Financial technology, or Fintech, is used to describe a rising trend in the financial and banking industry.

With the development of the Fourth Industrial Revolution, an increasing number of consumers are utilizing products and services from Fintech. However, along with the developmental opportunities, Fintech in Vietnam still faces many difficulties and challenges.

What is Financial Technology Fintech?

Fintech is short for Financial Technology, which encompasses all companies utilizing the internet, mobile phones, cloud computing technology, and open-source software to enhance the efficiency of banking and investment activities.

Fintech companies are divided into two groups:

The first group serves consumers, providing digital tools to improve individual borrowing, money management, and funding for startups. The other group consists of "back-office" companies that provide technology support for financial institutions. Fintech is currently providing services in various fields such as banking technology, payments, financial management, digital currencies, with diverse products like:

E-wallets Blockchain-based distributed ledger technology B2C online commerce mPOS Financial technology Fintech brings about a wave of entrepreneurship in the financial and banking industry, which was previously known to require substantial capital for entry. This diversity in participants and products also presents challenges in management.

However, when utilized effectively, Fintech can bring specific benefits such as:

Changing product distribution channels Making products easily accessible to consumers Facilitating customer behavior analysis Reducing labor costs and input expenses for organizations Reducing risks from errors Cost savings, reducing product prices

Alongside the Fourth Industrial Revolution, an increasing number of consumers are using products and services from Fintech. Traditional financial organizations are also developing financial technology products through collaboration with Fintech companies.

The Rapid Development of Fintech in Vietnam

Fintech has attracted the attention of many technology, financial, and investment experts worldwide. The total investment in financial technology in the first half of 2018 reached $31.7 billion with approximately 450 successful investment transactions, nearly tripling in value compared to the same period in 2017 (KPMG).

These figures reflect the strong and comprehensive development of Fintech in recent years, making it a part of the financial sector, promising to change the face of the financial industry globally.

Not lagging behind the global Fintech development trend, Vietnam has also witnessed significant and extensive growth in the Fintech sector in recent years.

The number of Fintech companies providing services in the Vietnamese market has more than doubled from about 40 companies at the end of 2016 to nearly 100 companies at present, covering various fields.

Not only are new Fintech startups entering the scene, but many commercial banks are also gradually transitioning, operating digital banking systems on modern technology platforms such as BIDV, Vietinbank, VPBank, TPBank, meeting the demand for quick and seamless customer service.

To date, Vietnam has 48 Fintech companies, with 48% of them engaged in payment activities, providing online payment services or digital payment solutions (2C2P, VTPay, OnePay, VTCPay, BankPlus, VinaPay, VNPay, Senpay, NganLuong, ZingPay, BaoKim, 123Pay…).

A few companies operate in capital raising (FundStart, Comicola, Betado, Firststep), money transfer (Matchmove, Cash2vn, Nodestr, Remittance Hub), Blockchain (Bitcoin Vietnam, VBTC Bitcoin, Copyrobo, Cardano Labo), personal finance management, POS management, data management, lending, and information comparison (Mobivi, Money Lover, Timo, kiu, Loanvi, Tima, TrustCircle, Hottab, SoftPay, ibox, BankGo, gobear…).

However, compared to some countries in the region, the number of Fintech companies in Vietnam is still relatively low (Indonesia has 120 Fintech companies; Singapore has over 300 companies).

Challenges Confronting Fintech in Vietnam

However, despite the opportunities for Fintech development in Vietnam, there are still many challenges:

Firstly, the legal framework is not fully comprehensive and accurate, especially for new technologies. The time for updating, amending, and supplementing legal regulations is slower than the rapid pace of technology development.

Secondly, Vietnam's technological infrastructure does not meet the requirements of high-tech development, especially in terms of security technology.

Thirdly, Fintech companies often face difficulties in business models, management models, and long-term development directions, making it challenging for businesses to grow significantly.

Fourthly, the awareness of Fintech product consumers is still limited, sometimes leading to security vulnerabilities. People have not yet developed awareness in safeguarding personal information such as their names, ID numbers, passports, addresses, dates of birth, and account numbers. This significantly increases the risk of affecting consumers' accounts as well as financial organizations.