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BANKING & FINANCE

expected to grow by 137.3 per cent on an
annual basis to reach $491.3 million in REGIONAL “BUY NOW, PAY LATER” (BNPL) PLAYERS
2021,” the report noted. “The medium- to (within Southeast Asia)
long-term growth prospects for the BNPL Indonesia Malaysia Philippines Singapore Thailand Vietnam
industry in Vietnam remain strong. BNPL Akulaku
payment adoption is expected to grow Atome
steadily over the forecast period, recording
a compound annual growth rate (CAGR) Fave
of 36.5 per cent during 2021-2028.” Grab
The segment has the potential to become
a priority for consumer finance and fintech Home Credit
players in Vietnam, according to Mr. Breu. Hoolah
Several tailwind trends are already sup- OctiFi
porting its growing attractiveness for finan-
cial players, including Vietnam’s relatively Oriente
low banking penetration, rising income Pace
levels, growing middle class, and increasing Pine Labs
urbanization, all of which are shaping con-
sumer demand for discretionary spending. Rely
If its potential can be unlocked, BNPL Shopee
could be an effective mechanism for finan- Split
cial players to acquire customers at the
point of need, create a credit history for Splitit
new or unbanked customers, and select Available Not available Available soon
customers for the cross-selling and up- Source: Tech in Asia, 2021
selling of bigger ticket items or more prof-
itable products. revenue. “BNPL is a developing trend with lenges, Mr. Breu recommended, providers
As BNPL solutions are on the rise in many advantages in terms of operating could consider building capabilities in
Vietnam, many players are already unveiling models, meeting customer needs, helping technology, data, and analytics, creating
new services and ramping up operations. them reach their desired product easily, ecosystem partnerships with original equip-
The BNPL model has been successfully and spend sensibly,” Mr. Butler said. “The ment manufacturers (OEMs) and retailers
tested in the retail sector, serving as a bal- challenges we are facing during the pan- to gain access to a customer base and non-
ancing link between the buyer’s and the demic include the method of approaching traditional data in supporting underwriting
retailer’s needs. “Retailers from other cat- customers, debt collection, and product and sales, and innovating product offerings
egories, such as groceries, household goods, delivery times. Technology updates and consistent with market trends.
and apparel, among others, are also actively customer data review therefore need con- Considering the size of the underbanked
considering credit line offerings for their stant change and improvement.” market in Vietnam, Mr. Seck Yee Chung,
customers,” Mr. Breu observed. “Regional Partner at Baker & McKenzie Vietnam,
fintech players who have recently entered MANAGING RISKS said BNPL service providers have leeway
the market are providing small ticket size One of the challenges facing Fundiin is to introduce the easy-to-understand and
loans for purchases through their partners that the trust of Vietnamese people in procedurally less-burdensome payment
in the offline and online space. While it is financial services is generally low, as many alternative to a large population that face
still too early to assess the impact of BNPL have been cheated by high fees and interest limited access to credit and traditional
in boosting revenues, it is expected that rates. “When they first see Fundiin, they banking services. Other factors such as
the easy availability of credit at the point don’t believe a BNPL service can be free accessibility offered to users of all income
of sale would drive consumer spending.” until they complete the first transaction levels and fee transparency will also push
Fundiin has claimed that its BNPL solu- with us,” Mr. Cuong said. the development of BNPL in Vietnam.
tion can increase a retailer’s sales by 30 per In fact, BNPL providers are facing chal- BNPL and micro-financing solutions
cent without the need for a credit card or lenges similar to those faced by incumbent have to date been mostly provided by
an application. “Leveraging technology and consumer finance players, which include licensed domestic banks and finance com-
an internally-built credit scoring model, a difficulty in assessing consumer risk, panies, which creates cooperative oppor-
we are able to provide a seamless onboard- especially given that Vietnam has a large tunities with fintech startups. Nonetheless,
ing process within five seconds, offering unbanked population with lack of credit to further develop the industry, ensure
an interest-free installment payment plan history, setting up an efficient operating consumer safety, and better enable the
to consumers while requiring only an ID model for sales and collections, and acquir- role of startups, Vietnam would need to
card, which makes our model fundamentally ing customers through low-cost digital evolve its laws on credit institutions and
better than credit cards,” said Mr. Nguyen marketing efforts at scale, according to financing activities, which can be tested
Anh Cuong, Co-founder and CEO of Mr. Breu. by way of and within the parameters of a
Fundiin. “This facility helps retail merchants In particular, some experts have warned fintech regulatory sandbox. Fintech activ-
increase conversion and average order that fintech companies customizing their ities, provided by non-bank service
value, and reach new customers.” BNPL offerings must have a sufficient providers, that could be test run within
Similarly, Movi prioritizes cooperation data-based credit rating system for man- such parameters include payments, credit,
with reputable partners and brands with aging risk and avoiding bad debts. In Viet- P2P lending, and credit scoring. Vietnam
good prices and after-sales services to add nam, as a new concept, consumers may would need to issue regulations on a fintech
to its BNPL product experience. BNPL easily fall into debt with cut-throat high regulatory sandbox to enable these next
currently accounts for 25 per cent of its interest rates. In navigating these chal- steps, Mr. Chung said. %

SEPTEMBER 2021 | VIETNAM ECONOMIC TIMES | 39