Vietnam’s Fintech Emerges as Most Funded Sector With a 249% Surge

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In 2022, financial services emerged as the most funded startup sector in Vietnam, accounting for 38% of all venture capital (VC) investment secured by the country’s tech companies, a new report by Do Ventures and the Vietnam National Innovation Center says.

A total of US$244 million was raised in the fintech sector last year, surpassing industries including e-commerce (US$204 million), healthcare (US$37 million) as well as entertainment and gaming (US$10 million). The amount represents a staggering 249% surge and see the financial services sector bucking the downturn market trend.

Venture capital investment in Vietnam, Source: Vietnam Innovation and Tech Investment Report 2023, Do Ventures/Vietnam National Innovation Center/Cento Ventures Research, 2023

Venture capital investment in Vietnam, Source: Vietnam Innovation and Tech Investment Report 2023, Do Ventures/Vietnam National Innovation Center/Cento Ventures Research, 2023

VC funding in Vietnam witnessed a sharp decline of 56% in 2022 compared to the previous year, following on a broader trend observed across the global VC landscape. A total of US$634 million was raised through 134 deals, down 19% year-on-year (YoY) in deal count.

Vietnam venture capital investment annually, Source: Vietnam Innovation and Tech Investment Report 2023, Do Ventures/Vietnam National Innovation Center/Cento Ventures Research, 2023

Vietnam venture capital investment annually, Source: Vietnam Innovation and Tech Investment Report 2023, Do Ventures/Vietnam National Innovation Center/Cento Ventures Research, 2023

Within financial services, data analytics and scoring secured the most funding, raising a total of US$100 million in 2022. The sector is followed by wealth management and capital markets (US$43 million), payments (US$43 million) and payments (US$30 million).

Notable fintech deals closed last year in Vietnam last year include Finhay’s US$25 million Series B, Timo’s US$20 million round, and Infina’s US$6 million Seed round. Finhay and Infina are two wealth and investment platforms, while Timo is a digital banking company.

Capital invested by fintech sector, US$M, Source: Vietnam Innovation and Tech Investment Report 2023, Do Ventures/Vietnam National Innovation Center/Cento Ventures Research, 2023

Capital invested by fintech sector, US$M, Source: Vietnam Innovation and Tech Investment Report 2023, Do Ventures/Vietnam National Innovation Center/Cento Ventures Research, 2023

The rise of fintech

Vietnam’s fintech sector is witnessing rapid growth, driven by the rise of the middle class, a tech-savvy population, and a thriving e-commerce environment.

Over the past years, the fintech startup landscape has expanded considerably, rising from a mere 39 fintech companies at the close of 2015 to over 150 firms by 2021, according to a separate report by Acclime Vietnam, a corporate services provider in Vietnam, and Decision Lab, a local digital media tracking and online research company.

By 2022, that number had progressed to 176, data from HyperLead, a Vietnamese affiliate marketing platform specializing in the finance and banking space, found, with payments being the most crowded segment (40 companies), followed by personal lending (26), blockchain and cryptocurrency (20) and wealth management (16).

Vietnam fintech startup map 2022, Source: Hyperlead, March 2023

Vietnam fintech startup map 2022, Source: Hyperlead, March 2023

At the same time, usage of digital payments is increasing considerably, with non-cash payment transactions in 2022 rising by 86% in volume and 31.39% in value, Nguyen Quoc Hung, the general secretary of the Vietnam Banks Association, said earlier this year. According to local media outlet VnEconomy, usage of digital payments continues to rise this year, increasing by 53.5% quarter-on-quarter (QoQ) in volume in Q1 2023.

Banks are catching up to the trend, teaming up with startups to launch innovative products and respond to changing customer preferences.

According to the Acclime Vietnam/Decision Media report, VietinBank is working with seven fintech startups across various industries. Vietcombank, meanwhile, has partnered with the M_Service, the operator of the popular MoMo mobile wallet, to provide small-value money transfer services in rural areas. And BIDV, a prominent participant in the banking system, has partnered with 24 fintech companies and 756 service providers to offer its customers access to more than 1,500 financial services.

Government support

The Acclime Vietnam/Decision Media report highlights the role of the government in facilitating the growth of digital payments. In 2020, the government approved the National Digital Transformation Program Through 2025, a national plan aiming to spur digital transformation through awareness, enterprise strategies, and incentives, and focuses on digitalizing businesses, administration, and production activities.

Some of its goals include having all national databases, including those for population, land, business registration, finance, and insurance, online and connected; having 50% of the population owning a digital checking account; and boosting the use of digital payments so that they make up for 70% of all transactions, according to a Vietnam Briefing analysis.

Despite government support, the Acclime Vietnam/Decision Media report notes that the Vietnamese legal framework is still in its infancy with only a few fintech segments being regulated, namely digital transactions and payments, as well as e-commerce.

To address regulatory uncertainties, the SBV is currently developing a sandbox regime for fintech companies to test their novel products in a safe environment. Through the framework, the central bank hopes it will gain a better understanding of the risks associated with different fintech business models and technologies, thereby allowing the regulator to develop a full-fledged legal framework that encourages innovation but which also mitigates financial risks and promotes financial stability.

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Source: https://fintechnews.sg/77316/vietnam/vietnams-fintech-emerges-as-most-funded-sector-with-a-249-surge/

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