Google Wallet Arrives on Vietnam’s Fintech Sector Scene

Google has introduced its Google Pockets cell app will now be out there in Vietnam.

The announcement sees Google Pockets be a part of a protracted line of fintech apps all vying for a chunk of Vietnam’s US$14 billion fintech market.

And it’s not simply in funds that fintech options are taking off. A spread of cell apps focusing on inventory market buying and selling and funding, together with cash lending, have all come on-line in recent times.

Fintech is undeniably booming in Vietnam and the momentum with which it’s propelling ahead, for a comparatively nascent business, is displaying little signal of slowing down.

Vietnam’s fintech business in numbers

A Robocash evaluation in Could of this yr discovered that the market was anticipated to succeed in US$18 billion by 2024. This represents an enormous demand for fintech companies within the burgeoning Southeast Asian nation.

Alongside this discovering, Robocash additionally reported that of enterprise capital invested in Vietnam, 93 p.c, in 2021, was directed towards digital funds.

It additionally discovered that between 2016 and 2021 fintech firms in Vietnam boomed. Over 5 years the variety of operators elevated by a whopping 84.5 p.c.

There was, nevertheless, a marked decline in market entrants from 11 per yr to only two. This may very well be an indication that the market could also be reaching peak saturation. Nevertheless, it may be an indication that huge gamers within the sector have firmed up their grasp on what Vietnamese fintech customers need and wish. New entrants, as such, will must be savvy operators with understanding of how Vietnam’s fintech sector works.

What’s driving development in Vietnam’s fintech sector?

Vietnam is a big development marketplace for fintech. Over 75 p.c of the inhabitants have web entry and that is set to climb to 82 p.c by 2025 or near an additional 7 million individuals.

On prime of that, Vietnam boasts a comparatively younger and tech-savvy inhabitants. In line with the Ministry of Communication 73.5 p.c of Vietnam’s inhabitants are at the moment utilizing smartphones. It estimates this quantity will climb to only over 82 p.c by the tip of 2022.

Moreover, a digital transformation of the Vietnamese economic system is on the prime of the federal government’s agenda. The Nationwide Digital Transformation Programme launched final yr, lays out key targets for digital banking to be achieved by 2025. These embody:

• 50 p.c of banking operations to be totally on-line,
• 50 p.c of the inhabitants to have a digital checking account, and
• 70 p.c of buyer transactions to be made by means of digital channels.

That mentioned, regardless of embracing digital banking, there was little regulation developed to handle the fintech sector.

Fintech regulation in Vietnam

Vietnam’s strategy to the proliferation of fintech and digital belongings has been regular and cautious. To talk of, there may be little or no fintech-specific regulation. There are, nevertheless, quite a lot of rules in different sectors that could be related to fintech operators.

For instance, Decree 101/2012/NĐ-CP, issued in 2012 and protecting non-cash funds could be utilized to fintech cost suppliers although it doesn’t point out them particularly.

Creating a fintech sandbox

To capitalize on the alternatives fintech presents the federal government is taking steps towards making a fintech sandbox.

This sandbox could be a check space for credit score organizations and monetary establishments to develop new applied sciences, for regulators to evaluate the dangers and advantages of fintech for the patron, to cut back the dangers shoppers face utilizing fintech merchandise, and to find out which regulatory authorities will likely be liable for regulating the sector.

This might be one thing akin to sandboxes in different Southeast Asian nations like Singapore, Thailand, or Malaysia.

That mentioned, although a draft of a decree outlining a potential fintech sandbox program has been circulated it might nonetheless be a while earlier than it’s accredited.

The standing of cryptocurrencies and digital belongings

Cryptocurrencies, for all intents and functions, aren’t authorized in Vietnam.

The State Financial institution of Vietnam (SBV) has been very clear about this, in an official dispatch in 2017 stating that:

“Digital foreign money typically, and Bitcoin and Litecoin specifically, aren’t currencies and aren’t authorized technique of cost in keeping with the provisions of Vietnamese regulation. Issuing, supplying and utilizing digital foreign money typically and Bitcoin, Litecoin specifically… as foreign money or technique of cost is prohibited.”

The letter goes on to level out that utilizing cryptocurrencies as tender could represent an ‘administrative violation’ and perpetrators could also be fined.

Peer-to-peer lending

Peer-to-peer lending can be for probably the most half unregulated. Though there was some suggestion that this might qualify as credit score actions by which case a license is likely to be required from the SBV.

Notably, within the aforementioned draft decree for a sandbox mechanism, there’s a provision made for exploring peer-to-peer lending companies.

Overseas funding in fintech in Vietnam

Though there are intensive restrictions on international direct funding in monetary establishments and credit score organizations in Vietnam, there are none particular to fintech. That is as long as the capabilities of fintech aren’t lined by different legal guidelines.

To be clear, an app just like the Google Pockets solely acts as an middleman between a monetary establishment or credit score group. It doesn’t really present credit score.

In gentle of this, international funding has poured into the sector in recent times–this too may very well be partly why Vietnam’s fintech sector has grown so huge so rapidly.

The way forward for Vietnam’s fintech sector

Regardless of elevated competitiveness in Vietnam’s fintech sector, Google Pockets reveals that there’s nonetheless room for brand new entrants.

Although there’s a lack of regulation, with a authorities desperate to digitally rework the economic system, any rules that do develop in Vietnam are prone to be favorable to the sector.

Moreover, because the inhabitants of younger tech-savvy Vietnamese continues to develop, and smartphone penetration proliferates even additional, the fintech sector is prone to proceed to growth too.