Fintech in Vietnam - What to Do with a Market Estimated to Reach Over 26.9 Billion USD by 2025
These are the insights of experts reported by PwC in its latest analysis of the fintech market in Vietnam by 2025.
According to the report, the market is projected to reach over 26.9 billion USD by 2025, based on the measured figure of 15 billion USD in 2021 and an annual growth rate of 15.7% (Source: PwC report).
Fintech in Vietnam - What to Do with a Market Estimated to Reach Over 26.9 Billion USD by 2025
These are the insights of experts reported by PwC in its latest analysis of the fintech market in Vietnam by 2025.
According to the report, the market is projected to reach over 26.9 billion USD by 2025, based on the measured figure of 15 billion USD in 2021 and an annual growth rate of 15.7% (Source: PwC report).
This development is an inevitable outcome as Vietnam remains a developing country within the Asia-Pacific region, an area that has garnered significant attention from international investors as the global economy has increasingly shifted eastward in recent years, with major financial hubs emerging and growing rapidly.
Moreover, with a young population, the majority of whom are tech-savvy and always ready to embrace the latest financial technology trends, Vietnam is well-positioned for growth.
In this article, let's join FinFan in analyzing the opportunities, challenges, and emerging megatrends in the fintech market for startup businesses in Vietnam.
Vietnam – A Promising Emerging Fintech Market in the Asia-Pacific Region
*Amidst the dynamic landscape of Asia-Pacific’s fintech arena, Vietnam emerges as a vibrant hub of innovation and growth.
Vietnam’s fintech narrative gains momentum as it positions itself as the second-largest player in the ASEAN fintech landscape, projected to reach a remarkable US$18 billion by 2024.
This surge reflects ongoing innovations reshaping financial services and driving sustainable economic progress.
While Singapore leads Southeast Asia in the total count of operational fintech firms (1580 firms by 3rd quarter of 2022), Vietnam’s fintech landscape offers substantial growth prospects.
The burgeoning size and user base of the nation’s fintech companies highlight the market’s immense potential (Vietnam Acclime, 2023).
As per UOB, the number of fintech enterprises has quadrupled over the past few years, from 39 companies at the end of 2015 to more than 200 firms in 2022, showcasing rapid growth and evolution in the sector. (United Overseas Bank, 2022).*
In addition, with a tech-savvy middle-class population of 77.9 million as of January 2023, Vietnam presents an opportunity for consumer finance institutions to collaborate with the fintech industry. Understanding the diverse needs and preferences of customer groups can drive the development of technology-driven business models in this sector. (Statista, 2022).
Mr. Anirban Roy, Senior Partner of InnoLab Asia and former Vice President of OCB Bank, also shares his views on Vietnam’s fintech potential:
“The future of Fintech in Vietnam is very promising, particularly within the MSME segment. With the Government’s strong push towards digitalization of MSMEs, there’s a substantial opportunity for Fintech to flourish by aligning with this wave of innovation.
By forging partnerships with modern lightweight ERP providers and leveraging cashless platforms like VietQR, the Fintech industry can offer comprehensive financial solutions tailored to the unique needs of MSMEs.
Leveraging data derived from their day-to-day business operations, Fintech can provide insightful and impactful financial services that drive growth and efficiency for MSMEs in Vietnam.
This collaboration between Technology and Finance holds the key to unlocking tremendous potential and driving sustainable economic development of MSME segment in particular and the country in general.”
*Source: innolab
According to Mr. Tuyen Nguyen, Founder and CEO of Best Way Corporation (Brand: FinFan):
“With a dynamic and innovative market in Vietnam, coupled with impressive growth in the number of broadband users, such as 4G and 5G, in recent years, the fintech sector in Vietnam will focus heavily on developing mobile fintech applications to meet the increasingly diverse needs of the tech-savvy younger generation in the market”.
When asked whether the tech-savvy younger generation influences fintech products that support cross-border remittances to Vietnam, Mr. Tuyen added:
"Honestly, during FinFan's development process, we have always strived to incorporate the latest financial technologies that Vietnamese youth are using into our products and services. This aligns with our mission to provide cross-border remittance services to Vietnam that are “Faster – Safer – More Cost-Effective”.
As proof, after great efforts from our market research team and our technical team, we have successfully developed the e-wallet aggregator product, working in collaboration with major domestic e-wallet partners like MoMo, Zalo Pay, VNPay,… and remittance service providers like MoneyGram, Remitly, Sendwave, Paysend,… to Vietnam. Now, with just three steps, senders can pay remittance directly from abroad to the recipient's e-wallet account in Vietnam."
Indeed, Mr. Tuyen Nguyen's insights are entirely justified, as some of the most recent reports on VNExpress show that over 90% of Vietnamese people have been using mobile internet service packages during the first half of 2024.
Specifically, mobile broadband subscriptions increased by 7.6% compared to the same period in 2023, reaching an average of 91.9 per 100 people.
This marks the first time that this rate has surpassed 90%, exceeding the Ministry's target of 87.5% for 2024.
Meanwhile, out of 120 million mobile subscriptions in Vietnam, 100.7 million are smartphone users, an increase of 0.1% compared to the same period last year.
Regarding fixed broadband, the number of subscriptions reached 23.5 per 100 people, an increase of 6.8%, achieving 96% of the annual plan. Among these, 82.2% of households are using fiber-optic cables.
This also expands opportunities for payment services through online applications on mobile phones to be developed.
As a result, many e-wallet applications have been growing significantly and have emerged as top digital unicorns in Vietnam, reaching the top in Southeast Asia, such as MoMo, VNPay, and Timo digital bank...
Read more:
Case Studies of successful Fintech Startups in Vietnam
The remarkable growth of the fintech industry in Vietnam has been marked by the participation of over 200 companies in the market by 2022, spanning various sectors such as Payment, Digital Banking, P2P Lending, Buy Now Pay Later (BNPL), and more.
To this day, although some companies, such as the Moca e-wallet, have exited the market this year, the Vietnamese fintech market remains vibrant, with existing companies continuing to thrive and achieve outstanding growth.
Digital Payments
The digital payment market has never ceased to be dynamic, with major players in the two sectors of payment gateways and e-wallets.
This is occurring against the backdrop of rapid growth in e-commerce in Vietnam, which is leading the charge in the digital transformation of businesses.
Consequently, this has spurred the development of other industries, including payment solutions for marketplaces and e-commerce platforms, which are also experiencing explosive growth.
Read more:
Among the payment gateways and e-wallets, MoMo stands out, as it accounts for up to 68% of the market share, according to the latest reports, followed by VNPay and ZaloPay. However, despite all their efforts to compete for a share of the market, e-wallet companies are still under tremendous financial pressure, as the most recent financial reports for these e-wallets indicate that they are still largely operating at a loss.
Read more:
Digital Banking
Another industry that has proudly experienced significant growth is digital banking. Following the initial push from Timo, the first digital bank, a multitude of other digital banks has emerged, providing users with convenient and secure cashless payment solutions that are entirely online.
Another notable case study in the digital banking sector in Vietnam is CAKE. Launched in 2021 as a collaboration between ride-hailing firm Be Group and Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), CAKE has quickly gained more than 1.5 million customers in just over a year.
The mobile app offers a suite of banking services, including account management, payments, transfers, savings, investments, and more, all accessible through a mobile app. (VCCI, 2022).
Following the development of these two digital banks, a number of traditional banks in Vietnam are also racing to digitalize the banking sector, upgrading their low-tech banking transaction systems to high-tech solutions. This transformation aims to provide their customers with superior payment options, directly competing with these emerging banks.
Read more:
. Top 3 Digital Banks in Vietnam
. List of Transforming Digital Banks That Have The Most Users in Vietnam
**Peer-to-Peer Lending (P2P)
Peer-to-Peer Lending (P2P) emerges as a promising avenue for alternative finance. Platforms like GIMO that specializes in providing flexible salary payment solutions. In 2023, the startup announced the completion of its Series A funding round, raising a total of $17.1 million USD. (GIMO, 2023)
Wealth Management
Wealth Management is a $600-billion worth market in Vietnam by 2027, experiencing significant growth and innovation as digital solutions reshape how individuals manage and grow their assets (Mc Kinsey, 2023).
Finhay as an example, a local fintech startup, specializes in micro-investment solutions, enabling users to invest small amounts in diverse financial products like mutual funds and government bonds.
The startup is a pioneering asset management platform aimed at empowering millennial investors to delve into micro-investments in mutual funds.
In its latest funding round, this startup raised 25 million USD in Series B funding, led by Openspace Ventures and Vietnam Investments Group. (Tech in Asia , 2022)
Insurtech
Vietnam’s Insurtech grows nearly 50% each year, the same speed as Indonesia and the Philippines (Google and Bain Report, 2022).
By providing digital products, personalized coverage, and efficient claims processing, they are revolutionizing the way insurance is perceived and accessed in Vietnam.
Global Care is an example who facilitates seamless transactions for insurance agencies, streamlining sales and administrative processes.
This enables convenient transactions for customers seeking non-life insurance products, addressing not only purchasing needs and claims processing but also providing direct access to customer service representatives. (VOV, 2021)
Buy Now Pay Later (BNPL)
Buy Now Pay Later (BNPL) is increasingly popular and widely utilized. According to data from Research & Markets, the BNPL market in Vietnam is expected to grow by 45.2% annually, from $496.4 million in 2021 to $10,528.1 million in 2028 (Statista, 2023).
Fundiin is a key example in Vietnam’s BNPL industry, known for its innovative approach to consumer finance.
The company focuses on providing accessible and transparent payment solutions that empower customers to make purchases without immediate financial strain.
The startup offers three interest-free and fee-free BNPL products, including: Pay in 3 monthly installments; Pay after 30 days; Automatic recurring payments.
In 2022, this startup achieved a significant milestone by successfully raising a $5 million investment in its Series A round. (ThinkZone Ventures, 2022)
In essence, these key sectors and areas underscore the vast potential and opportunities within Vietnam’s fintech sphere.
They epitomize the spirit of innovation, collaboration, and growth that defines the landscape, promising a future brimming with possibilities in the ever-evolving world of financial technology.**
Legal and regulatory considerations
Innovation collides with regulatory intricacies. Understanding the legal and regulatory dynamics becomes paramount for stakeholders aiming to harness the full potential of this vibrant market. The evolving regulatory framework, while striving to keep pace with rapid fintech advancements, can create uncertainties for companies, necessitating adaptable compliance strategies.
- Acquiring licenses for fintech services involves intricate procedures and rigorous standards, posing significant challenges for startups.
- Compliance with data privacy regulations and robust cybersecurity measures is imperative, demanding substantial investments in technology and expertise.
- Fintech ventures must also adhere to stringent anti-money laundering regulations, requiring effective measures and thorough customer due diligence.
- Regulatory ambiguity, particularly in areas like peer-to-peer lending and blockchain, can impede innovation and investment, emphasizing the need for clear guidelines.
- Operating internationally adds complexity, with diverse regulatory frameworks across jurisdictions requiring proactive engagement with authorities. Building positive relationships with regulatory bodies and proactive collaboration are vital, as non-compliance can lead to severe penalties or suspension of operations.
In recent years, Vietnamese banks have increasingly recognized the potential of open banking, unveiling developer portals and offering open APIs for third-party use. Despite these advancements, the absence of a comprehensive regulatory framework hampers their ability to fully embrace open banking.
In a June 2022 article of Bao Dau Tu, Mr. Roy Anirban (Senior Partner of InnoLab Asia & Former Vice President of OCB Bank) emphasized the necessity for the State Bank of Vietnam (SBV) in establishing rules and standards to ensure interoperability, security, and consumer data privacy in open banking.
“When there is no common standard for open banking, different banks will implement different API security protocols, leading to the possibility of data theft from some open banking participants,”
He further explained “[In addition,] non-bank ecosystem partners will have to connect using different API formats from bank to bank, which will affect the quality of the system software, introduce risk for poor customer experience as different banks will provide different information” (Fintech Singapore, 2022)
He highlighted that SBV should adopt an Account Aggregator (AA) model akin to India’s. Introduced by the Reserve Bank of India (RBI), the AA network facilitates financial data sharing among institutions with the individual’s consent. Various entities, such as banks, NBFCs, asset management firms, and insurance companies, can join as Financial Information Providers (FIPs) or Financial Information Users (FIUs). In India, over 1.1 billion bank accounts can share data via AA, with approximately 1.4 million users linking and sharing data. Furthermore, numerous SEBI, insurance, and pension regulated entities are active on AA, with 72 entities accessing data as FIPs and FIUs. (Ministry of Finance in India, 2022)
Thus, understanding and mitigating regulatory risks are essential for fintech ventures to maintain business continuity and uphold their reputation in the market.
Despite being in the process of refining its legal and regulatory framework for the fintech and financial sector, the Vietnamese government continues to exert relentless efforts in crafting policies tailored to the needs of financial companies such as:
Cashless Payment:
- Prime Minister Decision 2545/QD-TTg approving the Scheme on development of cashless payment in Vietnam during 2016-20.
- Decision 316, issued in March 2021, permitting the use of mobile money for small transactions.
E-money and E-Transactions:
- The 2005 Law on Electronic Transactions, Decree 35/2007/ND-CP on electronic transactions in the banking sector, Decree 101/2012/ND-CP on cashless payment (revised under Decree 80 of 2016), and SBV Circular 39/2014/TT-NHNN guiding intermediary payment services.
- Decision No. 194/QD-TTg issuing the National Action Plan to implement the commitments of the Vietnamese Government on anti-money laundering, counter-terrorism financing, and the proliferation of weapons of mass destruction, aiming to remove Vietnam from the Grey List of FATF Specialized Financial Intelligence Unit on Anti-Money Laundering.
Controlled Testing Mechanisms for Fintech Activities:
- Government Resolution No. 100/NQ-CP approving the proposal to draft a decree on Controlled Testing Mechanisms for Fintech activities in the banking sector including Credit Scoring, Data Sharing via Open API, and Peer-to-peer lending (P2P Lending).
- Decision 999/QD-TTg authorizing the State Bank of Vietnam (SBV) to draft a decree on Fintech regulatory sandbox, allowing entities to test innovative financial products or services.
Looking ahead, an early issuance of a comprehensive legal framework for fintech in Vietnam will be instrumental in attracting investment and fostering growth in the industry. As the fintech landscape continues to evolve, startups must remain agile and proactive in addressing regulatory challenges to seize opportunities for innovation and expansion.
** Source: innolab
Vietnam’s Fintech Trends for 2024-2025
According to FinFan's assessment, the fintech trends in Vietnam will also align with and catch up to the global megatrends, exemplified by:
The First Trend of Fintech has been Really Popular Recent Years: Sustainable or Green Finance
As you may know, the financial sector consumes a significant amount of energy and resources to operate smoothly.
This sector involves the exchange and trading of currency, which requires a substantial amount of wood resources to produce paper money.
Additionally, printing facilities must operate at full capacity to ensure a consistent supply for the market.
The Second Trend of Fintech: Generative AI integration and RPA
It can be said that AI and robotics are currently leading trends in the transition from the 4th industrial revolution to the 5th, as their applications span across various sectors of life—from factories to customer service personnel, and from tools like Google or OpenAI in assisting humans with information retrieval and acting as virtual assistants.
Fintech is also deeply involved in the realm of AI technology, as its inception aims to optimize and integrate technology into the financial sector.
The Third One is Integrating Multi-platform Financial APIs and B2B Fintech.
In the rapidly evolving landscape of financial technology (fintech), the integration of multi-platform financial APIs and the rise of business-to-business (B2B) fintech solutions are shaping the future of financial services.
Financial APIs (Application Programming Interfaces) serve as crucial connectors in the fintech ecosystem, enabling seamless integration and data exchange between diverse financial services and platforms.
These APIs allow different applications and systems to communicate with each other, facilitating functionalities such as payments, transactions, account information, and more across various digital platforms.
Next is Tokenization, Alternative Assets among Top Wealthtech Trends
***In the wealthtech segment, asset tokenization is expected to gain traction this year owing to the technology’s potential to enhance liquidity, simplify trading, and open up new investment opportunities.
This trend will be driven by increased adoption among banking incumbents like JP Morgan and ABN AMRO which are developing infrastructure to support the trend.
Plutoneo, a German-based blockchain consulting firm, projects that the European security token market will grow 81% annually over the next five years and reach EUR 918 billion by 2026.
The democratization of alternative assets is another major trend to look out for in 2024 and beyond.
These assets, which include private equity funds, luxury goods, art and real estate, offer diversification and new investment opportunities for both institutional and retail investors. Fintech companies are driving this trend by making private banking accessible to a broader audience.
Finally, indexing is poised to be a hot trend in fintech in 2024 driven by the rapid growth and needs of the exchange-traded fund (ETF) market.
Many asset managers lack the sophisticated in-house capabilities required for index development and benchmarking, a gap which creates opportunities for innovative indexing fintech startups to provide the necessary infrastructure for designing and maintaining these custom indices.
Their services will be particularly crucial for the growing segment of thematic ETFs, which require specialized and dynamic indexing solutions.*
***Source: fintechnews.ch
And the Last Trend of Fintech: Next-generation Compliance Tools
For a company in the financial sector, legal compliance is of utmost importance because this industry directly impacts the budgets of one or multiple interconnected countries around the world.
However, issues related to legal compliance remain a significant gap, especially as financial crimes like fraud and money laundering have become increasingly sophisticated in bypassing these legal mechanisms using modern technology.
For this reason, technology companies continually develop applications related to KYC (Know Your Customer), integrating AI technology with fingerprint or facial biometrics to accurately record the information of payers. This helps prevent cases where identical names might lead to information being easily confused.
Read more:
. Top 5 Of Global Fintech Megatrends In 2024 – Which Can Be Strongly Developed In Vietnam?
In conclusion
The fintech landscape in Vietnam is on the brink of remarkable transformation, with projections estimating the market will reach over 26.9 billion USD by 2025.
This growth presents a wealth of opportunities for both established companies and startups. As Vietnam continues to embrace digitalization, businesses must leverage emerging technologies to innovate and meet the evolving needs of consumers.
To capitalize on this growth, fintech companies should focus on enhancing user experience through mobile applications, ensuring security in transactions, and expanding their service offerings to cater to the diverse demands of the market.
Collaboration with traditional banks can also create synergies, combining the agility of fintech with the stability of established institutions.
Moreover, with a young and tech-savvy population, there is immense potential to drive the adoption of digital financial solutions. By investing in education and awareness, fintech firms can empower consumers to embrace these innovations confidently.
In summary, as Vietnam navigates its path toward becoming a fintech powerhouse in the Asia-Pacific region, businesses must be agile, customer-centric, and forward-thinking to thrive in this dynamic and rapidly evolving environment.
Embracing change and harnessing the power of technology will be key to unlocking the vast potential of the fintech market in Vietnam.
This article was curated and authored by FinFan's market research and development team, alongside our marketing department.
About FinFan
FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, and digital APMs solutions, which can provide valuable input and integration on and for the same.
FinFan is already integrated with almost the world's well-known MTOs, PSPs, switch, and core fintech platforms such as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.
For more information, please get in touch with us through:
🌐https://finfan.io
📞(+84) 2866 85 3317
✉ support@finfan.vn
LinkedIn: FinFan
Dr. Tuyen Nguyen
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