VIETNAM'S ALTERNATIVE LENDING TO REACH OVER $441 MILLION

Vietnam's alternative lending is expected to grow by 24 per cent on an annual basis to reach $441.2 million in 2024, according to a report released by Research and Markets on September 16.

The report shows that Vietnam's alternative lending sector has experienced significant growth over the past six months of 2024, driven by the increasing adoption of digital financial solutions and the rise of fintech companies offering flexible lending options.

Sometimes referred to as marketplace lending, peer-to-peer lending and P2P lending, alternative lending takes place through online platforms that use technology to bring together borrowers underserved by traditional lending institutions, with loan investors seeking attractive yield-generating investments, according to Morgan Stanley.

This trend is expected to continue, with projections indicating robust expansion in the next six months as more consumers and small businesses seek accessible credit alternatives amid challenges in traditional banking systems. Key sub-segments, particularly the "Buy now, Pay later (BNPL)" market, are anticipated to thrive, reflecting changing consumer preferences and increasing demand for short-term financing solutions.

Vietnam's alternative lending sector is rapidly expanding, driven by digital innovations and increasing demand for flexible credit solutions. Key trends include the growth of BNPL services, mobile payment programmes, and significant small and medium-sized enterprise financing. Strategic partnerships and supportive regulatory changes further bolster this sector's development, suggesting continued robust growth and a shift towards more inclusive and accessible financial solutions.

The collaboration between Sendo and Kredivo enables Sendo's e-commerce platform to offer a BNPL service through Kredivo in partnership with VietCredit. This allows users to access credit lines for purchases on the Sendo marketplace.

Meanwhile, MoMo has tied up with TPBank to facilitate the MoMo Postpaid Wallet, which provides users with small lines of credit for various services, enhancing the accessibility of short-term financing options within the MoMo app. Viettel Money and FE Credit also launched the Paynow service, a postpaid wallet that can be activated online, offering consumers a deferred payment option with a quick setup process.

In addition, the Vietnamese government has introduced several key policies to regulate and promote the growth of the alternative lending sector. The country is considering a regulatory sandbox for fintech firms to test products in a controlled environment before launching them to ensure innovation and financial stability.

Research and Markets noted that medium to long-term growth story of alternative lending in Vietnam remains strong. Alternative lending adoption is expected to grow steadily over the forecast period, recording a compound annual growth rate of 16.9 per cent during 2024-2028. The alternative lending market in the country will increase from $355.9 million in 2023 to reach $824.4 million by 2028.

Source: VIR