Vietnam’s consumer finance market shifts from expansion to sustainable quality

Oanh Tran, senior manager of Market Research & Consulting Services at FiinGroup

The Vietnam Consumer Finance 2026 Report shows that banks remain the primary growth driver of the consumer lending market. What is driving the divergence between banks and finance companies today?

In 2025, outstanding consumer finance loans grew by approximately 26 per cent on-year. Commercial banks continued to lead the market, recording growth rates nearly twice those of consumer finance companies. This divergence largely reflects differing strategic priorities between the two groups.

For banks, the recovery momentum of the real estate market since late 2024 has supported the expansion of secured retail lending products, particularly home purchase and home improvement loans.

This segment experienced strong growth in 2025 and remains an area where banks possess advantages in funding costs, underwriting capabilities, and risk management.

At the same time, many banks have accelerated their retail banking strategies, leveraging digital banking platforms and existing customer ecosystems to expand consumer loans. Foreign banks have also increased their presence, particularly in credit cards and personal/cash loan products.

Finance companies, meanwhile, have gone through a very different period. Following the disruptions during 2022-2024, when credit risk increased amid post-Covid economic pressure and geopolitical volatility, many players shifted their priorities away from loan growth towards asset quality improvement, debt resolution, and portfolio restructuring.

Therefore, the growth gap between banks and finance companies reflects differences in their starting points and strategic priorities rather than a deterioration in the competitiveness of finance companies.

Does the faster growth of bank consumer lending indicate a change in the competitive structure of the market?

The key issue is not merely growth rates, but rather the changing boundaries of competition within the consumer finance market. Historically, there was a relatively clear division between banks and finance companies. Banks primarily served customers with stronger credit profiles, while finance companies focused on mass-market and underbanked/unbanked borrowers.

Today, however, those boundaries are becoming increasingly blurred. The rise of digital banking has significantly reduced customer acquisition and servicing costs, enabling banks to reach customer segments that were traditionally served by finance companies.

At the same time, many finance companies are moving towards higher-quality customer segments to improve portfolio quality and reduce credit risk. As a result, the industry is entering a new competitive phase in which advantages no longer depend solely on branch networks or loan disbursement speed, but increasingly on ecosystem development and the effective deployment of customer data.

Cash lending has traditionally played a major role in consumer finance. Is the current shift cyclical or structural?

In my view, this is a structural transformation. During the rapid growth phase of Vietnam’s consumer finance market, personal/cash loans served as the primary engine for customer acquisition and profit expansion. However, these products also carried higher credit risk, particularly during periods of economic stress and declining borrower repayment capacity.

The developments of recent years have prompted many finance companies to reassess their growth strategies.

Rather than relying heavily on a single high-margin but high-risk product, finance companies are actively diversifying their portfolios. Expansion into asset-backed loans, instalment financing, and ecosystem-based lending products has become increasingly evident.

Another important factor is digitalisation, which is fundamentally changing consumer lending activities. Transaction data, spending behaviour, and digital footprints are becoming increasingly richer.

This may allow finance companies to assess customers with greater granularity and design more suitable lending products, and manage risk more effectively. The market, therefore, is not simply witnessing a product shift, but a broader transformation of its business model.

What factors will determine the competitiveness of consumer finance companies over the next three to five years?

For many years, competitive advantage in financial institutions was primarily associated with capital scale, distribution networks, and customer acquisition capabilities.

While these factors remain important, they are no longer sufficient to create sustainable differentiation. Going forward, the ability to collect, analyse, and utilise data will become a decisive factor.

Data enables companies to better understand customers, personalise product offerings, and, most importantly, assess risks more accurately. This becomes increasingly important as competition intensifies and profit margins gradually narrow.

However, data alone does not create a competitive advantage. The fundamental advantage lies in a company’s ability to convert data into effective business decisions.

Therefore, future winners will be those that successfully combine data, technology, and risk management capabilities. These companies are likely to achieve more green growth than the rest of the market.

What is your outlook for the consumer finance market?

After many years of rapid expansion, Vietnam’s consumer finance market is shifting from a mindset focused on scale to one centred on the quality of growth. This does not represent a slowdown; rather, it reflects the market’s maturation.

In the next cycle, competitive advantage will not necessarily belong to the institutions expanding loan books most aggressively. The winners could be those that successfully rebalance growth and risk, customer expansion and asset quality, and technology and governance.

The race in consumer finance continues, but the rules of the game are changing: adaptability will become the defining factor behind long-term success.

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