Not only following South Korean businesses, the country’s banks and finance companies have seen a bigger pie in Vietnamese market i.e. consumer finance, especially lending market via cards. It is quite clear that recently, card issuing companies from this country have constantly poured capital on purchasing domestic finance companies. Specifically, Shinhan Card spent about 3.420 trillion dong on purchasing Prudential Finance Company, Lotte Card poured 1.734 trillion dong to acquire 100 percent stake in Techcombank Finance Company.
Banks from South Korea are also promoting credit card issuance, especially Shinhan Bank. After pouring capital to acquire the retail segment of ANZ Vietnam, this bank is aiming at becoming one of the three leading banks in credit card segment.
Shin Dong Min, CEO of Shinhan Bank in Vietnam said “In the coming time, we will continue strengthening retail segment, with special priority given to develop utility product line, investing in technology for digital bank and expanding preferential programmes for credit cards”.
With the “attack” of a series of banks and card companies from South Korea, it is not surprising that in the near future, many Vietnamese consumers will own a Korea-branded credit card. South Korean banks and companies have had too much experience in this sector.
Currently, Vietnam has 127 million bank cards. However, the number of credit cards is still very low, just about 4-5 percent. Along with the technology development trend and growth of spending via credit cards, this is the potential land for many domestic and foreign businesses.
The strong landing of financial investors from South Korea makes Vietnam credit card market be warmed up day-by-day. Previously, many finance companies only focused on consumer loans and cash loans such as Home Credit, FE Credit, etc. but now, they also race to issue credit cards and consider this as a key sector to focus on competing in this year.
Foreign banks entering Vietnamese market firstly focus on wholesale, and not many foreign banks are successful in retail sector. However, due to having similar business culture to Vietnam, finance investors from South Korea have quickly assessed retail market, targeting at millions of individual customers who are Vietnamese.
Currently, many South Korean finance investors have appeared in Vietnam such as Shinhan Bank, Woori Bank, Lotte Card, Shinhan Card, Kexim, KEB Hana, Industrial Bank of Korea, Kookmin, Busan and Nonghyup. Some information shows that South Korean financial group Hana is also promoting the plan to become BIDV’s shareholder. South Korean banks are leading the group of foreign banks in Vietnam in terms of scale and market share.
In several recent years, these banks are shifting their strategy from wholesale to retail. Accordingly, not only serving South Korean businesses in Vietnam, more than 93 million Vietnamese consumers are the target of many Korean banks.
Shin Dong Min said that Shinhan’s target of strongly developing retail segment in Vietnam is to achieve the balance between wholesale and retail. However, it is not difficult to see that the consumer finance “delicious pie” that is growing at 40-60 percent is causing not only South Korean investors to hunger for.
Understanding the market and consumption habit of Vietnamese consumer, abundant capital, modern technology, etc. are the advantages of Korean banks in Vietnam retail market. To compete with Korean competitors, Vietnamese banks will have to improve many factors, not only service quality but also fees and interest rates.
