Mapping Vietnam’s latest fintech battlefield: digital lending

An earlier version of this article was published on February 15, 2022. 

In 2020, Tech in Asia detailed the brutality of Vietnam’s e-wallet war. Within the country, close to 40 players were fighting to replicate the success of Alipay or WeChat Pay in China.

Three years later, even as local firms MoMo and ZaloPay have pulled ahead on the digital payments front, the two companies have not achieved the level of ubiquity that Alipay or WeChat Pay have in their home market.

To grow, e-wallets must evolve beyond payments. This explains why ZaloPay and MoMo have introduced features like buy now, pay later (BNPL) within the past two years.

These efforts to diversify also reflect a broader trend: that the fintech battleground may be shifting to another segment – digital lending.

Vietnam has one of the most unbanked populations in the world. About 69% of citizens do not have access to banking services.

This provides an opportunity for fintech companies to transition the population away from cash as well as provide an avenue through which they can borrow, especially short-term loans. While lending to the unbanked or underbanked can be risky, it can potentially lead to higher returns.

A 2022 report by Google, Temasek, and Bain and Company notes that the lending segment in Vietnam could grow by a 56% compound annual growth rate between 2022 to 2025.

F88, a rising local non-bank lender, targets customers who find it hard to borrow from traditional banks or financial institutions. One of F88’s value propositions is that it can process a loan in just 15 minutes.

Within the span of five months, the company raised two funding rounds totaling US$110 million. It’s also gearing up for a domestic IPO.

Founded in 2013, F88 originally operated on a pawnshop model, which meant that customers had to bring in items that could be used as collateral to take out loans. Since then, it has diversified its services to include vehicle title loans  life and non-life insurance, bills payment, mobile money, and e-wallet top-ups.