Vietnam’s growing fintech industry: The opportunities for meaningful partnerships with healthcare Challenges and Opportunities for Fintechfor

andpenetration.Tounderstandthecontextandopportunitiesin Vietnam, we also commissioned Vriens and Partners, a government advisory think tank, to take a deep dive into Vietnam’spolicylandscapeandpotentialinanin-depthreport. Topics 1. Vietnam’s growing fintech industry: The opportunities for meaningful partnerships with healthcare 2. Challenges and Opportunities for Fintech for Health in Vietnam

3. Introduction and Market Context

4. Vietnam’s Fintech Market

5. Vietnam’s Healthtech Market

6. Policy Landscape

Vietnam’s growing fintech industry: The opportunities for meaningful partnerships with healthcare Escaping a cash-only culture

InMay2020,avideoofacryingVietnamesewomanwentviral. Shewastremblingtearfully,repeatedlythankingamannextto her.Shehadlostabundleofcashsentfromrelativestopayfor hermother’sdialysistreatmentsandtheyoungmanhadfound thepacketandreturnedittoher.Unknowntohim,thissmallact of kindness likely allowed the woman to avoid months and perhapsyearsoffinancialhardship. Among the many advances Vietnam has faced in the last two decades, the relatively rapid shift from cash-based to digital payments is one of the most recent. Though the government mandate was already in place, COVID-19 has propelled the

process forward, creating the foundation for a vast digital ecosystem for Vietnamese consumers. With much of the infrastructureinplace,wheredoeshealthcarefitinandhowcan we capitalize on this progress by creating innovative fintech solutionsforlow-andmoderate-incomepeople? There is no doubt that investing in “critical digital infrastructures like information systems, connectivity, cybersecurity, and tools to collect and analyze data are fundamental to a digitally-enabled system,” a fact the Vietnam government knows well.135 Building on the National Financial Inclusion Strategy, The State Bank of Vietnam (SBV) governor highlighted non-cash payments, digital banking, and green banking as the top three priorities for the industry from now until 2025. The country has also loosened regulatory restrictions around cashless payments and built up the technological infrastructure needed to create an ideal digital paymentecosystem.Aplanforextendingtheseservicestosmall businessesandthoseinruralareasarenowalsoinview.

Inthelastfewyears,Vietnamwitnessedasurgeinfundingfor fintechcompaniesandstartups,rankingsecondintermsofthe total investment for fintech in the region, with much of these investments going to payments companies. The number of fintechstartupsin Vietnamgrewbymorethan 179%between 2017 and 2020 with the paymentssector representing 31% of all fintech startups. In addition, the total value of digital transactions in Vietnam increased 124% in the first quarter of 2020comparedto2019.

Building on the digital foundation

Inhealthcare,astrongdigitalpaymentsecosystemcanserveas a first step to unlocking new pathways for access to financial

services for people who have traditionally been left out (the unbanked and underbanked). These populations are particularlyvulnerabletotheshocksofhealthcarecoststhatare not sufficiently covered by social insurance (e.g. innovative medicinesforcancercare).Outsideofsocialinsurance,mostdo notholdprivateinsuranceanddonothavesufficientsavingsfor a major health illness or event. This is a problem in a country, such as Vietnam, where out-of-pocket spending for health services remains high (41% of total health expenditure). In addition, about a third of the population borrows money –including for healthcare needs – from unofficial lenders who imposehigh-interestrates,makingitnexttoimpossibleforlowtomoderate-incomepeopletopaybacktheseloans. TheVietnamesegovernment,inanefforttoaddresstheseissues, hasmadeitaprioritytodigitally-enableallhealthcaresystems in the country. According to SBV, more than 30 hospitals have introduced systems for electronic hospital fee payment. However, it is worth noting that this number has not changed since 2019, and the national goal of digitizing 50% of the hospitals in major cities by 2019 has not been reached. There havebeenmanyobstaclestoimplementationsuchaslowrates of adoption and buy-in, connectivity troubles with banking software,andcommunicationandcompatibilityissuesbetween intermediary services and hospital information systems. Further regulatory advances – such as considering integrating the national ID system to sign up for digital banking services instead of requiring in-person signatures – should also be considered. In addition, these services should be extended to ruralareasandthebenefitsofadoptingthecashlesssystemare adequately explained to businesses and consumers with low digitalliteracy.

The opportunities

Withthischangingdigitalculture,whataretheopportunitiesfor fintechandhealthcaretocometogethertoaddresshighout-ofpocketpayments?AgoodplacetostartisbyutilizingVietnam’s growingdigitalinfrastructuretodevelopnewtoolsthatprovide accesstofinancialservicestounderbankedandinformalsector workerstohelpaddresstheirhealthneeds.Forexample,cana fintech-enabledhealthsavingsaccountshelpapersonsetaside small amounts of money that can be put specifically towards thesecosts?

Second, what unique partnerships need to be made that integratehealthandfintechservices?Lastyear,MoMoandViet Duc University Hospital signed an agreement to integrate MoMo’s payments platform onto the hospital’s payments system,allowinguserstopayfortheiroutpatientandinpatient healthcareservicesviatheapp’se-wallet.Bygoingcashless,Viet Duc aims to reduce wait times, simplify processes, and altogether eliminate the need for cash. Momo’s e-wallet users are ubiquitous and collaborations such as this one can allow eventheunbankedtoeasilypayfortheirhealthcareneedswhen andwheretheywant. Finally, in addition to payments, we look at how services like insurtech(suchasPapaya),peer-to-peerlending,healthsavings accounts,andcrowdfunding(likeBetado)cantakeadvantageof this movement towards digitization in hospitals. Can they extendthehealthsystem’sdigitalreachintoruralareasandhave a positive impact on out-of-pocket spending? The Fintech for Healthprogramisexploringtheseopportunities.