Vietnamese startups pour $129 million into financial tech

Vietnamese startups have invested $129 million into financial technologies, with investors saying the country has high potential for tech development, a conference in Hanoi heard last week.

Vietnam is one of the best markets for financial technologies given its widespread smartphone usage, increased consumer spending and low unemployment rate, Varun Mittal, Ernst & Young"s ASEAN FinTech head, said at the conference.

FinTech (financial technologies) are technological innovations created to support or enable banking and financial services such as AI-powered trading.

“Foreign investors are interested in and even willing to buy FinTech from Vietnam due to the country"s markets being attractive for FinTech development,” Mittal said.

The company said there are almost 80 FinTech firms currently operating in Vietnam, with about 47 percent specializing in payment services. This is partly due to the fact that most Vietnamese people still conduct transactions in cash.

Mittal also said that several banks want to collaborate with FinTech firms to develop digital banking software instead of developing the software themselves, citing lower costs.

Korea-based financial group Keb Hana’s chairman Kim Jung Tai said that the group is working with a Vietnamese bank on the development of FinTech during a meeting with Vietnam’s Deputy PM Vuong Dinh Hue in Hanoi back in January.

However, obstacles still remain. Vietnam’s financial services country leader for Ernst & Young, Nguyen Thuy Duong, said the Southeast Asian nation does not yet have an official policy regarding cooperation between banks and FinTech firms. The fact that many FinTech companies are just fledgling startups with limited capital, workforces and experience doesn’t help either.

Duong added that the State Bank of Vietnam is working on developing a legal framework to experiment with FinTech before applying it on a larger scale.