A new company called Lendbiz was recently set up in Hanoi. The company offers a peer-to-peer lending platform targeted at small and medium-sized enterprises (SMEs) in Vietnam.
Lendbiz joins other peer-to-peer lending platforms in Vietnam such as Timma, Vaymuon and Mofin. But unlike these which focus on consumer loan, Lendbiz focuses on business loan and aims to “provide fast and inexpensive capital to enterprises and help develop the business community in Vietnam.”
On Lendbiz, businesses can demand up to 1 billion VND (44,000 USD) in a loan with no collateral required. Applications are approved within 24 working hours. Investors can participate with as little as 500,000 VND (22 USD) and the platform promises up to 20% interest a year.
The establishment of Lendbiz comes on the heels of the launch of LenddoEFL in Vietnam. Orient Commercial Joint Stock Bank (OCB) announced last week that it will become the first bank to offer LenddoEFL’s psychometric scoring solution in Vietnam.
LenddoEFL’s solution uses a combination of a proprietary psychometric assessment from an interactive digital questionnaire plus various behavioral data sources to measure credit risk. The solution aims to serve unbanked and underserved populations.
“We expect this partnership will allow us to grow quickly by approving more people without increasing our risk, shortening turnaround times and improving the onboarding experience for our clients,” said OCB COM-B Director, Phu Nguyen. “This project will also help COM-B develop intelligent banking services.”
According to the World Bank, access to and use of formal financial services is low in Vietnam compared with other countries in the region, with only 31% of all adults having formal bank accounts as of 2014.
For many experts, fintech has the potential to improve financial inclusion in developing countries where traditional financial institutions have been unable to serve the large population of unbanked.
Speaking at the Digital technology – the great engine of accelerating financial inclusion in Vietnam conference in May 2017, Nguyen Kim Anh, the deputy governor of the State Bank of Vietnam (SBV), said:
“Digital technology will help banks accelerate financial inclusion, expanding their financial services to remote and rural areas, saving expenditure and developing sustainably.”
In particular, peer-to-peer lending could help bridge the lending gap in Vietnam and fuel the growth and prosperity of local SMEs.
Peer-to-peer lending platforms create a marketplace for investors to lend money directly to individuals or businesses. In return, they receive an attractive yield – provided the borrower does not default.
These platforms allow borrowers to get money at lower rates, while allowing lenders to earn higher returns than from savings and investment products.
SBV’s stands on peer-to-peer lending
Despite being in its infancy, Vietnam’s peer-to-peer lending space has already attracted a large number of depositors and borrowers, and is expected to boom.
Yet, Vietnamese regulators have yet to establish legal regulations for peer-to-peer lending.
Pham Xuan Hoe, the deputy director of the SBV Banking Strategy Institute, has stressed the need for the government to soon create a legal framework for peer-to-peer lending.
Another central bank official has said the SBV was carrying out a study on peer-to-peer lending and would regulate the practice soon.
Featured image by Andrey_Popov via Shutterstock.com.