The Hanoitimes - In 2017, Vietnam`s fintech market reached USD 4.4 billion in transaction value and is expected to grow to over US$7.8 billion by 2020, said a report on Vietnam`s fintech growth potential by Solidiance, an APAC-focused consulting firm.
In this recent published report, Solidiance believed key drivers behind the development of fintech in Vietnam are thanks to surging smartphone and internet penetration in urban areas, the growth of e-wallet services spurred by low banked ratio, growing income levels driving a rising middle class, and burgeoning e-commerce sector.
Vietnam's internet penetration reached 52% of the population in 2016 while smartphone ownership accounted for 72% in urban areas and 53% in rural areas. This makes Vietnam one of the fastest growing adopters of smartphones in Southeast Asia. The introduction of 4G in the country - along with lower-priced smartphones and service costs - will also act as enablers and provide the necessary means for digital payment and other fintech services.
Currently, there are 35.4 million online shopping users and it is expected to accelerate to 42 million, accounting for 42.5% of the projected population by 2021. The average spend of US$62 online will grow to US$96 by 2021 and Cash on Delivery - the major means of payment - is expected to be replaced by digital payments & other modern payment methods.
At current growth rates, digital payment leads the fintech services market share at 89%. Solidiance forecasted the growth rate of personal finance and corporate finance will be at 31.2% and 35.9%, respectively.
Additionally, the government also plays a crucial role in facilitating a conducive environment for fintech to flourish.
In order to minimize the gap with other countries in the region, Vietnam's government has approved a financial scheme for the development of non-cash payments in Vietnam effective from 2016-2020. The ambitious plan aims to reduce the ratio of cash transactions to 10%, reaching 70% banked accounts by 2020. Fintech can also leverage rising bank penetration to accelerate value- added services.
Vietnam's government recently published a circular No.39 on facilitating mobile payment which officially recognizes e-wallet services as a payment service as well as collection services & granted licenses to numerous companies in payment services to ensure compliance and security
Currently, the State bank of Vietnam (SBV) is actively cooperating with international organizations such as the World Bank, the Asian Development Bank (ADB) to set up national strategy on financial inclusion toward the goal of sustainable development.
In this strategy, raising people's awareness on financial issues, especially the poor and disabled is of important matter, in addition to the goal of ensuring financial access to people, especially in remoted areas and the poor.
In March 2017, SBV has established a Steering Committee on Fintech, with an aim to complete the ecosystem including a legal framework to facilitate the performance and the development of Fintech companies in Vietnam in line with guidance and orientation of the Government, as well as planning for accelerating the development of Fintech in Vietnam.