Poor existing banking infrastructure? No major Unicorns from the local ecosystem? – No problem.
The rise of Vietnam as an innovation/Fintech hotbed is a fascinating trend. A tech savvy population, supportive government regulations, and high smartphone penetration – a great combo that has done wonders to several countries across the world.
Vietnam ranks third in South East Asia for the most populated country. It has been growing phenomenally over the past few years. In 2018, it saw GDP grow by 7.08%. The growth in the country has been praised by the president of the World Economic Forum Borge Brende. Vietnam’s economic reforms have helped reduce debt and lay a strong foundation for public finance.
So why are they special and what has triggered this new boom in the economy and investments going in for innovation? These statistics will shed light on the opportunity and growth.
- 100 Million population
- 84% Smartphone Adoption in Tier 1 cities, and 71% in Tier 2 cities
- 40% Unbanked, and set to go down to 30% by 2020
- Second Fastest growing Data analytics market in the world (CAGR 19.4%)
- 161% growth in digital wallets in 2018
- $70 Billion Mobile Payments by 2025 expected
- Reforms to reduce cash transactions to 10%
- 30% to shop online by 2020
- 2019 startup investment to top $800 Million vs 2018 number of $444 Million
- 3000 startups in the country – from 400 in 2012.
Amongst South East Asian innovation hubs, Vietnam has attracted about 17% of the startup investments. It ranks third behind Indonesia at 48% and Singapore at 25%.
Just to compare Vietnam to hubs like Singapore feels unfair to me. Singapore is arguably the most matured Fintech hub in Asia. To get anywhere close to Singapore in terms of investments is an amazing achievement for any Asian country.
The Vietnamese government have been very supportive of innovation in the country. As a result there are several startups in Fintech, Blockchain, Sharing Economy and other themes. A map of Vietnam’s Fintech startups should show the breadth of coverage across different clusters within Fintech.
The government have been smart with their regulatory stance. They haven’t banned crypto currencies yet. Investors in Vietnam lost close to $650 Million in the ICO scam. The Government has since then stopped with warning investors about the risks of cryptos, but largely taken a neutral stand and not banned exchanges and crypto businesses. With a clampdown on cryptos in other Asian economies, this is viewed as an opportunistic stance by the government.
The buzz in Vietnam could also be attributed to a tech savvy population. The country now has over 250,000 technology professionals, who are fast adopting and learning technology trends.
Some Vietnamese professionals who are overseas educated have also contributed to inspiring a new generation. The Education startup Elsa, run by Vietnamese CEO Vu Van have a base in Ho Chi Minh City. They are based in Silicon valley, however, Vu Van who is Stanford educated, wanted to grow her app in Vietnam.
There is a saying in my mother tongue which means, it only takes a spark to light a forest. The rise of Vietnam definitely sounds like one of those examples.
I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.
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