Vietnam’s Consumer Finance is one of the fastest growth markets in Vietnam in recent years.

The total outstanding consumer loan is currently at VND960 trillion, accounting for 15.7% of the total outstanding loans of the whole system; of which, VND74 trillion is provided by finance companies which posted highest consumer outstanding loan growth in the past three years with an average increase of 44% a year.

Talking at the conference, Ms. Nguyen Thi Quynh Lan said “Despite rapid growth, share of consumer finance in total loans is just about 10% in Vietnam – well below other emerging market peers. Going forward, we expect retail loans to grow at  about 25-30% p.a. over the next 5 years”.

Ms. Huyen Pham, Financial Sector Specialist from WBG shared that to further develop Consumer Finance in Vietnam, the country should (1) Diversify financial products and services distribution; (2) Enhancing capacity of financial institutions and (3) apply consumer protection and enhance financial literacy.

Speaking at the conference, Dr. Nguyen Thi Hien, Deputy Head of Banking Strategy Institute, SBV said “Before December, 2016, Vietnam market did not have a legal framework for consumer credit activities. On 30th December, 2016, SBV issued Circular No. 39/2016/TT-NHNN on the lending activities of credit institutions and foreign banks and Circular No. –43/2016/TT-NHNN on the consumer lending activities of consumer finance companies”.

Although market remains very potential because of low penetration and significant unbanked population in Vietnam, various challenges exit. Sharing at the conference,

Mr. Reet Chaudhuri, a Financial and Banking Expert from McKinsey & Company said:  “Vietnam has high population growth rate and clearly consumer finance demand is there” but in fact “Fintech system in Vietnam is fairly small, to –date there have been only 40 fintech companies, most of them focus on Payment, only 3-4 companies are in the CF, and he thinks “the solution for Vietnam would be banks explore partnership with fintech companies, bring some technologies into the banking system to serve customers.”

Mr. Nimish Vinaykant Dwivedi, Credit Card Business Center Director, FE Credit/VPFC shared: FE Credit enjoys over 53% market share of consumer finance in Vietnam. The key to success for FEC was leveraging technology expand its reach and making decisions truly FAST. With use of imaging technology and workflow automation, FEC reached 10,000 POS garnered 5 million customers.