Foreign investors tap into fin-tech

According to the Topica Founder Institute, Vietnamese financial technology firms have attracted the third-highest amount of foreign capital into tech start-ups, just below e-commerce and media. 

The latest example of investor eagerness to profit from this trend is a US$28-million joint-investment from Goldman Sachs and Standard Chartered Bank Private Equity in M_Service, the operator of mobile e-wallet service Momo, announced on March 17.

 Momo is currently the only mobile payment app in Vietnam to utilize the “one-touch payment” technology, which reduces transaction time for customers.

At the announcement ceremony, Terence Ting, head of Asia Private Investments at Goldman Sachs, noted that while mobile phones had gained immense popularity in Vietnam, the banking sector failed to take advantage of this trend. In fact, it is estimated that one-third of Vietnamese people have yet to use any services provided by banks. 

According to Ting, this gap presents a great opportunity for financial technology firms, who can make use of smartphones and other digital tools in order to promote financial services in Vietnam.

“Vietnam has a dynamic, tech-savvy, and young population, which has spurred the growth of tech-based consumer services, including finance”, Ting told VIR. “thus, Goldman Sachs wants to support firms in financial technology, which provides a neutral payment platform that does not belong to any banks”.

This is the second time that Goldman Sachs has invested in M_Service, as the American investment bank already poured US$5.75 million into the Vietnamese start-up in 2013.

Likewise, Bert Kwan, managing director and head of ASEAN private equity at Standard Chartered Private Equity (SCPE), said that he was excited to invest in financial technology firms, since this would fulfill the bank’s broader mission of promoting financial inclusion in Vietnam and benefit Vietnamese consu,ers, merchants, and retailers. Kwan thus has high hopes for M_Service, which received US$25 million from SCPE in last week’s deal.

Back in October 2015, Standard Chartered Bank teamed up with Dragon Capital to establish the “Vietnam FinTech Club”, as was suggested during UK Prime Minister David Cameron’s visit to Vietnam. 

The club is designed to network and advocate for the new sector, pulling together ideas to create a revelant financial technology ecosystem in Vietnam. Members include such industry players as FPT Vemtures, IDG Ventures, NexT-Tech Investment, M_Service, Fundstart, 1Pay, Pasoto.com, Loanvi.com, and Mymoney.vn.

However, despite foreign investors’ strong interest, experts noted that local financial technology firms still had a long way to go. The most prominent issue was convincing Vietnamese consumers of these start-ups’ trustworthiness when handling money, especially when compared to traditional banks.