Which road will fintech take?

According to PricewaterhouseCoopers, fintech startups have attracted $40 billion worth of investment over the last four years. Asia Pacific alone received $15 billion worth of investment in fintechs in 2018.
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According to PricewaterhouseCoopers, fintech startups have attracted $40 billion worth of investment over the last four years. Asia Pacific alone received $15 billion worth of investment in fintechs in 2018.

Solidiance predicts that Vietnam’s fintech market will be valued at $7.8 billion.

According to the State Bank of Vietnam, there are 150 fintechs operating in many fields, mostly in the payment sector.

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There are many fintechs in the payment sector

Meanwhile, the annual report on investments in Vietnam’s startups in 2018 by Topica Founder Institute showed that fintech still led business fields in attracting capital with eight deals made in 2018, worth $117 million in total.

By the end of 2017, $4.4 billion dollars had been been poured into the sector and the figure is expected to double by 2020.

The annual report on investments in Vietnam’s startups in 2018 by Topica Founder Institute showed that fintech still led business fields in attracting capital with eight deals made in 2018, worth $117 million in total.

Many fintechs in Vietnam receive large investments. MoMo received capital from Warburg Pincus. VinID took over MonPay platform. TomoChain mobilized $8.5 million through ICO (initial coin offering) in 2018. Tima received $3 million from Belt Road Capital Management, while Finhay received $1 million from foreign partners.

“Foreign investors plan to buy good fintechs because the market potential is great,” said Varun Mital, deputy chair of Singapore Fintech Association.

Policies

While fintech is witnessing hot development, the policies to manage the sector cannot keep up with its rapid development pace. There are concerns that the firms could be exploited for illegal purposes.

State management agencies have recently taken moves to tighten management over fintech. The central bank is drafting a legal document which sets limitations on foreign investments in payment intermediaries, and restricts the value of transactions and the number of e-wallet accounts one individual can have. It also sets strict requirements on individuals’ information declaration.

The tentative policies have raised controversy. While some experts suppirt the watchdog agency’s intention to keep tight control over the payment sector, others argue that the strict regulations will cause inconveniences to users and hinder the development of financial institutions.

Varun Mital said at a workshop on fintech management organized recently by the Vietnam Association of Financial Investors (VAFI) that if state management follows an overly cautious approach, Vietnam’s fintechs won’t be able to develop fully.

The plan to set a cap on foreign ownership ratio in fintechs (30 percent or 49 percent) has caught special attention from investors. At present, the development of fintechs still heavily relies on foreign investments. Limitations on foreign ownership ratio, if it is set, will mean that Vietnam’s fintech will not have enough money to develop.

Kim Chi