Imminent sandbox to offer boost for fintech environment, illustration photo/ Source: freepik.com

According to a newly released fintech funding report by market analysis platform Tracxn Technologies, the aggregate H1 funding for fintech in Vietnam dwindled to $6.2 million from the prior year’s $17.9 million.

Likewise, the collective funding into Vietnamese tech startups plummeted by 82 per cent to reach $66 million in H1, a notable downturn from the $372 million recorded in 2022.

This decline is primarily attributable to the persistent repercussions of the “funding winter” and the prevailing global economic uncertainties, Tracxn said. The dearth of late-stage funding further contributed to this downturn, as the fintech sector in Vietnam observed no such funding events throughout 2022 and 2023 so far.

“Within the funding rounds that did transpire, early-stage investments constituted the majority, contributing an aggregate of $5.1 million to the total funding in the opening half of 2023,” Tracxn said.

Nonetheless, this sum signifies a significant decline of 97 per cent in comparison to the substantial amount of $195 million secured during H1 the preceding year.

Prominent backers who with substantial influence in shaping the local fintech landscape throughout the past two years were Integra Partners, Genting Ventures, CIE IIITH, Y Combinator, and WeFounder Circle.

Among these, the latter trio held crucial roles in seed-stage investments, whereas Integra Partners and Genting Ventures have prominently positioned themselves as investors of note in early-stage funding.

Meanwhile, in July, GIMO, a startup specialising in adaptable salary solutions in Vietnam, announced the successful completion of Series A funding, amassing a total capital infusion of over $17.1 million. The deal was spearheaded by the TNB Aura Venture Capital Fund, alongside active engagement from GIMO’s existing investors such as Integra Partners, Resolution Ventures, Blauwpark Partners, ThinkZone Ventures, and Y Combinator.

Currently, the State Bank of Vietnam (SBV) is gearing up to unveil a sandbox regulatory framework for the banking sector, a culmination of nearly two years of intensive groundwork. This move is forecasted to be a catalyst for Vietnam’s fintech landscape, ensuring robust growth and innovation.

Pham Anh Tuan, head of the Payment Department at the SBV, said that the government had closely overseen the sandbox framework’s development. A recent directive from the Prime Minister’s Office has put the central bank on a fast track, with plans to present the final proposal imminently.

“Should the government greenlight our proposal, we’re primed to release the accompanying guidelines. All facets of this framework have been rigorously prepared,” Tuan said.

Following the decree’s formal endorsement, the SBV intends to roll out official circulars, which are projected to be operational from January 2024.

Furthermore, the government is actively contributing to the expansion of the fintech sector by assuming a leadership role in the National Digital Transformation Programme.

The initiative aims to accomplish notable milestones, encompassing the digitalisation of half of all banking operations, provision of digital bank accounts for half of the population, and the facilitation of 70 per cent of transactions through digital mediums.

While challenges have impacted the recent funding landscape, Tracxn maintained a positive outlook for its recovery as the global economy achieves stability. The report highlighted that Vietnam’s economy has displayed continuous growth over the past decades, leading to a substantial surge in per capita income.

“The country’s economy is poised to expand at a rate of 6.3 per cent by 2023, underscoring the potential for growth not only within the fintech sector but also across numerous other industries,” the company said.