FinTech, a portmanteau of financial technology, has taken the global economy by storm. It primarily evolved as a solution to inefficient methods and unexplored opportunities in the financial services sector. Billions of investments are flowing in this industry due to the abundance of untapped opportunities.
Asia-Pacific has nearly $15 billion in FinTech investments between January 2016 and February 2017. In Vietnam, the investments had garnered 4.4 billion in 2017 and by 2020 it is expected to hit $7.8 billion. This is due to the rising popularity of e-wallets, internet and smartphone penetration and the growing e-commerce in Vietnam [Forbes].
What’s more, the Vietnamese government aims to attract investors in the FinTech industry. The creation of the SBV (State Bank of Vietnam) Steering Committee on Financial Technology and other measures contributed to the robust growth of the market. Additionally, the Ministry of Planning and Investment will draft a new strategy with an aim to encourage high-quality investments in this sector.
With such robust market growth, no wonder several foreign capitals are flowing in the Vietnamese FinTech industry. So, the next sections will cover case studies of successful FinTech companies and how to achieve an efficient company formation in this area.
Trends in the Vietnam Fintech Industry
Vietnam’s 30% foreign ownership restriction in the banking provides restricted market access to investors. But, with the growing FinTech industry, it allows foreign investors to tap into the financial market of the country. Foreign entrepreneurs can set up and register a company in this industry and venture in a lucrative overseas market.
Foreign investors and entrepreneurs who want to take part in the FinTech market can look into the digital payments solution. In 2017, this sector comprised 89% of the industry. Though personal and corporate finance is expected to grow significantly by 2025, digital payments will continue to dominate due to the rise of e-commerce, smartphone ownership, internet access, and consumerist class.
Now, here are two case studies from Fintech companies that acquired large foreign investments:
Allowing users to invest in mutual funds conveniently has made Finhay gain a strong presence in Vietnam’s FinTech sector. This mobile wealth management platform started in 2017, allows customers to invest as little as $2.17 (VND 50,000) in mutual funds from the company’s portfolio.
With this business model, millennials can take part and benefit from mutual funds investment. Plus, it provides users with a risk assessment recommendation based on the information in the applicant’s account. As a result, the Vietnamese FinTech firm was able to raise $1 million in seed funding from Singapore’s Insignia Venture Partners and other investors from Hong Kong and the US [The Independent].
MoMo Mobile Money
Since digital payment is the top trend in Vietnam’s FinTech scene, mobile money apps such as MoMo stood out. Founded in 2013, it started as a digital payment service provider via e-wallet. From then, it expanded to utility bill payments, airline flight payments and many goods and services at over 100,000 payment points. Plus, it caters to a massive market for about a quarter of 100 million people.
In 2016, the company caught the eyes of many foreign investors and was able to raise $25 million from Standard Chartered Private Equity, while Goldman Sachs added $3 million, which invested $5.8 million back in 2013. Recently, MoMo received a significant investment deal from Warburg Pincus in the Series C investment [TechCrunch].
Seek Experts for an Efficient Company Formation in Vietnam
With an aim to turn Vietnam into a cashless economy, the government will continue planning new strategies to attract investors and promote start-ups. However, the Vietnamese economy is still transitioning to a digital economy. That’s why it is best to seek the help of company formation professionals. These experts will guide investors and entrepreneurs who are looking to join in Vietnam’s large market.
Contact DesFran in Vietnam for expert advisory solutions about offshore company formation today.
How Vietnam’s Fintech Market Could Reach Nearly $8 Billion By 2020, Forbes.com
Today’s top tech news, January 23, 2019: Vietnam’s fintech firm Finhay secures US$1M funding from Insignia Ventures Partner, Finance.theindependent.sg
Momo, Vietnam’s top payment app, lands big Series C investment led by Warburg Pincus, Techcrunch.com