Vietnam’s economy has propelled itself from one of the poorest nations in Asia to a low-middle income one in the space of one generation. But how has it achieved this and what role has fintech played in boosting the country’s economy?
It has been almost 30 years since Vietnam launched Đổi Mới, its economic development transformation plan that transitioned the country away from its planned centralised economy, which acted as the catalyst for positive change. In recent years, technology adoption has played a big part in ensuring this change continues.
Currently, Vietnam has a gross domestic product (GDP) of $4,163 per capita and is a member of the Association of Southeast Asian Nations (ASEAN); many of its trading partners are from fellow ASEAN member nations.
Some of the largest banks in the country include:
Bank of Investment and Development of Vietnam (BIDV)
Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank)
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
The banking scene is made up of state-owned commercial banks, joint-stock commercial banks, joint-venture (JV) banks and foreign-owned banks. The majority of its financial services clusters reside in the largest commercial hub of Ho Chi Minh City or the capital city of Hanoi.
Examples of fintechs from Vietnam include wealthtech firm Finhay, e-wallet payment fintechs Momo and ZaloPay, and payment VnPay.
Fintech’s role in Vietnam’s economy
Ninety per cent of Vietnamese bank transactions are completed via digital channels. In fact, many basic banking services, like bank account openings, deposits, and money transfers, have been completely digitised. Additionally, around 40 banks opened 35 million accounts through electronic know-your-customer (eKYC) in 2023.
Fintech is going to continue to lead the charge for the digital economy’s development in the near future too, reaching $45billion in the next year, according to research from Google, Temasek and Bain & Company. Vietnam’s fintech sector is experiencing the second-highest growth rate (behind Singapore) in the ASEAN region. Additionally, by the end of 2024, the country is expected to have a digital valuation of $18billion.
This builds on previous success as in 2022, Vietnam had the highest digital economy growth rate in Southeast Asia at 28 per cent.
In January this year, according to data from the country’s central bank, the State Bank of Vietnam (SBV), non-cash payment transactions surged by 63.3 per cent in volume and 41.45 per cent in value compared to findings in January 2023.
Additionally, internet banking and mobile banking transactions also saw a 57.85 per cent and 68.54 per cent increase in volume and 32.43 per cent and 41.12 growth in value, respectively
QR code payments in Vietnam
Like much of Southeast Asia, QR code payments are very popular in Vietnam. Users, both young and old, can pay for many day-to-day transactions using this payment method. Between January 2023 and January 2024, QR code payments saw a massive increase of 892.95 per cent in volume and 1,062.01 in value.
In early 2021, 40 per cent of adult consumers were already using QR code payments in the country. This made it the third highest Southeast Asian country using the payment method, only behind Thailand at 42 per cent and Malaysia at 50 per cent.
VietQR is the common brand identity for QR code payment and transfer services processed through the network of The National Payment Corporation of Vietnam (NAPAS) and its various member banks, partners and payment intermediaries in Vietnam. NAPAS reported that by Q3’23, VietQR codes saw a doubling in payments, exceeding 100 million transactions per month.
Adopting digital
Traditional financial services like automatic teller machines (ATMs) have seen a decline in usage in Vietnam. The volume usage dropped by 15.4 per cent and the value followed s similar trend, declining by 18.76 per cent. This further shows the growth of non-cash payments and wider fintech in Vietnam.
The rise of living standards in the country, particularly the rise of the middle class, has also aided in the development and adoption of Vietnam’s digital infrastructure.
For instance, despite Vietnam being categorised as a lower-end, middle-income country, it has an internet penetration rate of 79.1 per cent, boasts nearly 78 million internet users and 161.6 million active mobile connections. Interestingly, this accounts for a large part of the country’s population (over 98 million) showcasing its impact.
According to recent estimates, there are at least 260 fintechs in the country of Vietnam. They account for various subsectors including payments, wealthtech, and alternative finance – to name a few. Considering in 2015, there were only 39 fintechs and in 2021, around 150 in the country, the ecosystem has blossomed.
The global fintech scene saw a decline in funding in 2023, and Vietnam was no different. However, despite an 80 per cent drop in financing, the growing number of fintechs in the country shows that attitudes remain optimistic.
Government fintech support
Whilst the government might not be as fast with other countries in support, it has nonetheless been responding to calls for help and support for the sector. In March 2024, the State Bank of Vietnam (SBV) released a new draft decree on the regulatory sandbox for the country. The last time the state bank approached the topic was in 2020.
The country also has its own financial inclusion strategy which will last until 2025. It aims to extend this until 2030. One of its aims is to boost the total number of people with bank accounts in Vietnam to 80 per cent. Additionally, it is looking to be more inclusive for the lower-income population and micro, small and medium enterprises (MSMEs), who traditionally have been financially excluded.
The Vietnamese Socio-Economic Development Strategy (SEDS) 2021-2023, aims to develop an integrated, efficient and sustainable economy.
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