million in SmartNet, the operator of the SmartPay e-wallet in Vietnam. The investment is aimed at promoting digital payment services and expanding SmartPay’s market share[13].

These collaborations demonstrate the great potential of Vietnam’s fintech market for international investors. Japanese companies can leverage their technological strengths and experience to cooperate with Vietnamese startups, promote innovation and develop digital financial services, and contribute to the common growth of both sides.

Challenges to overcome

Despite its great growth potential, Vietnam’s Fintech still faces many challenges. Specifically, the current unclear legal regulations are one of the biggest obstacles. In particular, areas such as P2P Lending and blockchain need to be strictly regulated to avoid risks of fraud and unsafe credit.[14]

Additionally, raising consumer awareness of Fintech products is also an important factor as many people, especially in rural areas, remain concerned about the safety of online transactions and digital financial services.

Conclusion

The Fintech ecosystem in Vietnam is growing strongly and has great potential. With support from the government, a young population and international integration trends, this sector can become a major driver for the digital economy. This is a great opportunity for foreign investors, but to be successful, they need to be flexible in adapting to local regulations and consider collaborating with domestic startups to leverage their market knowledge. Companies can invest in advanced financial technology and digital transformation solutions to serve underserved areas, ensuring sustainable and safe development.

[1] https://tapchinganhang.gov.vn/su-phat-trien-cua-fintech-va-thach-thuc-doi-voi-cac-ngan-hang-thuong-mai-viet-nam.htm

[2] https://lanhtevadubao.vn/thi-truong-fintech-tai-viet-nam-thuc-trang-va-giai-phap-29580.html

[3] https://thesaigontimes.vn/thi-truong-fintech-manh-dat-mau-mo-nhung-con-thach-thuc-ve-phap-ly/

[4] https://baodautu.vn/thi-truong-vi-dien-tu-doi-mat-nhieu-noi-so-d217264.html

[5] https://lanhtevadubao.vn/luat-phap-hoa-hoat-dong-cho-vay-ngang-hang-tai-viet-nam-27130.html

[6] https://tapchicongthuong.vn/thuc-trang-hoat-dong-cho-vay-ngang-hang-tai-viet-nam-106492.htm

[7] https://vneconomy.vn/insurtech-tai-dinh-hinh-buc-tranh-thi-truong-bao-hiem.htm

[8] https://lanhtevadubao.vn/thi-truong-fintech-tai-viet-nam-thuc-trang-va-giai-phap-29580.html#:~:text=N%C4%83m%202022%2C%20t %E1%BB%95ng%20gi%C3%A1%20tr%E1%BB%8B,t%E1%BB%B7%20USD%20v%C3%A0o%20n%C4%83m%202024 .

[9] https://www.brandsvietnam.com/congdong/topic/332869-Data-Station-41-Digital-Landscape-2023-Thoi-gian-luot-Internet-gap-3-lan-TV-Digital-chiem-hon-nua-ngan-sach-Marketing .

[10]https://www.sbv.gov.vn/

[11] https://cafef.vn/hiep-dinh-evfta-se-tac-dong-manh-toi-fintech-va-mobile-money-tai-viet-nam-20200613171752121.chn

[12] https://tuoitre.vn/vi-dien-tu-momo-duoc-dau-tu-them-200-trieu-usd-20211221100609818.htm

[13] https://vietnambiz.vn/startup-fintech-viet-nhan-von-dau-tu-gan-10-trieu-usd-tu-chi-nhanh-cua-ngan-hang-lon-thu-hai-nhat-ban-20221115162736252.htm

[14] https://tapchicongthuong.vn/thuc-trang-hoat-dong-cho-vay-ngang-hang-tai-viet-nam-106492.htm

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