return icon

Fintech putting pressure on banks

Mr. Marc Djandji, Entrepreneur in Residence at VIISA's Fintech Lab, talks about the mark fintech is making in Vietnam.


Mr. Marc Djandji, Entrepreneur in Residence at VIISA's Fintech Lab


According to Asia-Pacific-focused consultants Solidiance, Vietnam’s fintech market was worth $4.4 billion in 2017 and is predicted to reach $7.8 billion by 2020, for a 77 per cent increase over three years. What factors lie behind this growth?

There are a number of important key dynamics driving the growth of fintech in Vietnam. Here are just a few that come to mind:

  1. Vietnam has a tech-savvy population.
  2. The country benefits from a rapid proliferation of smartphones and internet connectivity. 

  3. There is a large population of unbanked and under-banked individuals and small and medium-sized enterprises (SMEs) that fintech firms can service.
  4. Forward looking policies have been adopted by the government aiming to reduce the amount of cash transactions in the country.

  5. An expanding ecosystem to support digital entrepreneurs.

Does the rise of new fintech products and services put pressure on traditional banks? 

The user experience at traditional Vietnamese banks is antiquated. Many of the recent fintech-related developments are highly customer-focused and contrast with the traditional product orientation of banks.

So, the younger, tech-savvy generation is gravitating towards branded fintech companies that provide the best user experience and the best value and that can ultimately help them reach their financial goals.  

Solidiance’s research shows that digital payment leads the fintech services market share in Vietnam, with 89 per cent. This doesn’t mean that Vietnamese banks will go the way of Kodak.

Banks will remain widely used, profitable, and cash-rich businesses. But they’ll need to upgrade themselves to compete.

Already, we’ve seen a number of Vietnamese banks embracing these new concepts of customer-centric services and adopting new technologies to better serve clients. 

What are the challenges facing Vietnam’s fintech industry?

The greatest challenges are the regulatory environment in which fintechs operate and the increasing competition. 

There has been some degree of cooperation between banks and fintechs in recent times. What are your thoughts on this trend?

Information technology and fintech will change the competitive landscape. Though banks will continue to play a leading role in the financial ecosystem, the traditional bank-customer relationship will need to evolve.

I believe more cooperation is a win-win for banks and fintechs. As enablers, fintech companies can help Vietnamese banks reduce friction in service delivery or enhance the customer experience. Banks, meanwhile, allow fintech firms to locate clients easily and serve them better.

What should local banks do during digital transformation?

Not only banks but also insurance companies need to embrace new financial technologies and even try to accelerate innovation from within by setting up their own corporate incubators.

To deal with the challenges and uncertainties ahead, these financial institutions will need to become agile and flexible.

Financial institutions with a large client base will have many development areas to explore, such data mining, blockchain technologies, microfinancing as a product, and pay-as-you-go (PAYGO) insurance models.

Financial institutions trying to launch a successful innovation program should focus on a concerted approach.

Established players have an advantage in that they can leverage existing data to identify new revenue sources.

However, they will have to decide relatively quickly which type of app and service to launch and to how to best leverage existing human resources and consultants to get there.

What should the government do to support the development of fintech in Vietnam?

The government should support technology and innovation. The current legal framework is unclear on certain areas of fintech and, in some cases, it completely bans the development of innovative solutions. It will take a coordinated effort from many stakeholders within government to solve some of these issues. 

To support the fintech ecosystem, the government should create a regulatory sandbox to help fintech companies test their products, discover real challenges, and find scalable solutions.

One area I am particularly interested in is equity crowdfunding. Equity crowdfunding is the online offering of private company securities to a group of people for investment, and therefore it is a part of capital markets.

In other countries, it has enabled innovative startups to access much-needed capital to support their growth and development. 

Because equity crowdfunding involves investment in a commercial enterprise, it is often subject to securities and financial regulation.

In Vietnam, this type of activity would be regulated by the State Securities Commission under the Law on Securities, and would be considered a public offering.

However, the Law on Securities’ requirements for a public offering in regards to capital structure, size, and profitability are too restrictive for private innovation companies.

These requirements are far too restrictive for startups to raise funds from capital markets, and force them to rely on friends and families, angel investors, and venture capitalists (VCs).

Under Vietnam’s current Law on Securities, a company like Amazon would never have been able to launch a public offering of its shares. If the country wants to promote innovation, it must empower the way innovation gets funded.  VN Economic Times

Linh San


HCM City suggests raising tax on owners of more than one home

The government of HCMC has proposed imposing a higher property tax on people who own a second home but do not use it.

Former State President Nguyen Xuan Phuc explains his resignation

Former President Nguyen Xuan Phuc decided to resign and retire as he was fully aware of his responsibilities before the Party and the people when a number of officials under him committed violations during his stint as prime minister in 2016-2021.

Vietnam remains third largest seafood supplier to RoK

The nation remained the third largest seafood supplier to the Republic of Korea (RoK) last year with the country’s seafood market share as part of the RoK’s total imports reaching 10.2%, according to statistics released by the Korea Customs Service.

Airline agencies asked to tighten control over smuggling by air

The Civil Aviation Administration of Vietnam (CAAV) has asked agencies under its wing to strengthen inspection and supervision to promptly detect and handle smuggling by air.

Vietnamese FM meets Cambodian, Philippine, Malaysian counterparts

Foreign Minister Bui Thanh Son met with his Cambodian, Philippine and Malaysian counterparts on February 3 on the sidelines of the 32nd ASEAN Coordinating Council Meeting (ACC-32) in Jakarta, Indonesia.

Vietnam to help Timor Leste soon become official member of ASEAN: FM

Vietnam will work with other ASEAN member states to discuss, agree on processes, procedures and necessary measures to support Timor Leste to become an official member of the group soon, Foreign Minister Bui Thanh Son said.

Vietnamese circus artists Quoc Co, Quoc Nghiep set new world record

Circus artists Giang Quoc Co and Giang Quoc Nghiep on February 3 (Vietnam time) set a new head-to-head balancing walk plus blindfold record in Milan, Italy.

HCM City faces shortage of teachers at all levels

The Ho Chi Minh City People’s Committee has held a press conference to provide information about socioeconomic issues and epidemic prevention and control in the city.

Female People's Army officer works at EU Training Mission in Africa

Of the seven officers of the Vietnam People’s Army sent by the President to international missions, Lieutenant Colonel Vu Thi Lien is the first officer performing duties at the European Union Training Mission in Central African Republic (EUTM RCA).


Minister requests fruitful cooperation in defence industry with other countries

Vietnamese cyber users advised to be cautious about ChatGPT registration

ChatGPT has recently been so popular in various fields. Since there are limits in ChatGPT registration from Vietnam, Internet users here are warned to be careful to proceed with the process to avoid being scammed.

2-3 more submarine fiber cable routes needed for Vietnam

The Vietnam Internet Association’s (VIA) Secretary General Vu The Binh said Vietnam needs at least two or three more submarine fiber cable routes in the next five years to serve mounting demand.

Vietnam still approves use of Covid antibody treatment

Vietnam still approves use of Covid antibody treatment Evusheld as it is still effective against subvariants circulating in the Southeast Asian country.

Former Coast Guard generals accused of embezzling $2.1 million

The crime allegedly started in 2019 when the Vietnam Coast Guard’s Department of Technology was allocated VNĐ150 billion (US$6.3 million) to purchase equipment.