FACTORS AFFECTING THE ADOPTION OF FINTECH IN VIETNAM

TS Nguyễn Thị Mai1, Nguyễn Hoàng Khương Duy2, Nguyễn Lê Trung Dũng3,
Trần Tuyên Khâm4, Nguyễn Nhật Anh5, Nguyễn Thị Thu Hà6

Abstract
Tremendous advancements in technology have led to innovation in financial services,
most recently with the emergence of FinTech. In just a few years, especially within the
time of COVID-19, FinTech has grown rapidly in Vietnam. However, up to the present
time, the introduction of FinTech into different aspects of life in Vietnam still faces many
obstacles, viz. the customer’s acceptance of financial technology innovation. This study
used logistic regression with data from the Global Findex database in 2011, 2014 and 2017
to explore the factors affecting the adoption of FinTech in Vietnam. Results showed that
while access to finance featured by the possession of either a financial institution account,
a debit card ,or a credit card, education and income induced the mentioned adoption, age
had negative impacts. Theoretical and practical implications of the findings are also
discussed.
Keywords: FinTech, financial technology, finance, technology, financial inclusion,
Vietnam.
1. Introduction
Technological advances have led to innovation in financial services, one of which is
the emergence of FinTech - “the segment that is at the intersection of the financial services
and technology sectors where technology-focused start-ups and new market entrants
innovate the products and services currently provided by the traditional financial services
industry” ( Chang et al., 2016). The pandemic of Covid-19 has forced entrepreneurs to
change their norm of conducting business by applying FinTech products and services as
part of their business operation (Osman et al., 2020). Services of FinTech are built and
developed from novel, innovative ideas or ideas that may be outdated but done differently

1
Bộ môn Khoa học Cơ bản, trường Đại học Ngoại thương CSII tại TP. HCM, Email: nguyenthimai.cs2@ftu.edu.vn
2
Sinh viên trường Đại học Ngoại thương CSII tại TP. HCM, Email: nguyenhoangkhuongduy2011155120@ftu.edu.vn
3
Sinh viên trường Đại học Ngoại thương CSII tại TP. HCM, Email: nguyenletrungdung2011156058@ftu.edu.vn
4
Sinh viên trường Đại học Ngoại thương CSII tại TP. HCM, Email: trantuyenkham2011155227@ftu.edu.vn
5
Sinh viên trường Đại học Ngoại thương CSII tại TP. HCM, Email: nguyennhatanh2011156042@ftu.edu.vn
6
Sinh viên trường Đại học Ngoại thương CSII tại TP. HCM, Email: nguyenthithuha2011155140@ftu.edu.vn
with the aim of simplifying transaction procedures and improving customers' access to
financial services (Gomber et al., 2017; Milian et al., 2019; Nguyen & Bui, 2019).
As stated in Vietnam FinTech Report by FinTech News Singapore in 2020, there were
124 FinTech startups in Vietnam. However, a large number of startups differ from the fact
that those companies can work efficiently. Specifically, up to 10/2020, only 36 in 39
licensed non-banking service providers are actually operating. Despite some positive
changes, Vietnamese users are still skeptical about using FinTech services. Hoang et al.
(2018) suggested 4 main FinTech obstacles: legislation, technology infrastructure, business
models, and user consciousness. Besides, there were also some other challenges such as
education, capital, investors, ... FinTech was still a new industry in Vietnam. Therefore,
many Vietnamese banks are not eager to cooperate with FinTech companies due to the
disclosure of customer information (Thong et al., 2017). According to the State Bank of
Vietnam (2018), about 90% of people's transactions were still cash transactions. In addition,
the change of laws related to FinTech's activities had not matched with the rapid pace of
technology change. Vietnam's education system was still at phase 2.0 when only using
Internet connection for communication between teachers and students (Thanh, 2017). The
above reasons are a few of the challenges that FinTech companies must thoroughly address
to help the industry grow to a higher level.
From the above factors, it is apperceived that applying FinTech's achievements into
practice plays a consequential role in enhancing the position of the economy and enhancing
the competitiveness of Vietnamese enterprises. With the multifaceted change in the 4.0
revolution, the application of FinTech avails Vietnam to minimize the gap in development
speed compared to other countries on the world map. Especially in the context of the Covid
19 pandemic, users are shifting to utilize more products and services with technology
applications. Therefore, FinTech has more opportunities to reach potential customers.
However, up to the present time, bringing FinTech into different aspects of life is still
facing many difficulties. Moreover, in the new normal, the incrementing competitiveness of
this field and the desideratum to integrate into the world economy, the application of
financial technology becomes more and more clamant.
2. Literature review
2.1. Definition of FinTech
Some scholars refer to FinTech as innovative financial services or products delivered
via technology (Lee & Teo, 2015) or the use of technology to deliver financial solutions
(Arner et al., 2015). Meanwhile, according to Lee & Kim (2015), financial technology
refers to a type of business that uses hardware and software to provide financial services.
Similar to the above, Abdillah (2019) defines financial technology as the adoption of
advances in information technology in financial services industry.
Today, the interpretation of financial technology has expanded to include any
technological innovation in the financial sector such as innovation in financial education
and training, retail banking, investment, or operational improvement. Gomber et al. (2017)
argue that financial technology has become the connection of modern and, mainly, Internet-
related technologies (e.g., cloud computing, mobile Internet) with established business
activities of the financial services industry (e.g., money lending, transaction banking). Arner
et al. (2015) described financial technology as financing of technology itself (e.g., via
crowdfunding, venture capital, private equity, private placements, public offerings, listings,
etc.).
In this study, FinTech is defined as financial services provided by startups or by
existing financial institutions such as banks, and users of FinTech financial services such as
payments, borrowing money, transferring money, repaying debts, buying insurance,
managing financial assets, and making investment decisions such as buying stocks and
bonds.
2.2. Factors affecting the adoption of FinTech
There are many studies examining the influence of age on FinTech adoption such as
the study of Karsh et al., (2020), Brodmann et al., (2018). The research results show that the
2 generations of Millennials and Gen Z are the main driving force for FinTech companies
and banks to digitize financial services on digital devices such as smartphones, providing
services on digital channels such as e-banking and mobile banking. Among them,
Millennials are those born between 1980 and 2000, and Gen Z are those born after 2000.
Carlin et al., (2017) argue that the main driver behind the highest FinTech adoption of 2
generations of Millennials and Gen Z is better access to information than the older
generation. Vahrenkamp (2017) further explicates that Gen Z is a generation born with
technology, more dependent on technology, financially aware, and responsible for
controlling financial matters than Millennials.
A case study by Jouda (2020) on the expanding TAM model and investigating the
factors affecting the intention to use Mobile banking of consumers shows that gender is also
a factor affecting the adoption of FinTech. In particular, Mobile banking allows consumers
to perform financial transactions without being bound by time and space through Internet-
enabled mobile devices such as smartphones. According to the survey results, after bank
customers completed 612 valid questionnaires about Mobile banking, the proportion of men
accounted for 64.1% and the proportion of women accounted for 35.9%. Meanwhile,
according to the study of Mohamed & Mohammed (2012), the proportion of men is 72.9%.
It proves that the main customers of FinTech applications are men, but the percentage of
female customers intrigued by FinTech is increasing in many countries. Therefore, financial
institutions need to pay attention to the characteristics and psychology of the customer's
gender to obtain the highest profit.
Gulamhuseinwala et al. (2015) highlight that FinTech is being used a lot among high-
income people. Research results denote that FinTech usage is low (6%) for people with
incomes below US$30,000, usage is higher (44.1%). from 150 000 US dollars or more. This
ratio reflects the vigorous interest of higher-income earners in investment and remittance
products, the FinTech proposals that are of most interest to this group. In contrast,
respondents with lower incomes tended to use savings, and invest far fewer products and
less than 3% had purchased insurance or borrowed money through FinTech.
Wang et al. (2019) pointed out that the main impediments to FinTech innovation and
adoption are data security issues, poor user interface design, and lack of customer trust.
Furthermore, attacks on the wireless networks and operating systems of mobile banking
platforms remain a major problem in the data security research landscape. These attacks
have damaged customers' trust in online transaction payments because of the high risk of
unauthorized transactions from unauthorized people. Clearly, issues of privacy and secure
data are becoming a major concern for FinTech adoption. As a result, FinTech’s usage risks
have become a greater concern for customers than the value of the product.
According to a study by Niu et al (2017), the results indicate that the level of
education in China has a statistically and economically consequential influence on the use
of various FinTech services, including banking digital, mobile payments, digital asset
management, and digital consumer credit.
3. Methodology and data
3.1. Methodology
The study uses the Logistic Regression Model to examine the factors affecting the
adoption of FinTech in Vietnam. The equation is as follow:
 Logit(P(Y=1| x1, …, xk)) = β0 + β3Xijt
The variables are depicted in Table 1.
Table 1. Variables in the model

Expecte
Symbo
Variable Description d Previous studies
l
outcome
Dependent variable
Fintech =1 if having used a mobile Mohannad et al. (2020);
Fit money account Zaiton et al. (2020); Puah
=0 otherwise & Chong (2021)
Independent variable
Characteristic of interviewees
Financial Fin =1 if having an account or +
inclusion debit card or credit card;
=0 otherwise
=1 if having a debit card; + Hajer et al. (2021)
Fin1
=0 otherwise
=1 if having a credit card; +
Fin2
=0 otherwise
Age Age Atkinson & Messy
Age of the interviewee (2012);
Bucher & Lusardi (2011);
Gulamhuseinwala et al.
+/- (2015);
Ryu (2018);
Shwu-Shing et al. (2019);
Luận(2019);
Zaiton et al. (2020)
Age- Age2 Age-square
square
Gender Gender =1 if gender of the +/- Atkinson & Messy
interviewee is male (2012);
=0 otherwise Ryu (2018);
Mohamed et al. (2012);
Zaiton et al. (2020)
Education Edui Dummy, education with +/-
three levels: completed Mohamed et al. (2012);
primary or less, secondary, Zaiton et al. (2020),
or completed tertiary or more
 Expecte
Symbo
Variable Description d Previous studies
l
outcome
Income Incoi Dummy, +/- Mohamed et al. (2012);
five income groups (poorest, Atkinson & Messy
second, middle, fourth, (2012);
richest) Zaiton et al. (2020)
Year Yeari Dummy, i = 1 if 2011, i = 2
if 2014 and i = 3 if 2017
Nguồn: The authors (2021)
3.2. Data
The study uses data from the Global Findex database in 2011, 2014 and 2017
developed by World Bank since 2011. The database is the world’s most comprehensive data
set on how adults save, borrow, make payments, and manage risk. Launched with funding
from the Bill & Melinda Gates Foundation, the data are collected in partnership with
Gallup, Inc., through nationally representative surveys of more than 150,000 adults in over
140 economies.
The database consists of 6 parts: (i) questionnaires on how people around the world
use financial institutions and their availability to the public; (ii) questionnaire on the reasons
why the interviewee does not own a bank account or an account with other financial
institutions; (iii) questionnaires on the use of mobile phones or the Internet to make
payments, borrow, borrow or receive or send money; (iv) questionnaires about the saving
and borrowing activities of the interviewees; (v) questionnaires about the ability to resist
financial instability; (vi) questionnaire on how to pay and receive money of interviewees.
Within the scope of the study, this study mainly uses the following questions from (i), (ii),
(iii) và (vi).
4. Discussion
The study has performed testing steps related to the model and has controlled for
related issues. The the logistic regression model results shown in Table 2 shows that the
significance level of the financial inclusion stayed at 1% when being evaluated through one
of three factors: having an account or debit card, or credit card. Each of the aforementioned
elements contributes to the adoption of Fintech in Vietnam. The perceived financial
inclusion variable, which is assessed based on whether the respondent has an account, debit
card, or credit card at a financial institution or not, has a positive relationship to the
adoption of FinTech in Vietnam. The higher level of perceived financial inclusion, i.e., the
more evaluation criteria they meet, the more likely they are to adopt FinTech. Especially
with the rapid technology change, customers can easily access and use services in financial
institution systems. In the fourth quarter of 2020, there were approximately 111 million
cards in circulation in Vietnam and about 390 million transactions via ATM,
POS/EFTPOS/EDC of the reporting credit institutions during the reporting period. All the
strong evidence above proves that customers are increasingly concerned about non-cash and
contactless payment methods, which is the background for customers’ interest in financial
technology adoption. Also, customers have a certain understanding of transaction methods.
They are familiar with some modern technology applications in transactions through
financial institutions or payment cards such as fingerprint authentication, face recognition,
mobile banking, etc. The two above factors are the essential background to enhance the
adoption of Fintech in Vietnam.   
The study findings revealed that age negatively impacts the FinTech adoption through
mobile and has a significance level of 5%. According to Nielsen’s report studying the
differences in demand between generations, the respondents were divided into 5 generation
groups, including Silent Generation, Baby Boomers (the generation born during the
population explosion), Generation X, Millennials – Gen Y, and Generation Z. Carlin et al.
(2017) stated that the main reason behind the highest Fintech adoption among Millennials
and Gen Z is their highest awareness level in financial technology compared with older
generations and their life expectancy. The idea of a high intention level in using Fintech
services among both generations was also stated by Mohannad et al. (2020). This result is
consistent with the previous study of Shuwu-Shing et al. (2019), respondents in the age
group that fell between 26 to 45 had the greatest intention to adopt FinTech, followed by 18
to 25, and above 55 years old). Lastly, those aged between 46 to 55 years old had the least
intention to adopt FinTech. In addition, the gender and income of respondents do not affect
the adoption of Fintech in Vietnam.
Tables 2. Marginal effect coefficient of factors affecting the adoption of FinTech
in Vietnam
Model (1) Model (2) Model (3)
fin: has one of: account/ debit card/ credit
card 0.119***    
  (-0.00475)    
fin1: has an account   0.119***  
    (-0.00478)  
fin2: has a debit card     0.118***
      (-0.00563)
age -0.00112** -0.00114** -0.00121**
  (-0.000519) (-0.00052) (-0.000542)
age2 -1.18e-05* -1.16e-05* -9.93E-06
  (-6.38E-06) (-6.39E-06) (-6.66E-06)
gender -0.000803 -0.000766 0.00084
  (-0.00372) (-0.00373) (-0.00389)
edu2: secondary 0.0351*** 0.0357*** 0.0396***
  (-0.00496) (-0.00497) (-0.00518)
edu3: completed tertiary 0.176*** 0.177*** 0.188***
  (-0.0117) (-0.0117) (-0.0122)
inc2: second 0.0298*** 0.0305*** 0.0308***
  (-0.00724) (-0.00727) (-0.00752)
inc3: middle 0.0217*** 0.0220*** 0.0227***
  (-0.00743) (-0.00745) (-0.00772)
inc4: fourth 0.0351*** 0.0357*** 0.0359***
  (-0.00782) (-0.00786) (-0.0081)
inc5: richest 0.0462*** 0.0468*** 0.0483***
  (-0.00757) (-0.0076) (-0.00786)
yr2: 2014 0.139*** 0.139*** 0.139***
  (-0.00894) (-0.00894) (-0.00914)
yr3: 2017 0.180*** 0.179*** 0.176***
  (-0.00825) (-0.00825) (-0.00839)
Observations 21,536 21,536 21,536

Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1

Source: Processed data from Global Findex 2011 - 2017 (2021)
Tertiary or more education was positively related to the adoption of Fintech. The
higher level of education, the more profound and updated people understand Fintech.
Moreover, when an individual has a certain understanding of Fintech, he/she puts more trust
and greater intention to use than any who are still vague about FinTech products. However,
completed secondary or less do not reflect the adoption of Fintech because they may neither
have enough awareness to understand the steady innovation of technology nor worry about
the financial problems. This is similar to that of Thu et al.’s (2019) study, which points out
that people with a certain educational background or a good degree will impact greater
financial inclusion.
 Financial capacity is also a factor affecting the adoption of financial technology.
Compared with low-income people, higher-income customers are more likely to adopt
fintech. Individuals with higher income are more likely to use financial services such as
buying insurance, using mobile payments, etc., than those with lower incomes. It is also a
positive signal that the adoption of Fintech in Vietnam has been improved through the
years. The result of the logistic regression model shows that access to finance in 2014 and
in 2017 was higher than that in 2011. All the above discussed indicates fintech promotion
activities since 2011.
5. Recommendations and limitations of the study
Recommendations
Based on the results from the model, some recommendations are made in order to
enhance the adoption of Fintech in Vietnam:
The customers’ education level:
The financial institution should seize the opportunity to research and develop
appropriate Fintech products related to education and other jobs that regularly use Fintech
applications to attract these customers. Besides, the institution can organize workshops,
short courses, etc., to improve Fintech knowledge.
The customer has an account or debit card or credit card:
Financial institutions could consider bringing more benefits for those who introduce
Fintech to others. The users may be more easily affected by their friends, families,
colleagues, so the organization should take this advantage to expand their market. Financial
institutions can cooperate with banks to provide free accounts or cards for those who do not
have an account, debit card, or credit card. Through these activities, they can widely bring
their products to the customers.
Customers’ age:
With the working-age group of customers who always have a strong desire to improve
the effectiveness of their work, the financial institutions should create products with high
flexibility and good application in different circumstances in business to better access this
kind of customer. As for other age groups, financial institutions need to develop specific
products suitable for each age group to ensure that customers have a better experience with
financial technology. Additionally, it is also necessary to promote brand awareness, market
products through mass media, social media, etc., to reach the two-generation Gen Y and
Gen Z attention more effectively.
Limitation
Despite using data from the Global Findex database in 2011, 2014 and 2017 – the in-
depth database about how people save, borrow, make payments, and manage risk.
However, this database does not contain specific questions about customers' attitudes in
financial technology innovation and explicitly measures each group’s characteristics the
characteristics of each group by region, type of work. This mentioned limitation can be
overcome with in-depth investigations in the above discussion areas.
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Appendix

Appendix 1: Test for model fit and explanatory

Logistic model for fit

-------- True --------

Classified | D ~D | Total
-----------+--------------------------+-----------
+ | 664 372 | 1036
- | 2677 17823 | 20500
-----------+--------------------------+-----------
Total | 3341 18195 | 21536

Classified + if predicted Pr(D) >= .5

True D defined as fit != 0
--------------------------------------------------
Sensitivity Pr( +| D) 19.87%
Specificity Pr( -|~D) 97.96%
Positive predictive value Pr( D| +) 64.09%
Negative predictive value Pr(~D| -) 86.94%
--------------------------------------------------
False + rate for true ~D Pr( +|~D) 2.04%
False - rate for true D Pr( -| D) 80.13%
False + rate for classified + Pr(~D| +) 35.91%
False - rate for classified - Pr( D| -) 13.06%
--------------------------------------------------
Correctly classified 85.84%
--------------------------------------------------

. estat gof, group(10) table

Logistic model for fit, goodness-of-fit test

(Table collapsed on quantiles of estimated probabilities)

+----------------------------------------------------------+
| Group | Prob | Obs_1 | Exp_1 | Obs_0 | Exp_0 | Total |
|-------+--------+-------+--------+-------+--------+-------|
| 1 | 0.0180 | 47 | 25.7 | 2107 | 2128.3 | 2154 |
| 2 | 0.0323 | 86 | 53.7 | 2068 | 2100.3 | 2154 |
| 3 | 0.0518 | 117 | 89.8 | 2039 | 2066.2 | 2156 |
| 4 | 0.0719 | 120 | 133.2 | 2031 | 2017.8 | 2151 |
| 5 | 0.0949 | 154 | 177.9 | 2000 | 1976.1 | 2154 |
|-------+--------+-------+--------+-------+--------+-------|
| 6 | 0.1278 | 173 | 237.9 | 1984 | 1919.1 | 2157 |
| 7 | 0.1903 | 300 | 338.2 | 1851 | 1812.8 | 2151 |
| 8 | 0.2708 | 488 | 493.0 | 1666 | 1661.0 | 2154 |
| 9 | 0.3854 | 706 | 689.2 | 1446 | 1462.8 | 2152 |
| 10 | 0.7195 | 1150 | 1102.6 | 1003 | 1050.4 | 2153 |
+----------------------------------------------------------+

number of observations = 21536

number of groups = 10
Hosmer-Lemeshow chi2(8) = 81.21
Prob > chi2 = 0.0000