Incorporating a Fintech Company in Vietnam: What You Need to Know

Vietnam's share of regional fintech investment increased from 0.4% in 2018 to 36% in 2019, putting it second only to Singapore. Read more.

Fintech, or financial technology, has revolutionized financial services and is acting as a catalyst in fostering economic growth in a quickly digitizing Vietnam. The country’s share of regional fintech investment increased from 0.4% in 2018 to 36% in 2019, putting it second only to Singapore (51%). The government is also promoting fintech in order to pivot towards a cashless society and widespread financial inclusion.

Moreover, in recent years, several international entrepreneurs and corporations have expressed an interest in substantially investing in Vietnam’s fintech industry, particularly in digital payments. The high internet and mobile penetration rates, the unbanked population, and the potentially enormous Vietnamese market are driving the fintech investment boom.

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In this article, we’ll go over some specifics of setting up a fintech company in Vietnam. 

Fintech Development For Financial Inclusion

Individuals and small and medium-sized businesses in Vietnam are, as of yet, unbanked or underbanked in huge numbers. In 2018, for example, just 30% of individuals (15 and above) held accounts with financial institutions. Furthermore, the percentage of cash transactions was high, reaching 80% as of December 31, 2019. Meanwhile, the population’s access to Information technology and telecommunications (ITC) services was outstanding, with mobile phone penetration at 150%, internet penetration at 70%, and 3G&4G registration at 45% in 2019 (1). 

Fintech is part of the government’s agenda for regulatory reform, financial supply chain growth, fundamental financial services diversification, financial infrastructure improvements, and financial consumer protection. Fintech businesses, for example, are encouraged to participate actively in the financial services supply chain and form partnerships with credit institutions, particularly microfinance organizations and programs.

With a large customer base and strong legislative incentives, Vietnam is still mostly unknown to global fintech investors. However, the government has significant challenges in leveraging fintech to achieve financial inclusion targets. 

Regulators regarding the Fintech Industry in Vietnam

The FTC is a government-controlled agency that regulates the fintech sector in Vietnam. This centralized agency is critical in establishing a direct line of communication between fintech businesses and the government, assisting the former in resolving legal difficulties, and establishing a regulatory sandbox in which fintech services may be tested.

Furthermore, technology such as e-KYC (electronic Know-Your-Customer), cloud computing, APIs, IoT (Internet of Things), big data, artificial intelligence, and blockchain are relentlessly promoting Fintech development in Vietnam. The SBV’s goal for banking digitalization includes the development of such technology. SBV has set a target of releasing a legal framework for the use of important 4.0 technologies by 2025. e-KYC, Open API, big data, artificial intelligence, blockchain, and cloud computing are examples of these technologies.

Regulatory Framework

The government of Vietnam has recognized cashless payments as legal payment instruments in response to the growing demand for obtaining an IPS license by businesses in the country. Foreign investors are allowed to own a maximum of 50% of Vietnamese ISP shares under this law.

Although peer-to-peer lending services are widespread in Vietnam, the country’s P2P lending remains unregulated. However, the country’s central bank has begun to establish a regulated framework for peer-to-peer lending (source).

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Why Invest in Vietnam’s Evolving Fintech Sector

Vietnam’s GDP, at $340 billion, is smaller than Indonesia’s, Thailand’s, and the Philippines’. However, investors think the fintech industry in the country is particularly enticing for a variety of reasons. With about 80% of the adult population owning a mobile phone, Vietnam has one of the greatest mobile phone penetration rates in the area, yet a low number of bank branches per capita. Fintech has received regulatory backing, with hundreds of businesses receiving e-wallet permits. Investors aiming to offer financial services through smartphones have found fertile ground as a result of this mix.

Proponents also claim that the COVID-19 pandemic has removed a key roadblock to fintech’s growth. It’s been difficult to persuade businesses to accept mobile wallets since owners are wary about having to pay a charge to mobile wallet providers rather than take cash. Moreover, due to Vietnam’s strict restrictions, they have turned to the internet to reach out to customers.

How Can Cekindo Help?

Foreign investors inclined towards incorporation of fintech firms in Vietnam for lucrative returns must be aware of its hectic and document-intensive procedure. Cekindo, with its comprehensive financial services, can help you make a hassle-free investment with the country’s finest lawyers, financial consultants, and brokers on the team to help you every step of the way. 

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Tomas Svoboda - Cekindo - Vietnam Country Manager

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Ing. Tomas Svoboda

Tomas is the co-founder & Chief Business Development Officer responsible for Vietnam. His role is to define the key potential of the Vietnamese market and to ensure that Incorp's branch in Vietnam provides its clients with smooth and hassle-free market entry solutions.