Vietnam’s fintech becomes potential targets for international groups

CEO of Lotte Card Kim Chang-kwon has recently said that with years-long experience in finance and credit, Lotte Card wants to contribute its experience to Vietnam’s development regarding payment via cards and mobile phones, fintech, findata, and doing business on digital platform.
According to Kim, the purchase of Techcombank’s financial subsidiary will make it easier for Lotte Card to grow in Vietnam, where its parent Lotte Group has about 1.5 million clients in supermarkets and shopping centers.
Earlier, Keb Hana, another South Korean group, was also reported to consider teaming up with a local fintech firm via direct capital injection or through an investment fund.
Similarly, Senjo Group, a major fintech firm based in Singapore with profit averaging at US$400 million per year, is targeting payment fintech firms in Vietnam.
Before the entry of Keb Hana and Senjo, the market this year also saw a notable deal, in which China’s Alipay, through a Vietnamese intermediary, to engage in negotiations on buying stake of a local fintech firm.
British investors have so far also showed their interests in Vietnam’s fintech as Gareth Ward, new British ambassador to Vietnam, has recently discussed with State Bank of Vietnam (SBV)’s Governor Le Minh Hung on the possibility to enhance the cooperation between the two countries in fintech and green credit.
According to an SBV report, foreign investors have poured some US$130 million in Vietnamese fintech firms in the past two years. Some typical deals are Korea’s UTC Investment acquiring a 65 percent stake in VNPT Epay at cost of VND542 billion (US$24 million), MOL Accessportal acquiring a 50 percent of Vietnam’s top online payment system Ngan Luong, NTT Data acquiring a 64 percent of Payoo, True Money acquiring a 40 percent of IPay, and a consortium of Credit Saison, Golden Gate Ventures, and GMO Global Payment acquiring a 25 percent of Bao Kim.
Incentive policies   
According to a report on Vietnam’s fintech growth potential released by APAC-focused consulting firm Solidiance, Vietnam’s fintech market is expected to increase from US$4.4 billion in 2017 to US$7.8 billion in 2020.
Varun Mittal, Ernst & Young (EY) ASEAN fintech leader, said that Vietnam has become one of the highest potential markets for fintech development thanks to the golden population structure with a large number of population using smart phones, as well as high consumption growth and low unemployment rate.
In addition, Vietnam’s government also plays a crucial role in facilitating a conductive environment for fintech to flourish. The FinTech Steering Committee, established in March 2017, advises the government on the development of financial services ecosystem, including a legal framework to ensure market growth.
Government associations such as the National Technology Innovation Fund and other accelerators and incubators have also made the effort to address current difficulties to support and promote Vietnam as a tech-hub in the region by providing valuable opportunities for start-ups in R&D, capital, and professional expertise.
As the country aims to move towards a cashless society, the government also targets to reduce cash transactions to 10 percent and increase bank accounts in the population by 70 percent in 2020.
According to experts, the fintech market is currently seized by domestic banks and fintech firms. However, with a comprehensive and diverse approach strategy by foreign fintech firms, the segment may be usurped by foreign fintech firms if domestic firms fail to compete with overseas peers.