Digital payments are the dominant fintech segment in Vietnam. "For now I think what is taking up a lot of traction in the developing economies will be very consumer-based," Wong Wanyi, FinTech Leader at PwC Singapore and co-author of the report, told Nikkei Asian Review in November.
The Vietnamese government is keen to boost digital banking as a part of a wider drive to improve its people's access to financial services and become a cashless society by 2025. Compared to its aging neighbors in Northeast Asia, Vietnam is much younger (70% of the population of 91 million is younger than 35) and less attached to cash. Vietnam also benefits from high internet and smartphone penetration rates in its largest urban regions, a growing e-commerce industry and solid annual GDP growth. Vietnam's economy grew by 7.08% in 2018, its best performance in 11 years. The government is targeting 6.8% growth this year.
Vietnam may well be Asean's most underbanked major country behind Myanmar. According to a Standard Chartered report published in May, only 31% of the Vietnamese 15 or older have a bank account, a lower percentage than in the Philippines, Indonesia and Thailand. 90% of transactions in Vietnam use cash, while only 3.5% of Vietnamese have a digital wallet, the report found.
The surge in fintech funding in Vietnam can be attributed to two large digital payments deals, which account for a whopping 98% of all fintech investment in the Southeast Asian country this year. In July, Japan's SoftBank and the Singaporean sovereign wealth fund GIC invested US$300 million in the Vietnamese digital payment company VNpay. The other big Vietnam fintech deal occurred in January, when the digital wallet MOMO Pay received $100 million in a Series C funding round led by U.S. private equity firm Warburg Pincus.
According to the Ho Chi Minh City Computer Association, Vietnam had 154 fintech firms by mid-2019, compared to 120 last year. Overall, they have raised $1.1 billion in investment capital.
Besides payments, which account for about 60% of Vietnam's fintech businesses, other key segments include crowdfunding (10.5%), crypto and blockchain (about 8%) and POS/mPOS management (about 5%), according to the State Bank of Vietnam.