Digital banks and fintech startups eye Vietnam's unbanked and underserved consumers

Digital banks and fintech startups are teaming up to meet the needs of unbanked and underserved consumers in Vietnam

According to the latest statistics from the General Statistics Office (GSO), in the third quarter of the year, Vietnam recorded more than 28.2 million people who are unemployed or experiencing income reductions because of COVID-19. The situation makes it harder for workers to access bank loans as they cannot prove their financial ability.

Understanding the difficulties of Vietnamese workers, CIMB Bank Vietnam has entered a new strategic partnership with F88 Business JSC to promote financial inclusion to the unserved and underserved sector of the economy.

Thomson Fam Siew Kat, CEO of CIMB Vietnam, said F88 has developed a strong physical network with 500 branches to serve customers nationwide and has achieved significant business growth and financial success since launch. The primary aim of this strategic alliance is to improve the flow of credit to the unserved and underserved segment of the economy at an affordable cost. This happens as banks have lower cost of funds and F88 has greater reach beyond tier-2 centres.

"We have employed strategic alliances with many firms to effectively manage costs, overcome resource and technology constraints, and enhance our competitive position. With F88, we are looking to tap into new segments, manage costs, access both parties’ technology and infrastructure, and acquire new skills to provide an expanding array of financial services to wider markets while the global economy is recovering from the pandemic,” Thomson added.

The strategic alliance is expected to lead to productive institutional collaborations in financial markets, thereby expanding the array of financial products, and scaling up access of rural households and micro-businesses to financial services. The companies have shared a commitment comprising a new theme in lending services.

In November, Standard Chartered Bank also signed a partnership agreement with Home Credit Vietnam to launch an entrustment lending programme in Vietnam, an initiative that promises to enhance affordable access to finance for millions of Vietnamese consumers, driving greater financial inclusion in the country.

Under the entrustment lending partnership, Standard Chartered Bank and Home Credit Vietnam will offer accessible and affordable consumer lending products at scale to Vietnamese individuals. The partnership will harness international best practices with deep local market knowledge to offer innovative products, improving access to finance for Vietnamese customers – particularly those that may currently be underserved by traditional financial services.

According to the data by UK-based Merchant Machine, Vietnam ranks second among the top 10 unbanked nations, as 69 per cent of the population failed to approach traditional banking services and other financial institutions. Insufficient access to financial services has made Vietnam one of the region's most appetising markets for fintech companies.

In January 2019, MoMo received $100 million in Series C from Warburg Pincus. Four months later, FPT and SBI Holdings also invested $3 million in Utop. In June, homegrown fintech startup MFast successfully mobilised $1.5 million from two investment funds, Do Ventures and Jafco Asia.

In July, VNPAY mobilised $300 million from GIC and SoftBank. Meanwhile, Wee Digital last September also received an undisclosed investment from Intervest and VinaCapital Ventures.

Along with the limited access to financial services, Vietnam’s golden population structure is one of the main reasons behind digital banking and fintech investors accelerating their penetration in the market.