What is Fintech?

Fintech (Financial Technology) as the name suggests, is the fusion of finance and
technology.

Key Stakeholders
2.1. Customers:
They are the main users of both technology and financial services.
They directly benefit from financial institutions and a range of the latest, most
advanced technologies.
They motivate financial institutions to continuously research new products and
drive companies to innovate new technologies.
2.2. Financial institutions:
These include banks, insurance companies, securities companies, financial
companies, leasing companies, etc.
They are essential components of the financial system.
They guide the development of financial markets and continuously innovate to
provide the best products to meet the needs of people's lives.
2.3. Fintech companies:
Fintech companies are having a significant impact on financial institutions and
direct users.
They operate independently.

Products:
3.1. E-Wallet:
E-wallet is a Fintech solution that changes users' habits of using cash in financial
spending by enabling online money transfers, bill payments, phone top-ups,
shopping, and more, all done quickly and conveniently.
These wallets are usually linked to bank accounts and can perform money
transfers, payments, etc.
Examples: VNPay, PayPal, ZaloPay, MoMo, ShopeePay, etc.
3.2. E-Banking:
E-banking is an intelligent financial management tool that allows transactions
24/7.
Customers can conduct online financial transactions anywhere, anytime. All
processes are simplified, speeding up transactions while prioritizing security.
Examples: Mobile banking, Internet banking, SMS banking, etc.
3.3. P2P Lending:
P2P Lending is a platform built on 4.0 technology, connecting borrowers and
lenders directly without the need for banks or financial institutions.
When investing in the P2P Lending model, users benefit from attractive returns,
fast procedures, and the ability to participate with small capital, all through digital
platforms.
Examples: Fiin Credit, Tima, Vayonline247, Doctor Dong, etc.
3.4. Stock Investment Apps:
Traditional stock investment requires investors to be present at the exchange to
monitor fluctuations through electronic boards, which is inconvenient. Thanks to
Fintech, all these steps are now simplified and can be done on a mobile phone.
Securities companies have quickly developed a series of stock investment apps to
simplify the process for investors. Investors can track, analyze the market, and
place orders with ease.
Examples: VNDirect, Infina, Finhay, etc.
3.5. Budget Management Apps:
These apps help people reduce the burden of tracking income and managing daily
or monthly spending. Users can also plan and allocate spending through these
apps.
Examples: Money Lover, Spendee, MISA Money Keeper, etc.
3.6. Buy Now Pay Later (BNPL):
BNPL is an online payment method that allows customers to purchase goods
without having to pay the full amount upfront. Users can split the total cost into
multiple payments over a set period without incurring any fees if payments are
made on time.
The standout feature of BNPL is its simple registration process, convenient steps,
and diverse product categories, maximizing users' financial needs.
3.7. Cryptocurrency:
Cryptocurrency is a decentralized digital currency stored and transacted through
dedicated software or mobile applications.
These transactions are not governed by any country.
Although cryptocurrencies have little intrinsic value, they are highly secure,
convenient, and fast.
Examples: Bitcoin, Ethereum, Monero, etc.
3.8. Blockchain:
Blockchain acts as a "ledger" that records all cryptocurrency transactions. This
"ledger" does not have a central database but operates through a network of
"volunteers" around the world.
Blockchain is public, allowing anyone to view it at any time since it is stored
online. This technology secures information through encrypted blocks, allowing
individuals to transfer funds safely without the need for banks or financial service
providers.
Some reports suggest that blockchain has the potential to replace older banking
technologies by creating a secure and reliable database.
4. Benefits and Challenges
4.1 Benefits:
Improving financial service quality: Thanks to technological innovations and
breakthroughs, Fintech has enabled financial institutions to provide products and
services faster, more cost-effectively, and without the limitations of time or
location, increasing customer satisfaction.
Enhancing transaction methods: Fintech has shifted the trend from direct cash
transactions to online transactions, with digital banking services such as e-wallets
and Internet banking being the most prominent.
Removing barriers to financial services: Fintech offers solutions for people in
remote areas with limited access to financial services. It also targets individuals
without substantial collateral or small and medium-sized enterprises (SMEs) who
cannot meet the stringent requirements of traditional banks for loans.
4.2 Challenges:
For users:
Cybersecurity risks: With the rise in cybercrime and decentralized data storage,
customers using Fintech services face the risk of data breaches and personal
information leaks.
Scam traps: Fintech's "modernity" can be a major obstacle for those lacking
technological knowledge. Users unfamiliar with financial services, without a basic
understanding of products, and unaware of how to secure their information may
fall into scams run by fraudulent Fintech companies or online loan sharks,
exposing them to cybercrime and financial losses.
For Fintech companies:
High competition: The Fintech sector is a lucrative market where anyone can enter,
making competition with numerous other players inevitable for any startup
venturing into Fintech.
Chaotic market: The lack of clear and comprehensive legal frameworks has led to
the rise of predatory lending companies posing as Fintech firms. The confusion
between legitimate Fintech organizations and fraudulent operations can erode
public trust, placing reputable Fintech companies in a difficult position as scams
and illegal activities continue to proliferate.

2.The current situation in the world and in Vietnam

2.1 In the world.

**Market Analysis of Fintech**

The global Fintech market is estimated to reach USD 228.24 billion by 2024 and is
expected to reach USD 397.24 billion by 2029, growing at a CAGR of 11.72%
during the forecast period (2024-2029).
Fintech refers to computer programs and other modern technologies used by
businesses to provide automated and improved financial services. Over the years,
the fintech industry has evolved significantly, making it challenging for companies
to find a place among numerous competitors. With either collaborative or
competitive approaches, financial services companies and technology firms have
kept pace with each other, developing disruptive and innovative solutions in an
ever-changing business environment.
Several crises have acted as catalysts for the growth of the FinTech market. Since
the last global financial crisis, investment in Fintech has surged. Similarly,
COVID-19 had a significant impact on the global economy, causing an economic
downturn. This crisis led to the rapid development of the FinTech industry.
The technological aspect of the FinTech sector is advancing rapidly, with increased
adoption of technologies such as Blockchain, Application Programming Interfaces
(APIs), robotic process automation, data analytics, and more. These innovations
bring greater flexibility, efficiency, and precision.
=> Fintech has attracted significant interest and investment from technology
experts, financial professionals, financial institutions, and investors worldwide.
The development of Fintech also promises to transform the global financial sector
in the coming years.
2.2 In Vietnam.

**Vietnam Fintech Market Analysis**

The Vietnam Fintech market, in terms of transaction value, is projected to grow
from USD 39.02 billion in 2024 to USD 72.24 billion by 2029, with a CAGR of
13.11% during the forecast period (2024-2029).
Vietnam's rapidly growing Fintech market presents significant opportunities for
technology companies supporting digital banking, digital payments, blockchain,
and cryptocurrencies. Currently, Vietnam is home to over 130 FinTech startups.
The country’s fintech space is on a growth trajectory, supported by government
regulations, policies, and the appeal of investment within the Asian region.
Vietnam's young fintech industry is showing robust growth, especially in areas
such as P2P lending, crowdfunding, digital payments, crypto assets, and insurance
technology.
With a significantly high proportion of the population that is either unbanked or
underbanked, coupled with increasing mobile connectivity (150%), internet
penetration (70%), and 3G/4G subscriptions (45%), Vietnam remains an untapped
market and a promising land for fintech investors.
=> With such a potential market like Vietnam, investors have ample opportunities
to grow and experiment. Fintech in Vietnam is expected to boom even further,
becoming a dominant trend in shaping the financial activities and daily lives of the
Vietnamese people, both now and in the future.

What is PESTEL

PESTEL analysis, when combined with SWOT analysis, is a powerful tool for
understanding the environment or context in which change is taking place or is
being contemplated. It is an analytical tool used to understand the broader
macroeconomic and social context by measuring current and future markets.
Understanding long-term trends and their implications can guide strategic making
decision

The letters of PESTEL stand for Political, Economic, Social, Technological,

Environmental and Legal.
P-Political
- Political stability: The political climate is at the core of the operations of any
industry and the Fintech sector is also influenced by a volatile political
environment.
We can't ignore the geopolitical climate of the Russian war in Ukraine. The
Russian and Ukraine political turmoil has created an increase in the cyber-attacks
on these companies in the region. In addition, the unstable political situation
disrupts the amount of transactions made by the users. Within Ukraine and Russia,
banks have been impacted on both sides or within both countries. There have been
some of the largest distributed denial of service attacks ever reported due to this
kind of political instability.

- Government support for innovation: Government strategy for technology-based

financial services also constitutes an important part of the political domain. The
policies devised by government officials can help the Fintech sector to grow by
providing favorable incentives to new ventures to enter the market. In addition, it
can also create a strategy for supporting the integration of these services by people.
(According to Lê Huyền Ngọc ‘s research), In Vietnam, The Government is
undertaking research into new developments, including institutional frameworks
for controlled testing of new technologies, products, services, business models, and
new regulatory guidelines, particularly, especially in the field of P2P Lending with
many different initiatives. Vietnam's fintech sector in the coming years promises to
be a market rich in potential and fierce competition.

- International trade policies: The UK's exit from the European Union serves as a
prime example. Brexit has created a complex regulatory landscape for fintech
companies, especially those operating across borders. Companies like
TransferWise, now known as Wise, had to adapt to new rules around cross-border
money transfers. This involved not just compliance but also strategic shifts, like
setting up additional offices within the EU to continue seamless operations

- Cybersecurity legislation: Legislation related to cybersecurity significantly

impacts the fintech sector in various ways, shaping how companies manage and
protect sensitive data, comply with legal requirements, and maintain trust with
customers.(Rajath Karangara,Otilia P. Manta, 2024) While compliance can be
costly and complex, it is essential for maintaining operational legitimacy, customer
trust, and competitive advantage. Understanding and adapting to these legal
requirements is crucial for fintech firms to succeed in an increasingly regulated
environment.
Mandatory Standards: Legislation often sets forth specific standards for data
protection and cybersecurity. For instance, the GDPR in the European Union and
the CCPA in California mandate stringent measures for data handling, encryption,
and breach notification. Fintech companies must adapt their practices to meet these
standards to avoid legal penalties and maintain operational legitimacy. Failure to
comply with cybersecurity legislation can result in significant fines and legal
consequences. For instance, GDPR fines can reach up to €20 million or 4% of
global annual turnover, whichever is higher.
.

- Taxation policies: Recognizing the growth trends in fintech, many countries

around the world have implemented measures to support and facilitate the
development of the fintech sector. Notable examples include the UK, Australia,
Singapore, Malaysia, Hong Kong, Thailand, and Japan. Among these, prominent
policies include tax exemptions and reductions. For instance, China applies a 15%
corporate income tax rate for high-tech enterprises, while ordinary businesses face
a 25% tax rate. In Malaysia, startups in the technology sector benefit from tax
exemptions. Thailand offers a 5-year corporate income tax exemption for startups
that meet certain criteria. These measures are advantageous for many newbies of
FinTech firms.

E - Economic
Economic growth, exchange rates, inflation rates, interest rates, consumer income,
and unemployment rates are all economic factors. This factor may have an
immediate or indirect effect. This economic factor includes all the factors that
affect the business
climate of a company.

-Market volatility:
Impact on Investment Capital:
Reduced Investment: During periods of high market volatility, investors often
become more cautious and may reduce their investment in fintech companies.
Significant fluctuations can increase uncertainty and risk, leading venture
capitalists and investment funds to cut back on fintech projects.Case of Wirecard -
a famous fintech company was a notable example.
=> The incident heightened investor caution towards fintech companies, causing
many to struggle with attracting new investment and requiring them to implement
measures to ensure financial sustainability. The Wirecard example clearly
demonstrates that market volatility and severe issues within a single company can
lead to reduced investment in the broader fintech sector. Investors become more
cautious and tend to withdraw or cut back on investment in fintech projects when
faced with high uncertainty and risk.

Higher Cost of Capital: In times of market volatility, the cost of capital may rise as
investors demand higher returns to compensate for increased risk. This can make it
more challenging and expensive for fintech companies to raise funds.
Impact on Asset Values:
Stock Price Volatility: If a fintech company is publicly traded, market volatility can
affect its stock price. The price may experience large swings in the short term,
impacting the company's market value and making it harder to attract capital
through new stock issuance.
-Interest rate fluctuations : As of September 2023, the Federal Reserve's target
range for the federal funds rate was 5.25% to 5.50%, a significant increase from
the 0% to 0.25% range in 2021. The Federal Reserve's interest rate hikes have a
direct impact on FinTech companies.
Different Outcomes for FinTech Firms: With rising interest rates and a slowing
economy, we'll see many huge differences among FinTech companies. When
interest rates are low, people are more likely to borrow money. This creates
opportunities for fintech companies to offer competitive loan products. On the flip
side, high interest rates can deter borrowing, affecting the demand for such
services.
Incumbents May Benefit (Dushyant “D” Shahrawat, Udayveer Chawla, Vikas
Shah, 2022) : Traditional financial institutions (like big banks) might gain an
advantage as private capital becomes more expensive and harder to get. In recent
years, FinTechs grew quickly with lots of cheap funding, but as rates rise and
capital becomes scarcer, traditional banks might be better positioned. FinTechs will
need to focus more on making their businesses profitable and growing organically
rather than relying on external funding.
Uncertain Future: The performance of FinTech sectors in the coming years will
depend on how quickly and how much the Federal Reserve raises rates, and how
the economy reacts. If the economy slows down sharply or adjusts more smoothly,
it will affect FinTechs in different ways
-Inflation rates: Inflation rates are another economic indicator that fintech
companies need to watch closely. High inflation can erode the real value of
savings, making investment platforms more attractive. Many security companies
and finance companies might see increased activity during periods of high inflation
as people look for investment options that offer better returns than traditional
savings accounts. Conversely, low inflation might make conservative financial
products like fixed deposits more appealing

- Consumer spending trends:

Demand for Personal Finance Management Tools: As consumer interest in
effective financial management continues to grow, fintech companies that offer
budgeting, savings, and investment tools stand to benefit. This trend is particularly
strong among younger consumers who are tech-savvy and focused on optimizing
their financial health.
Growth of Digital Payments: Alongside advancements in technology, the COVID-
19 pandemic has marked a significant turning point for the fintech industry. Online
shopping, cross-border transactions, and contactless payments have become
prevalent habits, especially in Vietnam. As consumers increasingly shift towards
digital payments, fintech companies will benefit from higher transaction volumes.
-Economic growth: GDP growth also plays a role in shaping the fintech landscape.
A booming economy usually leads to increased consumer spending and a greater
willingness to invest. This creates a favorable environment for fintech companies
offering payment solutions or investment platforms. For example, during economic
upturns, PayPal and Square often experience higher transaction volumes. Being
attuned to these economic trends allows fintech companies to make informed
decisions about product development and market expansion.

S- Social
Population: The prevalence of unbanked populations varies greatly by country. In
nations such as Denmark, Finland, Norway, Sweden, Canada, the Netherlands,
New Zealand, Australia, and Germany, more than 99% of people have bank
accounts. Conversely, in countries like Madagascar, Niger, and Chad, only about
10% of the population has bank accounts. Similarly, Morocco, Vietnam, Egypt,
and the Philippines also have significant portions of their populations without bank
accounts (Norrestad, 2022). Therefore, in countries with a high percentage of
unbanked individuals, fintech companies see a significant market opportunity. For
instance, in nations like Madagascar or Chad, fintechs such as mobile payment
providers and digital wallets can introduce financial services to a large,
underserved population.
Aging: Most young people are accustomed to using debit and credit cards, as well
as mobile payment methods for transactions. They might also have accounts with
services like Momo. In contrast, many senior citizens tend to be less enthusiastic
about adopting mobile payment methods. So, Fintechs might focus their marketing
efforts on younger, tech-savvy consumers who are more likely to use and advocate
for new technologies. For example, platforms like Venmo or Revolut often target
younger demographics who are familiar with digital payments.

Cultural barrier
Trust and Security Concerns
Despite the growing popularity of fintech in Vietnam, some individuals are still
cautious about digital financial services due to concerns about security and fraud.
For instance, older generations or those with limited exposure to technology may
be wary of online transactions and mobile banking
Digital literacy: In rural areas of Vietnam, where access to technology and internet
infrastructure may be limited, digital literacy can be a significant barrier. Many
people in these regions may not be familiar with using smartphones or navigating
fintech applications. For example, a farmer in a remote village may find it
challenging to use mobile payment apps like MoMo or PayPal.
Traditional Preferences
Traditional banking and cash payments are prioritized in daily life, and some
individuals may resist transitioning to digital payment methods. For instance, a
local market vendor might prefer cash transactions and be hesitant to adopt mobile
payment systems.

T- Technological
Technological advancements are crucial to the fintech sector, frequently driving
innovation and disruption.
-Blockchain technology, for instance, has transformed financial transactions by
providing enhanced transparency and security. Companies such as Ripple have
utilized blockchain to enable immediate cross-border payments, posing a challenge
to conventional banking systems.
- Artificial intelligence (AI) is another transformative technology in fintech. AI
algorithms are capable of analyzing large datasets to identify fraudulent behavior
or deliver customized financial guidance. Firms such as CrowdStrike utilize
machine learning for cybersecurity solutions. These technologies enhance service
quality and lower operational expenses.
-Big Data Analytics: This technology processes vast amounts of financial data to
identify trends, optimize trading strategies, and enhance customer experiences. An
example of big data in action is Netflix's recommendation engine. Netflix uses big
data to analyze vast amounts of information about user behavior, including:
viewing history, rating, search queries
-Digital Wallets and Payments: Digital payments boost fintech growth by
increasing transaction volume, expanding customer reach. They enable quicker and
more seamless transactions, leading to greater financial inclusion and new revenue
streams for fintech companies. For example Momo ( "Mobile Money") is a popular
digital wallet service in Vietnam. Developed by the company M_Service, Momo
enables users to perform a wide range of financial transactions through their
mobile phones.

-Cyber security
Various industry surveys highlight cybersecurity as a major threat to businesses.
Beyond the loss of valuable data, the most significant impact often stems from the
damage to a company's reputation following a cybersecurity breach. This is why
FinTech and tech firms specializing in cybersecurity solutions are experiencing
strong success. For instance, Crowdstrike (CrowdStrike Holdings, Inc. is an
American cybersecurity technology company based in Austin, Texas. It provides
endpoint security, threat intelligence)

E - Environmental
Environmental factors are becoming a focal point in the fintech industry, even
though they have often been overlooked in the past. The growing emphasis on
ESG (Environmental, Social, Governance) criteria is pushing companies to adopt
more sustainable practices.
Sustainable investment: The environment has become a hot topic globally today.
Investors are increasingly paying attention to environmental factors before
investing because these factors can impact the long-term sustainability of a fintech
company. Businesses that do not focus on environmental issues may face legal
risks, costs related to pollution, and negative impacts on their reputation. Fintech
companies that focus on sustainability are more likely to attract investment. Ecolife
Recycling, a Canadian fintech company, developed a mobile app that offers
financial rewards for recycling. This innovative approach has not only garnered a
loyal user base but has also caught the attention of investors who are keen on
supporting environmentally responsible businesses.
Changing Consumer Behavior: The worsening environmental changes are
influencing consumer behavior. Financial companies that use technology will
benefit, as digital financial solutions can replace traditional banking services,
reducing the need for paper documentation and lowering the carbon emissions
associated with traditional transactions. This allows fintech companies to gain a
significant competitive advantage over traditional counterparts.
Ex: Aspiration, a U.S.-based fintech firm, offers eco-friendly financial services.
They have a feature that rounds up transactions to the nearest dollar and uses the
spare change to plant trees. This not only appeals to consumers who are
environmentally conscious but also sets the company apart in a competitive
market.

=> Environmental considerations are no longer a peripheral concern for fintech

companies. As ESG criteria continue to gain prominence, adopting sustainable
practices is becoming a business imperative. Companies that proactively integrate
environmental responsibility into their business models are better positioned to
attract both consumers and investors, giving them a competitive edge in the
market.

L- Legal
- Fintech companies often need to obtain licenses and comply with regulations
specific to their operations. For instance, in Vietnam, the State Bank of Vietnam
(SBV) regulates electronic payment services, requiring fintech firms to secure
licenses for providing payment services, remittance, and digital wallets.
Compliance with these regulations ensures that fintech companies operate legally
and adhere to industry standards.

- Fintech companies handle sensitive financial data, which makes data protection a
critical legal concern. In Vietnam, the Law on Cyber Information Security and the
Law on Personal Data Protection govern how fintech firms must manage and
protect user data. Companies must implement robust data protection measures to
safeguard personal information and comply with privacy regulations to avoid legal
penalties and maintain customer trust.

- Legal frameworks often include provisions to protect consumers from unfair

practices. In Vietnam, the Consumer Protection Law mandates that fintech
companies provide clear and accurate information about their products and
services, address customer complaints, and ensure transparency in their operations.
REFERENCES
Thiên Di (2022). Ngôi sao Wirecard sụp đổ: Bê bối tài chính chấn động nước Đức
khiến hàng tỷ USD của nhà đầu tư "không cánh mà bay"

George P (2023). How PESTLE Analysis is Redefining Fintech Strategies in 2024

Dushyant “D” Shahrawat, Udayveer Chawla, Vikas Shah (2022) .FinTech in the
Face of Rising Rates and a Possible Recession
Gintarė Pauliukevičienė , Jelena Stankevičienė (2021) .Assessment of the impact
of external environment on fintech development
Lê Huyền Ngọc. Tác động của fintech đối với hoạt động ngân hàng và một số đề
xuất để ngân hàng - fintech cùng phát triển tại Việt Nam
Phạm Nguyễn Anh Huy (2023) .Fintech có thể thúc đẩy các Mục tiêu phát triển
bền vững
Phan Đăng Hải, Nguyễn Kim Anh(2022). Cơ chế thử nghiệm có kiểm soát và vấn
đề hoàn thiện khung pháp lý về Fintech ở Việt Nam

Võ Tiến Lộc (2024).Thị trường Fintech tại Việt Nam: Thực trạng và giải pháp
Eko Riwayadi, Siti Awaliyati Deliabilda , Maeyer Beni Panahatan(2021). Pestel
analysis of financial technology in Indonesia.
Nguyễn Thị Hoài Lê (2023). Vai trò của công nghệ tài chính trong bối cảnh chuyển
đổi số và đại dịch COVID-19
Ryan Browne (2023). UK launches £1 billion fintech fund to compete with Silicon
Valley
Rajath Karangara,Otilia P. Manta(2024). Cybersecurity and data privacy in fintech

3.Potentiality and Segmentation of Fintech

Growth and Milestones
Early Development (2008-2015)
2008: The fintech journey in Vietnam began with the introduction of online
payment platforms.
2014: The State Bank of Vietnam (SBV) issued the first licenses for non-bank
payment service providers, paving the way for the development of digital payment
solutions.
Rapid Growth and Innovation (2016-2020)
2016: The number of fintech startups began to rise, focusing on digital payments,
peer-to-peer lending, and blockchain technologies.
2017: MoMo, one of the leading e-wallets in Vietnam, secured significant funding
and expanded its services.
2018: The fintech sector saw increased investment, with companies like VNPay
and ZaloPay gaining prominence.
2019: Vietnam’s fintech market was valued at approximately $7.8 billion.
Pandemic and Acceleration (2020-2021)
2020: The COVID-19 pandemic accelerated the adoption of digital payments and
online financial services. E-wallets like MoMo, VNPay, and ZaloPay saw a surge
in usage.
2021: Vietnam recorded about 395 million mobile transactions in the first quarter, a
78% increase from the previous year.
Recent Developments (2022-Present)
2022: The fintech industry continued to grow, with over 100 fintech startups
operating in various segments such as wealth management, alternative lending, and
blockchain.
2023: Vietnam’s fintech transaction value reached $11 billion, with projections to
hit $26.7 billion by 2025.
2024: Vietnam emerged as the second-largest player in the ASEAN fintech
landscape, with the market expected to reach $18 billion by the end of the year.

Vietnam's fintech market growth is projected to continue in transaction value,

reaching $45.3 billion by 2028.

(The digital assets and payments market is expected to be the largest segment, with
assets under management (AUM) of $249.10 million in 2024. In the same year, the
average AUM per user in this market is expected to be $24.54.

Furthermore, forecasters project the digital assets market will see a revenue growth
of 19.19% in 2025. The number of users in the digital payments market is expected
to reach 46.87 million by 2028, spurred by the meteoric rise of e-commerce and
the increasing adoption of digital payment methods.)

Potential growth
Opportunities and challenges
The window of opportunity and growth drivers.
Demographic benefits
Early 2024, approximately 77.9 million people in Vietnam are considered part of
the tech-savvy middle class. As this population increasingly adopts digital
technologies, it presents an opportunity for consumer finance institutions to
collaborate with the Fintech industry.
Vietnam Fintech Sandbox supporting business growth
The State Bank of Vietnam (SBV) has been soliciting input on proposed regulation
changes for the industry.The central bank sought out to establish a controlled
testing system, which is meant to provide both foreign and local investors with a
measure of protection against risks when investing in Vietnam’s Fintech sector
Cybersecurity and data protection
According to Kaspersky, Vietnam has the lowest rate of cyberattacks related to
banks, payment systems in the regio, 26.36%, much lower than the region’s
average of 43%.
E-Commerce, food delivery platforms are growth drivers for digital payments
Leveraging the symbiotic relationship of both sectors, the increase in penetration
rates of e-Commerce positively influences the growth of digital payments which
accounted for 37% of total transactions in 2022.
Integrating Fintech comes with challenges.
Legal framework still infant
In the last few years, the market became overcrowded, and a mindset of scrutiny
has been slowly adopted. The State Bank of Vietnam has a double edge-sword task
to handle: enable financial innovation and support the digitalization of the
economy through support policies designed to attract quality investment, it also
look after and create strict policies to regulate the Fintech sector and maintain
stability and safety.
Human resources pros and cons
The shortage of skilled human resources in the Fintech sector presents a moderate
challenge for Vietnam. A survey by the Institute of Banking Human Resources
found that most individuals with specialized skills in finance and banking lack
proficiency in information technology and foreign languages. Conversely,
technology engineers often have strong IT skills but lack in-depth knowledge of
finance.
Technological infrastructure
According to the Central Council of Theoretical Studies, there are several
challenges facing the country’s IT and telecommunications infrastructure. For
example, the speed and quality of information technology infrastructure must be
improved to support emerging technologies Additionally, mobile broadband
coverage in remote and mountainous regions remains limited, and the actual
connection speed is often inconsistent with the requirements of the digital
environment.

Segmentation of Fintech

Segmentation is the practice of dividing the target market into different customer
groups. Market segmentation involves dividing a market into smaller groups based
on factors like demographics, needs, priorities, shared interests, and various
psychographic or behavioral criteria. This approach helps in gaining a clearer
understanding of the target audience.
The 4 main types of market segmentation include demographic, geographic,
psychographic, and behavioral–which we'll cover more in depth in the next
section.
Demographic
3.1. Age
With a population of over 94 million people, the majority of whom are under 35
years old (accounting for 60.5%), this age group is highly adaptable to new
technological solutions. Additionally, mobile phone penetration in Vietnam is
currently high, with nearly 30 million mobile phone users by the end of 2017, and
it is projected to reach 40 million by 2021. Notably, Vietnam is a rapidly growing
and dynamic country in terms of internet usage in the region. Statistics show that
there are currently around 52 million internet users (accounting for 54% of the
population), ranking 5th in the Asia-Pacific region in terms of the percentage of the
population with internet access, following China, India, Japan, and Indonesia.
With these advantages, Vietnam is considered an attractive and promising
investment destination in the fintech sector in Asia. In this context, fintech
solutions will lead new companies to provide financial services outside the
traditional financial sector, potentially reshaping the competitive landscape among
financial service providers and expanding access to financial services.(Xuan
Thanh, 2018)
Vietnam is a country with favorable conditions and great potential for the
development of Fintech, such as a young population and rapid adoption of new
technology: 89% of users aged 20-44 use the Internet, and 58% of the population
uses the Internet for at least 5 hours a day (Nielsen, 2017).
The most discussed age group is 25 to 34 years old, accounting for 54% of the
total users discussing fintech. This group also uses fintech applications, such as
electronic payments, the most.(Nam Anh, 2023)
3.2. Career
A FinTech company is an information technology enterprise that provides
services in the financial sector. The customers of a FinTech company include
financial institutions (such as banks, investment firms, financial companies,
insurance companies, securities firms, etc.), businesses, and individual consumers.
The relationship between commercial banks and FinTech companies can be
multifaceted: commercial banks can serve as strategic partners with FinTech
companies to jointly offer services to individual and business customers, but they
can also be competitors, particularly in the areas of personal consumer lending and
payment services.( CDM, 2024)
Fintech products are typically divided into two groups based on the target users:
The first group includes products that serve consumers, such as digital tools and
other technologies that enhance how individuals borrow money, manage their
finances, and fund startups.
The second group consists of "back-office" technology products that support the
operations of Fintech companies and financial institutions.
3.3. Gender
Research into gender differences in FinTech adoption reveals that men
generally use FinTech services more than women. Several studies have explored
the reasons behind this disparity, which include differences in attitudes toward
technology, privacy concerns, and risk aversion.
 For instance, a study conducted by Chen (2021) found that women are generally
less willing to adopt new financial technologies due to greater concerns about
security and privacy compared to men. These attitudes contribute to a gender gap
in FinTech usage, which persists even when controlling for traditional gender roles.
The research highlighted that this gap is particularly noticeable in the adoption of
services that require more personal data or involve higher perceived risks.
Similarly, another study focused on the adoption of FinTech services in India
revealed that while both men and women find FinTech services useful, men exhibit
a higher intention to use these services. The study pointed out that men tend to
perceive these technologies as more beneficial, while women are more cautious,
possibly due to higher perceived risks and concerns about technology's ease of use.
( World Bank Blogs, 2021)
These findings suggest that targeted efforts to address the specific concerns of
women, such as improving security features and making the technology more user-
friendly, could help reduce the gender gap in FinTech adoption.
3.4. Income
FinTech plays a crucial role for high-income customers by maintaining
transactions that generate substantial surplus and high efficiency. Typically engage
with FinTech platforms for investment management, wealth planning, and
premium financial services. They seek sophisticated tools that provide
convenience, efficiency, and optimized financial returns. High-income users are
more likely to adopt robo-advisors, high-interest digital banking services, and
personalized financial management solutions (Chen, 2021).
Middle class is more likely to use FinTech for everyday financial management,
such as budgeting tools, online banking, and credit management. Middle-income
users are attracted to services that balance affordability with functionality, like
peer-to-peer lending and payment platforms (Bajunaied, 2023).
Finally, low income users focus on accessing basic financial services that may
be out of reach via traditional banking. Mobile banking, microloans, and
remittance services are prevalent among this demographic. These services are
valued for their low cost and accessibility, which are crucial for financial inclusion
(Igamo, 2024).
3.5. Ethic and Nation
Segmenting FinTech usage by ethnicity and nationality reveals complex
patterns shaped by cultural, economic, and regional factors.
Research indicates that different ethnic groups display varying levels of trust in
FinTech solutions. For example, African American and Hispanic communities in
the U.S. often show lower trust in traditional financial systems, which can lead to
either underutilization or increased reliance on alternative financial technologies.
This trend is partially due to historical and socio-economic factors that influence
these communities' financial behaviors( Ingenta Connect, ).
Ethnic minorities with limited access to financial education and traditional
banking services might adopt FinTech more readily as a means to gain access to
financial tools. For instance, mobile banking and peer-to-peer lending platforms
can offer a bridge to financial inclusion for these groups, addressing the gap left by
conventional financial institutions.
FinTech adoption varies significantly between developed and developing
countries. In developed countries, FinTech is often associated with convenience
and advanced financial management tools. In contrast, in developing countries,
FinTech is crucial for financial inclusion, particularly for the unbanked population.
Services like mobile money have seen widespread adoption in regions like Sub-
Saharan Africa, where traditional banking infrastructure is lacking.
The regulatory environment of a country plays a critical role in shaping FinTech
adoption. For example, in countries with supportive regulatory frameworks like
Singapore, FinTech growth has been robust across various demographics.
However, in countries with stricter regulations or where the regulatory
environment is less developed, such as in parts of India, FinTech adoption can be
more fragmented and slower, with significant variation across different
demographic groups.
Segmenting FinTech usage by ethnicity and nationality highlights the
importance of cultural context and regulatory environments. Understanding these
factors allows FinTech companies to tailor their offerings, thereby improving
financial inclusion and catering to the diverse needs of different demographic
groups.
( note tạm references:
Bajunaied, K., Hussin, N., & Kamarudin, S. (2023). Behavioral intention to adopt
FinTech services: An extension of unified theory of acceptance and use of
technology. Journal of Open Innovation: Technology, Market, and Complexity.
Igamo, A. M., et al. (2024). Factors influencing Fintech adoption for women in the
post-Covid-19 pandemic. Journal of Open Innovation: Technology, Market, and
Complexity.
Rani, V., & Kumar, J. (2023). Gender differences in FinTech adoption: What do we
know, and what do we need to know? Journal of Modelling in Management.)

Geographic
Geographically segmenting FinTech is essential for understanding how these
services are adopted and utilized across different regions. This approach considers
factors like technological infrastructure, regulatory frameworks, economic
conditions, and cultural variances.
4.1. North America( high adoption rates, key markets)
North America, particularly the United States and Canada, is one of the
leading regions in FinTech adoption. The market is characterized by a strong
presence of both startups and established financial institutions integrating FinTech
solutions. The U.S. has a well-developed financial system, robust regulatory
support, and widespread access to technology, which all contribute to high
adoption rates across various FinTech sectors, including digital payments, lending,
and wealth management.
 The U.S. and Canada have seen significant growth in digital banking, robo-
advisors, and peer-to-peer lending platforms. These services are popular among
tech-savvy consumers and businesses looking for more efficient and cost-effective
financial solutions.
4.2. Europe ( Diverse Adoption Patterns, Regulatory Influence)
Europe presents a diverse FinTech landscape, with different adoption patterns
across Western, Central, and Eastern Europe. Western Europe, including the UK,
Germany, and France, has a mature FinTech market, driven by innovation in areas
like digital payments, open banking, and blockchain technology. The UK, in
particular, is a global FinTech hub, largely due to its supportive regulatory
environment and financial services infrastructure.
The European Union's regulations, such as the PSD2 (Payment Services
Directive 2), have encouraged competition and innovation in the FinTech space by
allowing third-party providers to access bank customer data, leading to the growth
of various FinTech services.
4.3. Asia- Pacific( Rapid Growth and Innovation, Diverse Ecosystems)
The Asia-Pacific region is experiencing rapid FinTech growth, with China and
India leading the way. In China, mobile payment platforms like Alipay and WeChat
Pay dominate, driven by the high penetration of smartphones and a consumer
preference for digital transactions. India, on the other hand, has seen a surge in
FinTech adoption due to government initiatives like the Digital India campaign and
the Unified Payments Interface (UPI).
Countries like Japan and South Korea also have advanced FinTech markets,
with significant developments in digital banking, cryptocurrency, and insurance
technology. Southeast Asia is emerging as a key market with countries like
Singapore acting as a regional FinTech hub due to its favorable regulatory
environment and investment climate.
4.4. Africa( Financial Inclusion Focus, Regional Hubs)
In Africa, FinTech is primarily focused on financial inclusion, with mobile
money services like M-Pesa in Kenya being prime examples. These services have
revolutionized access to financial services for the unbanked population, allowing
for digital transactions, savings, and microloans in areas where traditional banking
infrastructure is lacking.
Besides Kenya, Nigeria and South Africa are also emerging as FinTech hubs,
with increasing investments in digital banking, mobile payments, and remittance
services aimed at improving financial inclusion.
4.5. Latin America (Growing Market, Challenges and Opportunities)
Latin America has seen rapid FinTech growth, particularly in countries like
Brazil, Mexico, and Argentina. These markets are characterized by a large
unbanked population and increasing smartphone penetration, which has driven the
adoption of mobile payments, digital wallets, and lending platforms.
While the market is growing, it also faces challenges such as regulatory
fragmentation and economic instability. However, these challenges also present
opportunities for FinTech companies to offer solutions that address specific
regional needs, such as access to credit and remittances.
( References:

Chen, L., & Shi, M. (2021). The global landscape of FinTech adoption: A country-
level investigation. Journal of Financial Stability.
KPMG (2024). Pulse of Fintech: H2 2023 Report.
Ernst & Young (EY) (2023). Global FinTech Adoption Index 2023.)

Psychographic
In the context of fintech, this segmentation can provide valuable insights into
consumer behavior, preferences, and adoption rates of financial technology
products and services.
One key psychographic factor to consider is financial literacy and risk
tolerance. As noted by Berger (2016) in his book The Psychology of Money,
individuals' understanding of financial concepts and their willingness to take risks
can significantly influence their adoption of fintech solutions. For example, those
with high financial literacy and a high risk tolerance may be more likely to
embrace innovative products like cryptocurrency or robo-advisors.

Another important psychographic factor is tech-savviness and comfort with digital.

As Kotler and Armstrong (2023) discuss in their textbook Principles of Marketing,
consumers' familiarity with technology can play a crucial role in their adoption of
fintech products. Digital natives, who grew up with technology, may be more
comfortable using mobile banking apps or online investment platforms. In contrast,
digital immigrants, who have adopted technology later in life, may require more
guidance and support.

Financial goals and aspirations are also key psychographic factors to consider. As
Slater (2017) points out in his book Consumer Behavior, consumers' financial
objectives can significantly influence their choice of fintech products. For instance,
individuals seeking to accumulate wealth may be more interested in investment
platforms, while those focused on debt reduction may prioritize budgeting tools.

Values and attitudes towards money can also impact fintech adoption. Consumers'
beliefs about money and their spending habits can influence their preferences for
financial products and services. For example, individuals who prioritize ethical and
sustainable investing may be more likely to choose fintech companies that offer
socially responsible investment options.

Finally, trust in financial institutions and technology is a critical psychographic

factor. As Berger (2016) emphasizes, consumers' level of trust in financial
institutions and their willingness to adopt new technologies can significantly
impact their adoption of fintech solutions. Building trust with consumers is
essential for fintech companies to succeed.
( References
Berger, J. (2016). The Psychology of Money. Penguin Random House.
Kotler, P., & Armstrong, G. (2023). Principles of Marketing. Pearson.
Slater, S. (2017). Consumer Behavior. Prentice Hall. )

Behavioral
Behavioral segmentation categorizes customers by their actions, like what they
buy, how often they use products, and how loyal they are. In the fintech world, this
helps understand customer choices, adoption rates, and marketing success.
Usage frequency and intensity are crucial behavioral factors in fintech
segmentation. Frequent users actively engage with fintech platforms daily, utilizing
them for a wide range of financial activities. Occasional users may interact with
fintech services less frequently, primarily for specific needs. In contrast, non-users
have not adopted any fintech products or services, potentially due to factors such
as preference for traditional methods or concerns about security.
Product adoption and loyalty are key behavioral factors in fintech. Early
adopters, who eagerly embrace new technologies, are often the first to adopt
fintech solutions. In contrast, late adopters are more hesitant and may need
additional persuasion. Brand loyalty, the extent to which customers favor a specific
fintech brand or product, is another important consideration. Understanding these
factors allows fintech companies to tailor their marketing strategies and product
offerings to different customer segments.
Customer Lifetime Value (CLTV) is a key metric in fintech that assesses the
total revenue a customer generates over their relationship with a company. High-
value customers, characterized by frequent usage and purchases, significantly
contribute to a fintech company's bottom line. In contrast, low-value customers,
with less frequent interactions and spending, generate lower revenue.
Understanding CLTV allows fintechs to prioritize customer retention and tailor
strategies to maximize the value of their customer base.
The channel through which users interact with fintech services is a crucial
behavioral factor to consider. Mobile users, who primarily access fintech products
and services on their smartphones or tablets, have become increasingly prevalent.
Desktop users, who prefer using fintech services on their computers, still make up
a significant portion of the user base. However, branch users, who rely on
traditional brick-and-mortar branches for their financial needs, may be declining in
number as more consumers adopt digital solutions.
( References
Kotler, P., & Armstrong, G. (2023). Principles of Marketing. Pearson.
Slater, S. (2017). Consumer Behavior. Prentice Hall.
Verhoef, P. C., & Lemon, K. N. (2002). Customer loyalty and relationship
management: A framework of antecedents, consequences, and strategies. Journal of
Marketing, 66(3), 39-53. )