The fintech industry in Việt Nam has grown quickly in the last few years, especially during the COVID-19 pandemic.

According to the statistics of the State Bank of Vietnam (SBV) and the Vietnam Fintech Market Report 2021, the number of companies in the industry has soared four times, from 39 companies at the end of 2015 to more than 154 by the end of 2021. Among those fintech companies, about 70 per cent are start-ups.

On top of opportunities, there are challenges for the industry. Việt Nam News reporter Ly Ly Cao spoke to experts and insiders to learn more about the promising industry.

Elaine Liu, business development director of Eddid Financial in Hong Kong. — VNS Photo

What do you think about the prospects of the Vietnamese fintech industry?

Elaine Liu, business development director of Eddid Financial in Hong Kong: We are very interested in the market. Everybody knows that Việt Nam is a booming market, especially for fintech and financial services.

The Vietnamese fintech market currently has the second fastest growth rate in the region, after Singapore. And the market is expected to reach US$18 billion by 2024 with a high level of competition, said analysts from a financial group, Robocash.

Việt Nam has a large young population that is a great source for the labour force of the industry and also contributes a large portion to consuming fintech products. That is a competitive advantage over the other countries in the region.

The Vietnamese market itself is already a place that has created a lot of opportunities for development.

We are headquartered in Hong Kong, one of the global financial centres, and hold licences to provide financial services, including securities trading, foreign exchange trading, investment banking, and wealth management. On the fintech side, we design and deploy our own trading app called "Eddid One", which is available in some Southeast Asian markets now, and we are looking forward to taking our applications and solutions to the Vietnamese market. When we do so, we're very much looking forward to potentially making foreign direct investment in Việt Nam.

We have formally formed a partnership in Malaysia while doing exploration in Indonesia. And then Việt Nam is our third ASEAN market in which we are testing the waters. We attach high expectations to the country and hope to understand the regulations as well as the market, and then find good partners who can help us set foot here.

Dương Phạm, counsel of Hogan Lovells International LLP. — VNS Photo Ly Ly Cao

What are the challenges the Vietnamese fintech industry faces?

Dương Phạm, counsel of Hogan Lovells International LLP: The main difficulty for the Vietnamese fintech business, in my opinion, is capital, which might be a barrier to its expansion.

The world's most successful fintech businesses all have substantial financial support, yet most of the companies are losing money and cannot turn a profit in the early stages. As a result, in order for the sector to compete on a global scale, it requires substantial financial assistance.

In addition, government assistance on regulatory frameworks is required to enable corporations to invest more aggressively or bravely and open fintech enterprises to the market.

Currently, the state management role of regulatory authorities in the financial and banking sector is still insufficient, complicating the handling of fintech-related concerns, particularly digital assets.

And the Government must also enhance the legal environment for specialised fintech fields and services for better management.

Nicole Nguyễn, ASEAN Vice Chairwoman of Global Impact Fintech Forum. — VNS Photo

How can the Government support the industry’s development?

Nicole Nguyễn, ASEAN Vice Chairwoman of Global Impact Fintech Forum: Fintech is a new industry in Việt Nam, so it is reasonable why the legal framework has not been completed.

We need to hold talks with countries in the region that have already witnessed successes in the industry to build a more friendly institution.

Countries like Thailand and Indonesia have taken a step ahead and applied the top-down strategy, meaning they work from the government and from corporations, then to their users.

Meanwhile, in Việt Nam, we use a bottom-up strategy, meaning that we start with startups and application companies. However, these companies often face many difficulties in offering products or cooperating with foreign corporations.

As a result, the Government may consider establishing institutions to bring supply and demand together. It will help both companies and users in the long run.

On the other hand, because startups are now struggling to invest and withdraw capital, it is vital to assist and establish institutions for both local and foreign companies.

In addition, start-up programmes and workshops in the fintech field should not just be a movement. We need to consider, after the programmes, what start-ups will do and what partners they can connect with. Currently, there are many ecosystems, but the distribution and arrangement are not methodical.