Vietnam will be the 'paradise' for Fintech? (Illustrative image)
Personal finance is FinTech’s destination?
The spreading “Cashless” trend (money circulation and transaction without cash) has indirectly modernized financial technology with the most revolutionary changes.
To meet the urgent needs of making more and more transactions in modern society without geographical limitations, FinTech - more specifically, the development of payment platforms - is being eagerly applied.
FinTech (financial technology) are technological innovations referred to users as applying technology in finance and invented to enable banking and financial services.
From e-wallets, mobile payments, and crowdfunding to smart technology services, blockchain, bitcoin, etc. FinTech’s financial solutions have gradually become essential in the operations of monetary institutions in particular, and the daily life of Vietnamese in general.
According to latest statistics, the population of Vietnam is approximately 95 million and the Internet penetration rate is over 60%, ranked 15th and 16th worldwide, respectively. A notable research found that the average daily internet usage duration among Vietnamese is about 7 hours.
These figures raised assumptions about whether Vietnam has been a fertile land for FinTech since its first arrival in 2015.
There are 67 FinTech firms currently operating in Vietnam. This number is still modest compared to neighbouring countries like Singapore with 490 firms, Indonesia with 262 and Malaysia with 196 FinTech companies, as stated in the 2017 statistics.
Research by Solidiance showed that by the end of 2017, Vietnam's FinTech market had reached USD 4.4 billion, and will increase to USD 7.8 billion by 2020.
In particular, most Vietnamese FinTech firms focus on payment, with two-thirds of startups specializing in online payment platforms and providing digital payment solution (POS/mPOS), money-transfer, etc.
As reported by EY, Momo is currently leading the Vietnam’s FinTech market, with the investment of up to USD 33.75 million from Goldman Sachs and Standard Chartered. The following are VnPay, 123Pay, Bao Kim, Ngan Luong, OnePay, Payoo, etc. with about 48 million users.
Fintech firms are divided into two groups. The first one includes companies that serve consumers, providing individuals with digital tools to improve money-borrowing methods, overdraft; managing personal finances, and funding startups. While the other group is “Back-office” companies that specialize in supporting technology for financial institutions, which are mainly banks.
Together, with other special related services such as electronic customer verification (eKYC), Robo-advising, peer-to-peer lending, etc. FinTech seems to be concentrating on personal purposes when targeting the Vietnam’s market.
The global race
Unlike most other trendy tech service products that originate and explode first in the United States, China turns out to be the leading market for FinTech with more than 60% of Chinese have approached this technological advancement, while it is just over 30% in the US.
This is because many FinTech services are involved with mobile phones. At the same time, young people also tend to be more open to new advanced technologies, even in the field of money.
In the last 10 years, FinTech has developed rapidly with huge investments including machinery, equipment, software and technology, employee training, and customer guidance. Leading in these fields are financial institutions, banks and businesses, especially for those in Asia.
Since 2010, the world has witnessed a powerful growth of FinTech investment in Asia of nearly 100 times larger. Of which China, including Hong Kong and Macao, has an overwhelming density in speed and scale.
Accumulating from 2010 to March 2017, the US is the largest FinTech investor, with a total capital of USD 63.1 billion; followed by countries in the Asia-Pacific with an investment of USD 22.9 billion. Groups of European countries, the Middle East and Africa came third with USD 10.8 billion of total invested capital.
Although in 2015, FinTech in Asia focused primarily on retail, small and medium-sized enterprises (SMEs), it was still the first year that observed investment in FinTech growing such substantial, especially in the Asia-Pacific.
Financial products and services by global financial technology solution providers are mainly payment service; insurance; investment planning; lending, crowdfunding; blockchain; stock trading and investment; data and executive management analyst as well as risk management; security and confidentiality.
