According to Solidiance, an APAC-focused consultancy firm, Vietnam’s fintech market was valued at US$4.4 billion in 2017 and is forecast to topple US$7.8 billion by 2020, equivalent to a 77 percent surge over three years.

Factors driving the anticipated growth include regulatory efforts to increase financial inclusion and to reduce cash payments, rising income and consumption in the e-commerce industry, and high internet and smartphone penetration rates.

To achieve the United Nations’ goal of promoting financial inclusion, the government of Vietnam has rolled out regulations to increase banking penetration to 70 percent from 59 percent in 2017 and to shift to a cashless payment economy, where the cash to total liquidity ratio is less than 10 percent, by 2020.

The State Bank of Vietnam has appointed a steering committee on financial technology to support the development of fintech companies in the country, as the government sees the importance of technologies to the transformation of the financial sector.

Vietnam’s economy grew 6 percent per annum during the past five years and 7.08 percent in 2018. Solidiance forecasts that the number of e-commerce users will reach 42 million with an average e-commerce consumption of US$96 a year by 2021, up from 35.4 million users with an average consumption of US$62 in 2017. The predicted growth of the e-commerce industry and the country’s policy to go cash-free will trigger the development and expansion of fintech solutions.

In addition, the World Bank believes Vietnam is capable of providing the necessary infrastructure for fintech services, even in remote areas, due to its high level of internet and smartphone penetration rates, some of the highest in Southeast Asia.

Within in the fintech industry, digital payment services account for 89 percent, personal finance for 9 percent, and corporate finance for 2 percent of the total fintech market volume in 2017. Solidiance predicted personal and corporate finances will account for 24 and 6 percent of the total market volume by 2025.

In terms of personal finance, fintech solutions will be provided to respond to demand in the peer-to-peer (P2P) lending and consumer finance segment, especially in rural areas. Unlike traditional banking, fintech solutions eliminate the need for face-to-face interaction, making financial transactions easier and faster for everyone.