17 Photo: Pixabay. KRISHNA THACKER A Test Case for Digital Leap-Frogging: What the Financial Inclusion Community Can Learn from Vietnam As one of the fastest growing economies in Asia, Vietnam represents a tantalizing opportunity for the financial services industry. But it also presents an interesting confluence of factors that could allow it to leap-frog entirely over brick-and-mortar legacy banking, propelling it to the forefront of digital financial services. Despite astonishing economic expansion that the World Bank estimates has lifted more than 40 million people out of poverty since the 1980s, Vietnam remains largely rural (66 percent of the population) and unbanked (69 percent). There is thus no long-standing familiarity with—or loyalty to—banks, as most Vietnamese find them hard to access. This leaves the door open wider for fintechs in Vietnam than in markets where long-established banking habits would have to be broken first. In addition, Vietnam’s population is young (the median age is 30 compared to 38 in the United States), and smartphone penetration is one of the highest in the region: Among the 89 percent of rural Vietnamese who have access to a mobile phone of some sort, 68 percent of them use a smartphone. In urban areas, where 93 percent are mobile phone users, 71 percent of these users have a smartphone. MOMENTUM IN THE SECTOR Just as importantly, the Vietnamese government has made both financial inclusion and digitization keys of its “Cashless 2020” economic policy framework which aims to provide bank accounts for at least 70 percent of the