|A customer makes payment by QR code for his order online. — VNA/VNS Photo
Lam Nguyen Hai Long, chairman of the HCM City Computer Association, said, “There are eight reasons HCM City can become the country’s fintech hub.
“It is now the driving force of the national economy. The city has a large number of software and technology firms, hi-tech parks and technology incubators. It is also the place for fintech companies to start up.
“It is home to the country’s first and largest stock exchange. Fifteen commercial banks, including four international ones, and many international investment funds are headquartered in the city. This is where businesses can find a skilled workforce. The city has the backing of overseas Vietnamese from the US and EU.
“HCM City is closely connected with the regional financial centre, Singapore, thanks to its geographical location. According to the 2018 Global FinTech Hub report, HCM City is one of the region’s emerging fintech centres.”
In 2002, the Party Politburo’s Resolution No. 20 determined HCM City will be developed into a financial centre of the country and, gradually, the region, and the goal was mentioned again in Resolution No. 16 in 2012.
“Therefore, this [HCM City] is the right place for fintech start-up projects.”
Concurring with him, Pham Xuan Hoe, deputy director of the Banking Strategy Institute under the State Bank of Vietnam, said the city has ideal conditions to become the fintech hub of the country and region, in order to realise its potential, but that needs breakthrough policies.
Vietnam is considered a promising market for fintech companies thanks to its young demographics, strong e-commerce growth and growing smartphone and internet penetration, Hoe said.
It has four public banks, 28 private banks, 1,183 people's credit funds and numerous other credit and financial institutions with whom fintech firms could tie-up for mutual benefit, he added.
“The Government wants to create a cashless society and increase banking penetration, especially to benefit small- and medium-sized enterprises and remote areas. Fintech plays an important role in this.”
Long from the HCM City Computer Association said the number of fintech companies has increased from 120 last year to 154 by mid-2019, and they have attracted US$1.1 billion in investment capital.
Their financial solutions have penetrated the retail and consumer credit markets, he said.
Hoe told Viet Nam News that: “According to international orgnisations, Vietnam’s fintech market will be worth $9 billion by 2020. They had earlier forecast it would reach $7-8 billion by 2020, but with the strong growth recently, they have adjusted their forecasts.”
Fintech companies are operating in all financial segments, including payment solutions (nearly 61 per cent), crowdfunding (10.5 per cent), bitcoin/blockchain (7.89 per cent), and POS/mPOS management (5.26 per cent), he said.
Tran Viet Vinh, CEO and founder of FIIN Company, said fintech is popularising modern and convenient financial services among Vietnamese.
“The development of fintech is creating opportunities for people to access funds quickly and conveniently, and immediately resolve their difficulties. This is the biggest contribution to eliminating usury.”
Hoe said, “Most fintech companies in Vietnam (72 per cent) have chosen to co-operate with banks to develop together.
“Fintech helped increase payments through internet banking by 19.5 per cent last year and through mobile banking by 170 per cent.
“The rapid growth in fintech has ushered in a transformation in the financial and banking sector and offers consumers more convenient and diverse products and services.
“But with such new models, we have to think about creating a legal framework for them to develop.”
According to experts, fintech faces considerable challenges related to cybersecurity, human resources and policies and regulations to support the development of an eco-system.
Long said Indonesia, Malaysia, Singapore and Thailand have a regulatory sandbox, a framework set up by a financial sector regulator to allow small-scale, live testing of innovations by private firms in a controlled environment under regulators’ supervision, while the Philippines and Vietnam do not.
He wanted the Government to quickly develop a legal framework and offer incentives to attract investment from large tech companies for developing fintech platforms.