Despite Vietnam only accounting for 0.4 per cent of total fintech investment in Southeast Asia in 2018, this figure sharply increased in 2019 as venture capital funding pouring into Vietnamese fintech companies accounted for 36 per cent of total fintech investment in the region with Ho Chi Minh City and Hanoi emerging as regional as fintech hubs.

The leading fields which have been attracting venture capital in fintech companies are peer-to-peer lending apps, credit scoring, and mobile payments.

According to a recent report released by the World Bank, the number of Internet users located in Southeast Asia has rapidly increased since 2011.

Despite this growth, 90 per cent of all Internet users still come from five major countries, mainly Indonesia, Malaysia, the Philippines, and Vietnam.

There are two nations that are leading the way in terms of the number of start-up accelerators, incubator models, and development labs in Southeast Asia. The region’s strongest nation is Singapore which lead the way with 52 incubator models, while Vietnam is second with 24 models, according to ASEAN Today.

Vietnam has enjoyed impressive growth, developing into a prosperous start up centre in recent times. With 70 per cent of the population currently able to use the Internet, the country is now on a par with the same number of citizens using the digital applications as other regional peers such as the Philippines with 60 per cent and Malaysia with 81 per cent.

According to ASEAN Today, the Vietnamese government is striving to become a cashless society and bring individuals and businesses in rural areas the ability to access banking services.

As a means of fulfilling these goals, the government has begun to implement advanced policies aimed at promoting growth in the fintech field.

These policies have seen the number of fintech startups increase significantly, while the number of financial technological companies nationwide has risen from 40 in 2016 to 154 in 2019.

According to the survey conducted by the Institute for Development and Research in Banking Technology under the Vietnam National University Ho Chi Minh City, there are approximately 37 companies throughout the country that are operating in the digital payment field, 25 in peer-to-peer lending, and 22 fintech firms in the e-wallet and money transfer services.

With Vietnamese enterprises enjoying strong growth in the fintech field, international organisations have revised their market projections with the nation’s fintech market predicted to grow to between US$7 billion and US$8 billion before the end of 2020. In line with these projections, many economists are predicting that the fintech market will likely reach the US$9 billion mark.

In addition, the country’s banks and startups are starting to work in close co-ordination with 72 per cent of start-up businesses now working alongside banks. This is backed up by the opinion of experts who state when working with fintech companies, banks are able to significantly improve their products and services.

A representative of the Banking Strategy Institute under the State Bank of Vietnam stated that through a partnership with fintech companies, banks have been able to increase 19.5 per cent of the amount of payments made via e-banking in 2018.

With robust growth figures and a rapid expansion of the middle-class, investors are able to enjoy bright prospects for the nation’s fintech market. The country’s population is expected to grow to 105 million before 2030, an increase of 14 per cent in comparison with 2014’s figure.

As a result, this increase in the average income per capita and population growth has served to create an ideal business climate for investors.

These macroeconomic shifts in terms of business climate and demographics have seen the government begin to lay the foundations for the country’s fintech future.

Science, technology, engineering, and maths (STEM) has been made a key component of the national curriculum with students also able to enjoy greater access to computers. Moreover, before entering the fourth-grade students are able to develop computing skills and basic software development.

Aside from investing in future generations, the government has also made great strides to attract talented workers based overseas to return to their homeland to work.

The initial signs of these policies have shown that the government’s efforts have received positive feedback. Among dozens of thousands of overseas Vietnamese who choose to return to the homeland, many of them are entrepreneurs, highly-skilled experts, or those who are able to assume important positions at local companies, or are themselves the founders of various companies.

According to ASEAN Today, the nation will continue to expand its footprint on the region’s fintech map whilst simultaneously emerging as a major player in the region’s fintech landscape, serving as a model for other regional players.