Vietnam ranks second in the number of incubator, accelerator and innovation labs in the region, behind only Singapore, according to the latest “ASEAN FinTech Census 2018” released by Ernst & Young (EY); an optimistic sign for the development of fintech in the country.

Vietnam also has an advantage in being a young and digitally-savvy economy. As per another EY report, around 90 per cent of payments are still made in cash. For this reason, Vietnamese fintech startups had a strong focus on payments (47 per cent), ranking highest in the region.

There are also some fintech associations in Vietnam, where fintech startups can gather together to update and improve their knowledge, seek support, share experience, and develop a legal framework for the industry.

“Fintech companies are still small in scale and the policies and regulations for these companies are still limited,” said Ms. Duong Nguyen, EY Vietnam Partner and Leader of Financial Service Organizations and IT Advisory Services, and Vice President of the Vietnam Fintech Association (VietFinTech). “Many banks are still cautious in their decision to cooperate with fintechs. They don’t realize that there are people who have never opened a bank account but the number of smartphone users is increasing. Fintech is the bridge that helps banks bring more services closer to more people.”

Apart from funding issues, talent shortages and a lack of government support policies and regulations are other major challenges fintechs in Vietnam as well as the region must face. According to Mr. Brian Thung, Managing Partner of ASEAN Financial Services, governments play a vital role in shaping a conducive fintech ecosystem that helps to attract and develop the right talent pool and promote innovation, collaboration and healthy competition.

According to the Tracxn, investment in ASEAN fintechs has surged, jumping 45 per cent year-on-year to $366 million in 2017. Little has been discussed and published about the opportunities and challenges facing the fintech industry in the region, however.

To understand the key factors shaping the industry and bring to forefront the voice of fintechs in the region, EY undertook this research initiative and surveyed more than 250 fintechs in early 2018. Participants included fintechs primarily from ASEAN countries as well as outside of ASEAN who are looking to enter the region.

The census results show that fintechs are optimistic about the future growth of the sector, with a record number (89 per cent) believing that customers are open to adopting fintech services, 61 per cent seeing revenue growth as an immediate future goal in the coming 12 months, and 87 per cent planning to expand beyond home or their current market in the coming 12 months. Besides Southeast Asia, fintech’s preferred destinations for growth and expansion are the US, the UK and China.

Funding remains an issue for the fintechs surveyed despite their strong ambitions. With most in the earlier stages of development, more growth-stage equity and capital are needed, and 60 per cent of respondents expect their next round of funding to be more than $1 million.

(Source: Vietnam Economic Times)