Fintech advance in Vietnam
Vietnam has come as a surprise in the past year by being probably the best performing Asian economy in 2020, a feat accomplished without a single quarter of economic contraction (CNBC, 2021). In fact, the Vietnamese economy grew 2.9% last year from a year ago. Even though this was the lowest GDP growth level in decades, amid the negative impacts of the COVID-19 pandemic, it is considered a success for Vietnam.
Fintech in Vietnam
Over the past year, Vietnam’s Fintech industry has grown significantly on the back of rising adoption of digital transactions, a booming e-commerce industry and a broader push by the government to boost digital payments
Moreover, Vietnam is an increasingly connected country, and so it is a natural fit for the development of Fintech products. About 36 per cent of the population has a smartphone, and this is obviously much higher in urban areas. Furthermore, according to research from DI Marketing, for nine out of ten smartphone users, the device is their sole means of accessing the internet (EY, 2018)
In Vietnam the main Fintech segments are Payments (33%) followed by P2P lending (16%) and Blockchain (13%). Also, between 2017 and 2020 Vietnam’s Fintech startup landscape almost tripled in size, growing from 44 startups in 2017 to now 121 startups, growing approximately 179%.
In the region, in 2019 Vietnam already ranked second in ASEAN in terms of Fintech funding, attracting 36% of all of the region’s Fintech investment. Nevertheless, there are still some obstacles that limit further growth, which are regulation and low infrastructure system
Lending Fintech
The lending sector has been getting noticeably high and while Vietnam’s payment startups continue to grow and attract investors’ interest, the strongest growth during 2017 and 2020 was actually recorded in peer-to-peer (P2P) lending
In fact, the Vietnamese P2P market is estimated to see substantial growth, and its value will touch $7.8 billion this year, in line with global P2P lending’s rise to $490 billion by the end of 2020 (UNRAVEL ,2020)
However, Vietnam’s small and medium enterprises (SME) need more support, especially if the pandemic continues for a year or more. Online providers of SME financing are seeing a major increase in the demand for unsecured SME loans, making this a good opportunity to help businesses regain their footing in volatile times. Also, online lending platforms are able to provide direct support to established SMEs and ensure they are on firm footing to register post-pandemic growth. This turns Fintech into a mechanism to further promote economic growth
