Vietnam has been one of the fastest growing economies globally. Since 1986, various reforms under Đổi Mới spurred rapid economic growth and development in the country. These reforms lifted more than 40 million out of poverty in the process.
Access to and use of formal financial services have been very low in Vietnam. Vietnam continues to be a cash-dominant economy with cash payments accounting for over 90% of all transactions. To shift the balance and encourage safer transactions, the government has been urging a shift to digital payments and has announced ambitious plans to reduce cash transactions effectively.
Vietnam has the right ingredients to ride the wave of digital financial services. With a high percentage of internet users and mobile subscribers along with low banking penetration, digital financial services have immense potential in the region. The fintech players in Vietnam have a huge potential to address the key constraints that hold back financial inclusion and to facilitate the integration of underserved segments into the formal financial services sector.
Given the government’s push towards a cashless economy by 2020, we may expect technology-driven and innovative solutions to emerge in the country through active collaborations between fintechs and incumbent financial service providers.