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The lenders and debtors in the 4.0 era

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‘Debtors’ in the future in Vietnam will regularly connect to the internet and buy goods online, while ‘lenders’ will be fintechs which can take full advantage of high technology to approach targeted clients and design reasonable credit packages.

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Fintechs can take full advantage of technology to access targeted clients

 

Fintechs have become a rival to commercial banks and finance companies in the 4.0 industrial revolution era. 

By analyzing big data, they can easily estimate the real incomes of clients and ‘measure’ the risks of the loans and design suitable service packages.

A PwC report showed that in 2016-2017, the fintechs in Asia Pacific attracted $14.8 billion worth of capital, 88 percent of which went to China.

Kalidas Ghose, CEO of FE Credit, said the company uses big data in many different ways to classify clients, structure products and set lending interest rates specifically for different groups of clients. The clients with good credit history can enjoy better interest rates.

Regarding the ‘debtor’ in the 4.0 era, according to the Ministry of Information & Communication (MIC), about 50 million Vietnamese use the internet, or 46.6 percent of the population. 

Millennials, or those who were born between 1980 and 1998, amounting to 35 percent of Vietnamese, are the potential clients.

More arrivals

In late April, VNG unexpectedly appointed Dang Viet Dung, former CEO of Uber Vietnam, to the post of payment director of ZaloPay. 

However, this was not a surprise for insiders. Prior to that, a foreign fintech reportedly was seeking a marketing director in Vietnam.

VNG has been secretive about its plan with ZaloPay, but it is highly possible that VNG would exploit Zalo, a social network with 80 million downloads. 

Analysts believe that VNG would utilize Zalo as a platform for sale and ZaloPay as a tool that supports payment.

Another well-known name is MoMo with 6 million users, connecting hundreds of utility services, and more than 4,000 stores nationwide. 

Meanwhile, Mobivi of Viet Phu became well known recently with iCare Benefits, a program with 10,000 branded products. The members of the program can buy products on installment with zero interest rate for 180 days.
 
Technology firms aren’t the only players in the consumer credit market. Finance companies and banks will also join the playing field. 

A report from VIRAC, a market analysis firm, showed that banks made up 87 percent of total consumer credit in the country in 2015. However, their market share is falling.

The group of 12 finance companies headed by the quartet of FE Credit (VP Bank), Home Credit, Prudential Vietnam and HD Saison now hold 12 percent of market share. 

Micro-finance companies, or fintechs established in 2013-2015 (such as Mobivi and loanvi), hold 1 percent of market share.

 

Source: VietNamNet

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