Fintech industry lures big start-up investment Vietnamese start-ups have invested US$129 million in fintech and the industry is forecast to continuously attract heightened investor interest next time, according to the Ernst & Young (EY) ASEAN FinTech Census 2018. According to Varun Mittal, EY ASEAN fintech leader, with a population of young smart phone users, high consumer growth and low unemployment, Vietnam is becoming a promising market for fintech developers.   Vietnam’s fintech attracted hundreds of millions of dollars from investment funds “Foreign investors are also more interested in buying some fintech companies due to the huge market potential," said Mittal. The number of incubators and accelerators and innovation labs in Vietnam is estimated at 24, the second most among ASEAN region, following Singapore. However, another EY report showed that up to 90 percent of payments in the country were made in cash. Therefore, Vietnamese fintech companies are focusing on the field of payment with 47 percent of Vietnamese companies working on payment services, the highest rate in the region. According to Nguyen Thuy Duong, EY Vietnam deputy director and vice chairwoman of the club, Vietnam Financial Technology Club, said that fintech companies are currently small scale and policies for these companies are lacking. Apart from financial issues, shortages in staffs and governmental regulations are two major challenges that Vietnamese and regional fintech companies face. EY experts said that policy support from authorities will form the foundation for a fintech ecosystem that encourages creativity and healthy competition. Though fintech is still in the early stage of development in Vietnam, it has attracted hundreds of millions of dollars from investment funds. Vietnam currently has 78 fintech companies, many of which have received investments from foreign and domestic investors. By the end of this year, the amount of fintech companies in Vietnam receiving investments is likely to increase five times. Typically, UTC Investment from South Korea last year spent VND542 billion to acquire a 65 percent stake of VNPT Epay, while SEA has a 45 percent stake in VNPAY. A series of investment deals were made in 2016, including $28 million by SCPE and Goldman Sachs in Momo e-wallet, and Credit China Fintech’s acquisition of a 51 percent stake of Amigo Technologies. Foreign investors have poured money into Vietnam fintech firms as they can see the great potential in the market, analysts said. The 4.0 industry revolution with e-payment solutions is irreversible and Vietnam will have to follow the trend. Vietnam has 45 million internet users, ranking sixth in Asia, while its internet penetration- population ratio was 48 percent in 2015, higher than the Asian average level of 38 percent and the world level of 45 percent. According to VIRAC, a market analysis firm, by June 2017, the number of bank cards issued had reached 121.5 million. There are 76 institutions which provide payment services via internet and 39 institutions which provide mobile payment services. However, despite the good payment infrastructure, most of the card transactions are made to withdraw cash, accounting for 87 percent. This is both a challenge and opportunity for fintech to develop. The proportion of online shoppers in Vietnam is now at the average level compared with other regional countries. The conversion rate from the number of visits to websites into orders remains very low compared with traditional retailing. Analysts noted that commercial banks were joining forces with fintech firms to develop financial services. The Military Bank (MB) has joined hands with Startup Fintech to develop a technology which allows users to carry out transactions on Facebook’s Messenger app, while VP Bank has been working with Fintech Timo. The 2015-2017 period witnessed a boom of fintech firms with the appearance of MoMo, Payoo, 123pay and Finsom. Hanoi Times