Vietnam consumer finance market has been experiencing a boom in recent years, registering growth rate of 28.9% and was estimated to reach the total value of US$26.6bn in 2016. Though this may be a strong indication that Vietnamese consumers have great demand for financing, the main reason is that banking penetration is still low in Vietnam at only 31%. Many people with borrowing needs are unable to get access to loans due to strict regulations put forth by the government and formal financial institutions. However, a large unbanked population along with high mobile and internet penetration provide the strategic environment for the development of Fintech firms in Vietnam – a relatively new sector yet possesses an enormous growth potential.
The influx of Fintech firms has been changing the shape of banking and consumer finance market in Vietnam, introducing a number of innovative, direct and customer-oriented products such as mobile and e-payment, personal finance, business tools, etc. Realizing the potential of Fintech firms, many domestic and foreign investors also have flooded capital into this sector through many M&A deals, with total transaction value expected to reach US$7.2bn in 2020. In the coming years, it is expected that Fintech will continue to be one of the hottest investment sectors. At the same time, the government has been working on developing new regulatory framework and policies to accelerate the growth in the fintech sector, most notably through the introduction of the Fintech Taskforce and the decision to reduce non-cash payment transaction in Vietnam.