Non-cash payment transactions in Vietnam up by 63%

Fintech is boosting MSMEs in Vietnam.

In January, Vietnam witnessed a 63% increase in non-cash payment transactions, signalling a shift towards digital banking and ecommerce. 

Il-Dong Kwon, Managing Director & Partner at Boston Consulting Group Vietnam, said that fintech is not just altering, but vastly improving the banking landscape for the nation's tech-savvy populace.

"Fintech services, particularly e-wallets, are transforming Vietnam from a cash-heavy economy to a more digital one," Kwon stated. This change is attributed to the convenience and integrated experiences offered by digital platforms, making everyday transactions seamless, from grocery shopping to dining out. 

He said that traditional banking methods, reliant on paper processes, are being replaced by more efficient, less cumbersome digital transactions.

"We're witnessing not only a move towards cashless transactions but also the introduction of better banking products and solutions. This includes more attractive interest rates and convenient transactions, significantly enhancing customer experience,” Kwon said.

He explained how fintech solutions are bridging critical gaps in financing for these businesses. "MSMEs, from mom-and-pop shops to small restaurants, previously faced hurdles in securing bank loans due to unverifiable credit histories."

Fintech innovations now offer alternative credit scoring methods, using data like mobile usage and third-party information to provide more credible assessments of an SME's creditworthiness. This adaptation has led to more attractive lending rates and easier access to financial support for small businesses.

"The competition introduced by fintech forces banks to become more customer-focused and invest in digital transformation," Kwon elaborated. As fintech companies and banks vie for the attention of a growing number of tech-savvy consumers, the emphasis has shifted towards providing faster, more cost-effective, and innovative financial services.

Kwon also noted the positive implications for rural and traditionally underserved populations. Digital banking solutions are expanding the reach of financial services, offering better coverage and support to those who have been marginalised by the conventional banking system. 

"It's a win-win for the economy and customers alike," he remarked.