Nikkei Asia: Vietnam among Southeast Asia's top new fintech market

VOV.VN - Nikkei Asia, a leading financial newspaper run by Japanese media giants Nikkei Inc., published an article on August 6 titled “Vietnam emerges as Southeast Asia's next fintech battleground”.

According to Nikkei, for Vietnamese fintech startups like MoMo, the key to winning the battle against rivals such as Grab and Sea for the country's 100 million consumers may be “a simple cup of coffee”.

Before Vietnam was hit by fresh lockdowns amid the ongoing COVID-19 outbreak, the Ho Chi Minh City-based company ran promotions with some of the country's largest coffee chains, including Highlands Coffee, a fast-growing brand that boasts more than 300 outlets nationwide.

MoMo users received discounts for using the app to place and pay for an order, before then going to pick it up at a scheduled time. The promotion was designed in order to provide customers with a taste of the convenience of the all-in-one app.

Nikkei also quotes a person close to the company, stating that the attraction of Vietnamese consumers to use MoMo, even for small purchases, is part of the company's strategy which aims to get the app "on the first page of their iPhone".

Tuong Nguyen, executive vice chairman and Co-CEO at MoMo, told Nikkei that the diverse portfolio of services has helped to drive revenue at the firm, even during the current COVID-19 wave.

"We built a pretty balanced business... so we were confident that even in the very worst case, we will maintain at least 70% [of revenue] of a normal month," he said. "But of course we wanted to keep growing, so we focused on changing the risks to opportunities." 

According to the Japanese media outlet, MoMo, short for Mobile Money, first launched in 2013 and has gone on to become Vietnam’s largest e-wallet. It claims 60% of the country’s mobile payments market, processing an annualised US$14 billion worth of transactions for more than 25 million users.

However, Nikkei notes, the rise of MoMo has drawn in overseas rivals, helping to turn Vietnam into one of Asia's most competitive fintech markets.

“Dozens of players, including Southeast Asian tech giants Sea and Grab, have entered the space and are burning cash to acquire users,” the article notes.

According the financial publication, MoMo, which said in January it had successfully raised US$100 million from a group of investors, including US private equity fund Warburg Pincus, is already considering raising additional capital.

To enlarge  its network of stores that accept the app, MoMo is striving to expand its suite of services, an effort which will help it to branch out into areas like motorcycle insurance and consumer loans. In addition, it has acquired a software company that aims to speed up product development.

Nikkei notes that although Vietnam’s US$340 billion economy is also smaller than those of Indonesia, Thailand and the Philippines, its fintech sector is particularly appealing due to a range of factors.

Firstly, Vietnam has one of the region's highest mobile phone penetration rates at around 80% of the adult population, despite having a relatively low number of bank branches per capita.

Secondly, regulators have offered great support for the fintech sector, handing e-wallet licenses to dozens of local companies. That combination has served to create fertile ground for startups seeking to deliver financial services to consumers via smartphones.

Finally, the COVID-19 pandemic has greatly contributed to easing a major bottleneck for fintech to take off and be used more widely among the local population.

MoMo’s executives also acknowledge that the problem moving forward is that the app's success has contributed to attracting a flood of formidable competitors into the market.

Meanwhile, Grab has partnered with Moca, a local mobile payments company, making it the main payment option for its ride-hailing and food delivery services. Elsewhere, Singapore-based Sea, the gaming and e-commerce company, has also moved to launch payment services in Vietnam. Sea also operates Now, one of Vietnam's most popular food delivery apps.

Amid this increasing competition, Nikkei states MoMo believes it can beat its competition by locking in coffee chains and convenience stores.

“Young consumers use them more frequently than shopping online or hailing a car,” the article concludes.

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