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Financial Inclusion in vietnam 10 facts that are worth knowing

Over the years, Vietnam has remained largely rural and unbanked despite rapid economic growth. Financial services providers find it difficult to reach every corner of the country profitably. Yet as one of the fastest-growing economies in Asia, Vietnam offers great opportunities for the digital financial services industry.

While access to basic banking services and products remains a challenge in the country, the government has shown a firm commitment to advance financial inclusion through enabling policies. The high percentage of internet and smartphone users, along with low banking penetration, has paved the way for the growth of digital financial services in the region. The statistics highlighted below indicate that Vietnam can leapfrog from brick-and-mortar legacy banking to mobile-based banking—a phenomenon that is highly prevalent in several Asian countries, such as China, Indonesia, and Bangladesh.

Here are 10 key facts about digital and financial inclusion in Vietnam
1. Vietnam is home to nearly 95.5 million people. Of them, nearly 65% of the population comprises people who are under the age of 35 years. Of the rural population, 66% have limited access to formal financial services due to the lack of banking infrastructure and low incomes.

Source: Country Focus Note: Vietnam, MSC (MicroSave Consulting)

2. The lack of financial inclusion continues to be a substantial problem and particularly affects the low and moderate-income (LMI) segments. Vietnam is a lower middle-income country. More than 84.7% of the population spends, on average, under USD 10 per day.

Source: World Bank

3. The country ranks 78th out of 137th on the availability of financial services and ranks 60th out of 137th on the affordability of financial services.

Source: The Global Competitiveness Report 2017–2018, World Economic Forum

4. With only 3.41 bank branches per 100,000 adults, physical access to formal financial services remains limited.

In this regard, the State Bank of Vietnam has been developing agency banking regulations to improve access through low-cost, digitally enabled access points.

Source: Global Findex Database, 2017

5. 30.8% of all the adults in Vietnam have a formal financial account as compared to 73.7% of adults in East Asia and the Pacific.

Source: Global Findex Database, 2017

6. Vietnam has the right drivers to growth for digital financial services. With a high percentage of internet users and mobile owners, DFS players can use technology to offer innovative financial services to last-mile customers.

Source: Internet Live Stats, Fintech Singapore, TechinAsia

7. Although cash remains king in Vietnam, the reliance on electronic modes of payments has increased significantly in the country.

If the mobile payments market in Vietnam continues to grow at a compounded annual rate of 18.2% from 2018-2025, it is expected to reach USD 71 billion dollars by 2025. Payments using QR codes have gained popularity in Vietnam over the past few years. The method is now implemented by 18 banks, including state-owned banks, with 8 million users.

Source: Fintech Singapore

8. The Government of Vietnam has prioritized both financial inclusion and digitization of payments to achieve its objective of “Cashless 2020”. This plan aims to:
  • Provide bank accounts to at least 70% of the population who are over 15 years of age;
  • Equip supermarkets, shopping centers, and distribution agents with point-of-sale (POS) devices to accept non-cash payments;
  • Ensure that 70% of utility service providers and telcos accept non-cash payments;
  • Enable 50% of individuals and households in urban areas and metropolitan cities to use digital payment methods;
  • Curb the ratio of cash to total liquidity to under 10% by promoting non-cash payments in the country.

Source: State Bank of Vietnam, Vietnam Law and Legal Forum magazine

9. The Government of Vietnam aims to formulate and adopt a National Financial Inclusion Strategy (NFIS) by 2020. The NFIS is expected to give policymakers and regulators in Vietnam an opportunity to build an enabling digital environment to expand access and the use of financial services.

Source: State Bank of Vietnam

10. Vietnam’s FinTech sector has seen significant growth and investment.

The three most lucrative startup categories in Vietnam in 2018 included: e-commerce at USD 83 million, food technology at USD 65 million, and financial technology at USD 57 million. Today, there are more than 80 FinTechs in Vietnam of a range of services, such as peer-to-peer lending, credit scoring, blockchain technology, etc. These include key players like MoMo, ViettelPay, Moca, VTC Pay, NganLuong, and Payoo.

Source: Topica Founder Institute, Solidiance

These 10 points show that despite various barriers to financial inclusion, Vietnam has significant opportunities to ride the wave of digital financial services (DFS). Factors such as a large percentage of youth in the population, high smartphone and internet penetration, and strong commitment from the government will play a crucial role in efforts to achieve the mission of “Cashless 2020”.

About the i3 Program

The i3 program stands for Innovate, Implement, and Impact. It aims to bring meaningful financial inclusion in the country. This 36-month-program receives support from the MetLife Foundation and shares a vision that everyone needs access to the right financial tools to achieve their goals. The i3 program will work closely with implementation partners to improve the financial health of the low- and moderate-income (LMI) segments through interventions at both demand- and supply-sides.

MSC (MicroSave Consulting) has implemented the i3 program in Vietnam with the support, cooperation, and partnership of leading financial service providers and new-age FinTechs in the country.

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