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, according to Fintech News’ latest report on the domestic fintech landscape.
Investors continued to be bullish on the potential of fintech in Vietnam this year, pumping millions into local startups.
In 2019, Vietnam already ranked second in ASEAN in terms of fintech funding, attracting 36% of all of the region’s fintech investment. The optimism comes as Vietnam is experiencing a boom in digital payments and e-commerce activity amid COVID-19 restrictions and fear of contagion.
In Q1 2020, electronic payments increased by 76% with the total value of transactions jumping 124% compared to Q1’19. Players in the space recorded unprecedented growth, with payments on mobile wallet MoMo doubling since February.
E-commerce activity also significantly picked up this year, with overall visits to shopping apps reaching 12.7 billion in Q2 2020 and growing 43% quarter-on-quarter.
These new customer behaviors are in part driven by the government’s ongoing push for greater development and adoption of technology in the banking and financial sector. State Bank of Vietnam governor Le Minh Hung cited promoting non-cash payments, digital banking and green banking as the three top priorities for the industry for the 2020-2025 period.
Over the past couple of years, the Vietnamese fintech startup scene has grown from 44 companies in 2017 to now more than 120 companies.
These companies operate across a broad range of areas, though payments remain the dominant segment with companies in the space representing 30% of all fintechs in Vietnam.
Though it is apparent that the Vietnamese fintech industry is getting more and more crowded by the day, there are still gaps to fill. For one, the market is largely dominated by players operating under a business-to-consumer (B2C) model, leaving plenty of space for B2B players, notably those that leverage technology to help incumbent banks and financial institutions rapidly digitize, automate, and reduce their costs.
This represents a major opportunity of mature Swiss fintech companies that are internationally oriented to expand into the Southeast Asian country and help the local banking industry in their digital transformation.
Vietnamese banks have accelerated their digital push, partnering with fintech companies to ramp up effort. Vietnam’s Tien Phong Commercial Joint Stock Bank (TPBank), for example, recently partnered with digital-first banking platform Backbase to provide the bank’s customers with digital-first products and services.
Swiss fintech companies are particularly active in the B2B segment, and Swiss players such as Avaloq, Temenos and Adnovum have built a global reputation for creating trustworthy, reliable and innovative solutions for an international audience.
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