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Peer-to-peer lending: Next fintech wave in Vietnam

Released at: 16:25, 13/08/2019 BUSINESS SPOTLIGHT

Peer-to-peer lending: Next fintech wave in Vietnam

Photos: Interloan

Model possesses many advantages compared to traditional lending in terms of speed, operating costs, and interest rates.

by Thanh Thanh

Peer-to-peer lending (P2P lending) is a modern fintech solution that allows direct connection between borrowers and investors without going through an intermediary.

Taking advantage of artificial intelligence and automation, the model possesses many advantages compared to traditional lending in terms of speed, operating costs, and interest rates.

Vietnam has a population of 96 million, 76 per cent of whom are of working age and 70 per cent of whom have a mobile phone, with average incomes growing fast and people preferring to use advanced technology.

Meanwhile, access financial-banking services remains modest compared to the region. According to the World Bank, only 40 per cent of adults in Vietnam have bank accounts compared to 80 per cent in China and 74 per cent in the Asia-Pacific region.

With these parameters, Vietnam is truly a potential gold mine for the P2P model, with increasing interest from businesses and venture capital funds both domestic and foreign.

In only the past few years, there have been about 40 businesses active in P2P lending in Vietnam. The latest name to enter the market is Interloan. Interloan’s Personal Loan Financing service was developed from the P2P Lending Project, which was honored at the Fintech Challenge Vietnam 2018, launched by the State Bank of Vietnam.

Mr. Tran Dai Duong, Executive Director of Interloan, said that it is purely a company providing services connecting investors with borrowers.

What makes Interloan different from the majority of existing P2P lending models is that the connections between enterprises and users are authenticated by the company. With this approach, only employees of enterprises that have joined the partnership can trade on Interloan, increasing transparency and reducing risks for investors in the market. Businesses that have used Interloan services for employees include McDonald’s Vietnam, the Mat Bao BPO JSC, the Vien Dong Insurance JSC, and the Viet Money JSC.

In order to implement P2P lending services, Interloan has cooperated with three commercial banks - Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Nam A Commercial Joint Stock Bank (Nam A Bank), and Ban Viet Commercial Joint Stock Bank (Viet Capital Bank) - to act as units to manage accounts and perform transactions. All accounts and transactions of users will be made through the banking system.

The general goal of Interloan in expanding cooperation with banks and businesses is to improve the foundation of online high-tech P2P lending, supporting the systematization of advance salary payments for employees, minimizing pressure on working capital for small and medium-sized enterprises (SMEs), and providing workers with more financial access channels to serve urgent and short-term needs.

This P2P lending model helps contribute to financial universalization and pushes back against “black credit” in society, as per targets set by the government and the central bank.

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