The regulatory sandbox for financial technology (fintech) which is expected to be created this year, coupled with efforts to promote the use of digital financial services, are expected to accelerate the development of fintech in Vietnam.

A majority of fintech companies in Vietnam operate in payment service.
(Photo: laodong.vn)

Governor of the State Bank of Vietnam Nguyen Thi Hong recently said that the central bank would focus on creating favourable conditions for fintech development this year in a bid to boost the digital economy.

Vietnam saw strong fintech development in 2020, partly fuelled by the COVID-19 pandemic which forced people to shift to cashless payments.

According to the recent Vietnam Fintech Report 2020 by Fintech News Singapore, the strong development of fintech in Vietnam was driven by the rapid growth of e-commerce platforms and the Government’s efforts to accelerate digital transformation and cashless payments to cope with the impacts of the COVID-19 pandemic.

Statistics showed that electronic payments in Vietnam increased by 76% with the total transaction value increasing by 124% in the first quarter of 2020 compared to the same period of 2019.

The visits to e-commerce apps reached 12.7 million in the second quarter of 2020 when social distancing was imposed, representing a rise of 43%.

The report also pointed out that the number of fintech start-up firms in Vietnam increased nearly three times, from 44 in 2017 to 120 in 2020.

About 31% of them operated in payments, 17% in peer-to-peer lending and 13% in blockchain/crypto while the rest were in wealth management, comparison, data/credit/scoring management, crowdfunding, insurtech, digital banking and SMEs financing.

The report said that international investors were optimistic about the potential of Vietnam’s fintech market and had poured millions of dollars into domestic fintech start-ups. However, the investment was mostly disbursed in 2019.

Major deals were VNPay raising US$300 million from Softbank’s Vision Fund and Singapore’s GIC fund and Momo raising US$100 million in its Series funding C round from Warburg Pincus.

Key players in the e-wallet market were MoMo, Payoo, Moca, Zalo Pay and Viettel Pay while three outstanding companies in B3B were VNPay, Trusting Social and Kilimo Finance.

The central bank was focusing on promoting digital transformation in the banking sector and developing the legal framework for fintech, including regulations about eKYC, mobile money and cross-border money transfers.

A regulatory sandbox for fintech was also expected to be submitted to the Government this year.

Tran Viet Vinh, founder of Fiin Financial Technology Innovation Joint Stock Company, said that the regulatory sandbox when issued would create an impetus for the development of new fintech services, which would bring more convenience to users.

Vinh said that fintech companies should prepare for participation in the sandbox while diversifying their products and services.

According to Nguyen Ba Diep, deputy chairman of e-wallet Momo, the cooperation between banks and fintech companies was of significant importance to create benefits and value for users, adding that this was also an important factor for fintech development in 2021.