Interview CEO of Credify MAKOTO TOMINAGA
The Fintech ecosystem in Vietnam has been expanding more than ever in these recent years. Its mobile payment industry is expected to record a CAGR of 22.8% to reach US$ 27.7 billion by 2025 [Source]. Thus, we would like to know how Fintech has disrupted Vietnamese consumer behavior and what Fintech trends should be expected in Vietnam’s market for the next couple of years.
Business managers/bidev officers from potential partners that want to take a step ahead of the game in digitizing their businesses and catching up with Fintech trends.
This article serves as an entry to the thought-leadership articles by Credify, along with three other interview articles in the series #TalkwithCredify’sleaders
Can you introduce a little bit about yourself and share your story when shifting from working in Engineering to doing Business?
I started my formal career as an engineer in the embedded operating system space, working with Symbian and Nokia. This was mainly systems-level development, and I was excited to see our technologies really taking hold in the world.
After this, I was given the opportunity to join an early-stage biometrics startup called Authentec, where we developed a small form factor fingerprint sensing technology that dominated the market. With this company, we managed to list on Nasdaq and eventually sold the business to Apple. If you’ve used TouchID, you have interacted with the products we built.
Following my work with Authentec, I made an important transition from engineering to technical marketing and business development with Validity Sensors, and with Apple taking Authentec’s products off the market, we were ready to meet the demand with our new offering.
The shift to the business side was a goal of mine after I became fascinated with the inner workings of enterprises, viewing them in many ways similar to complex engineering systems. I felt for someone with a more outgoing personality it made a lot of sense to be able to apply my systems understanding in such away.
Even though I made this transition, I have always been a technologist and can never really completely remove myself from the product side of the business.
What inspired you to found Credify? Why did you choose Vietnam as a primary market?
In 2014 I was introduced to Blockchain Technology and spent several years researching and playing around with these systems. During 2017 there was a boom in projects seeking to leverage blockchain, but I felt that majority of them were disingenuous in the application of the technology, with the sole aim to raise insane amounts of money through ICOs without any products in the market.
In 2018, I began to delve into researching real-world use cases for blockchain and smart contract systems and came up with the initial concept of Credify, a protocol for harnessing crowd intelligence to signal counterparty reputation or credibility in the case where the data we traditionally rely on for this is insufficient or easily manipulated. I wrote the seminal academic white paper for the Credify protocol, which included a decentralized identity system that now serves as the basis for our idX technology, and proceeded to patent this globally.
Our focus for Credify has always been the developing world, where we can have the most impact in terms of empowering users with their own data to gain access to fairer credit and life-changing insurance.
Vietnam was a natural great choice for our first market, as we have a strong team here and a broad personal network. Additionally, Vietnam is one of the quickest to begin a serious transition to the new world of digital services, with partners like banks, consumer finance institutions, and insurance companies welcoming solutions like Credify’s serviceX with open arms, as we help them expedite their digital transformation journeys.
We are closely working with top-tier financial service partners to solve some of the really hard problems they face when natively introducing their services to users in Vietnam’s new digital economy. This openness to collaboration is a huge factor in our choice, and given the speed with which we are onboarding financial services partners in the country, it is proving a correct decision.
I should also share that Vietnam is a country that the founding members are absolutely in love with, so it made our decision even easier.
What were some of the challenges that you faced when establishing Credify?
In this space, we must comply with complex and often murky regulations, and an uncompromising approach to system security is of utmost importance. Local operators do not always immediately recognize the scope of painstaking efforts that we have put into creating the solutions to the challenges that they both do and will face as these regulatory and security burdens increase, but once we overcome this hurdle of awareness the value of our proposition is deeply appreciated. One other challenge we face is the task-driven mentality of the workforce. In our line of business and at our stage, it is absolutely imperative that all our team members take initiative, ownership in our vision and engage with the passion and creativity necessary to solve some really hard problems. It has been a slow process to build a team with this mindset, but we are managing step by step, and the results are simply inspiring!
The current state of Vietnam’s fintech ecosystem
What are some key elements that are helping Vietnam become an attractive market to invest and develop Fintech in?
The pace of digital adoption cannot be ignored, but I would also say that the ecosystem is robust and open to embracing innovation where it proves practical to the overarching goals of all stakeholders. The government has been very friendly towards fintech upstarts, as well, not being quick to impose overly burdensome requirements that ultimately stifle innovation. From this, the West could learn a lot. Vietnam also represents a rich resource for technical talent, with the government, has placed special emphasis on the development of the local educational system to focus on STEM. Having local talent of this caliber really helps us to achieve quicker GTM and a special level of support that is hard to realize where high-quality tech talent is scarce.
How has Fintech disrupted the Vietnamese market and consumer behaviors, especially in this time of the pandemic?
By far, the biggest impact on the Vietnamese market and consumer behavior in COVID times has been the rapid urban adoption of cashless payment solutions like e-wallets and QR payments provided directly by banks. We are still a long way away from mass adoption across the nation, but the trend is undeniable.
This being said, we have found that many of the well-respected local financial institutions are struggling to compete with fintech as they seek to bring new innovations to the market. This is exactly where Credify lends the strongest helping hand, as we assist these traditional businesses in bringing their services and products into the digital world more quickly, with lower capital investment requirements and with a much broader scope of availability than if they were to attempt to develop the user engagement channels that Credify offers from the outset.
What role does Credify play in Vietnam’s current fintech ecosystem? What position is it aiming for?
Currently, Credify is simplifying access to financial services for users in the digital economy by natively integrating our banking, consumer finance, and insurance partner services with digital commerce platforms, gig economy on-demand service applications, as well as SME wholesale and management systems.
The solutions we offer are empowering users with highly relevant and competitive financial service and product offerings that are being tailored to their individual profiles and needs, removing frictions that are inherent to cross-industry service offerings, and increasing engagement rates for greater levels of client success.
Through one integration, both sides gain immediate access to a rapidly growing network of partners, and soon will be able to leverage offline operational reach through the same channel. We are expanding serviceX to capture offline retail (O2O) opportunities, where financial institutions are currently spending too much to support their existing manually driven customer onboarding processes.
Vietnam’s Fintech trends in the future
What are the successful Fintech solutions in developed markets that would likely become key trends in Vietnam in the near future (E.g: embedded finance, BNPL, etc)?
There are a few trends of note that have emerged over the past several years in the financial services space that I think is quite important for understanding the direction that the Vietnam market will take.
First is digital banking. Challenger banks are popping up quickly around the world that are more agile, data-driven, and customer experience-minded, all powered by completely digital banking cores like Mambu, and Vietnam is no exception with no fewer than 4 fully licensed digital banks have come to market over the past year. This trend is being expedited by COVID’s impact on traditional banking, which has forced the State Bank of Vietnam to push new regulations around eKYC and digital lending through the legal approval processes much quicker than in times past. This has put competitive pressure on slower-moving or less well-capitalized banks to digitally transform.
Open Banking and Banking-as-a-Service, where banks are adopting standards like OIDC for user authorized access by third parties to their customers’ banking data and API enabled account services. Dominant players like our BEENEXT portfolio sister company Brankas in Indonesia are helping these heavily regulated institutions achieve their digital transformation (DX) goals faster and more cheaply with BaaS platforms. We see that many banks in Vietnam have already begun to explore these types of systems, and we are even working with several at Credify to assist them in these pursuits, especially in digital lending.
Strict regulations and outdated underwriting systems have kept more traditional banking institutions from entering into the fully digital lending space, but here is where Credify is changing the game. We are partnering with several top banks and consumer finance companies in Vietnam to co-develop digital lending services like unsecured cash loans, BNPL, and co-branded virtual credit cards.
With serviceX, we are availing a massive distribution network to these products in our rapidly expanding partnerships base with offline retail, e-commerce, and gig economy application operators. We partner with these ecosystems to natively embed all aspects of these new products–from onboarding to disbursement to account servicing–and enable them to make use of their valuable data in a completely privacy-preserving manner to achieve better conversion rates, lower maintenance costs, and realize higher levels of customer engagement and stickiness, all the while contributing to absolutely amazing user experiences. This is the future. This is embedded finance.
What advice would you give for Vietnamese businesses to prepare for the rising trends?
Do not be afraid to embrace new technologies to enhance your services and gain much broader market exposure. Fire any consultants or internal management that tell you that you can develop these technologies in-house more efficiently than solution providers that have focused their entire operations on innovating and perfecting these services as core offerings of their businesses.
Focus on elevating excellence in your core business and work with partners to achieve your DX goals faster, more efficiently, and to a higher degree of quality than you would ever be able to on your own.
I’ve seen far too many financial institutions both in developed and developing economies allow the “not invented here” mentality to drag their operational efficiency down to a crawl, forcing them to settle on mediocre service quality and user experiences and ultimately hindering their ability to effectively compete in this fast-changing world.
Even if you decide that Credify isn’t a good fit, we encourage you to collaborate with focused technology partners rather than attempting to grow these solutions in-house, as you will without a doubt see desired outcomes faster and greater levels of success for making such a smart decision early on.
#TalkwithCredify’sleaders is a series of 4 discussion articles in which our leaders will share their opinions and experiences on a compelling topic of their expertise.