The Vietnamese consumer finance market has embarked on a new chapter where credit providers are focused on refining loan services to boost customer satisfaction while regaining growth momentum and profitability. Following a lengthy period of adjustment, the market anticipates a recovery as economic conditions improve and FinCos evolve to thrive in a changing business landscape and evolving consumer demands.

Staying competitive necessitates a deep understanding of how competitors’ strategies, customer experience and preferences and aligning these attributes with product offerings effectively. To understand how major FinCos markets its products to customers, FiinGroup conducted confidential research, leveraging a multi-pronged approach, including cold-calling sales representatives, visiting stores, engaging in mystery shopping, and holding discussions with FinCos representatives and actual borrowers. Our exploration spans crucial dimensions such as product offerings and features, appraisal processes, customer attributes, acquisition strategies, risk appetite, target demographics, and interest rate positioning, at the company level and within each product segment. FiinGroup also conducted in-depth interviews with actual borrowers of major FinCos in Hanoi and HCMC to gain deeper insights into the voices of customers.

This report answers the following questions:

• What are the most common consumer finance products in Vietnam (PL, 2WL, CDLs, CRCs, etc.)?
• How are FinCos offering their products to customers in terms of interest rate positioning, average ticket size, tenure, etc.,?
• What is the average turnaround time for getting a consumer loan among major FinCos and different products?
• Which are the most important customer touchpoints (where and when the decision was made, eg: when shopping for goods/services, when experiencing mobile APP, when being consulted by telesales, when being consulted by DSAs, when seeing promotions/advertisements, etc.,)
• How do customers rate their satisfaction on various aspects (i.e. (*) website, APPs, network, sales agents, underwriting, product offerings, procedures, turnaround time, interest rates and fees, etc., ) along their journey at particular FinCos, their suggestions for improvements
• What are key attributes of customers and how do they vary among different demographic groups (i.e. Customers’ perception about CF, borrowing purposes, most preferred channel for getting information about CF products, percentage of monthly income allocated for debt repayment, most preferred interest rate ranges and turnaround time, etc., )
• What are the key factors that influence customers’ decision when choosing to stay with a FinCos or getting consumer loans at other FinCos

Below is a summary of key findings from the survey.

How are FinCos offering their consumer finance products to customers?

Conventional installment purchases of electronics, home appliances, and similar goods persist as the prevailing product choice, despite lower loan value compared to cash loans. Consumer Durable Loans (CDLs) have long served as the primary avenue for leading finance companies (FinCos) to acquire customers for cross-selling and upselling other products such as cash loans and credit cards.

New customers lacking extensive credit history or financial documentation are subject to higher interest rates, reflective of their perceived risk. Conversely, established customers with sterling credit records enjoy preferential rates as a testament to their loyalty and financial dependability.

Who are the customers of consumer finance companies?

FinCos attract customers from diverse occupational backgrounds, with white-collar workers, small business owners, and blue-collar workers dominating the scene, primarily residing in urban centers and industrial areas. The clientele of FinCos is predominantly aged between 30 and 40, consistent with previous surveys conducted by FiinGroup. The majority of survey borrowers currently holding CF loans at finance companies (FinCos) are new to consumer finance, highlighting a significant influx of new customers in this market segment to be explored.

How are customers’ recent experiences with FinCos

Customers appreciate FinCos' efficient lending process and salesforce but express concerns about their APPs, websites, and debt collection practices. Customers in HCMC tend to be more cost-sensitive, expecting lower interest rates and fees, while borrowers in Hanoi highlighted the importance of customized financial products to meet their individual needs, highlighting a pivotal aspect of service refinement.

What are recent customer trends in consumer finance sectors?

The emergence of "consumer finance as a service" is poised to be spearheaded by Generation Z, individuals under 30 who are tech-savvy and more inclined towards borrowing, viewing loans as payment options rather than debt burdens.

A shifting attitude towards debt management is also evident, with a growing number of borrowers willing to allocate over a larger portion of their monthly income for debt repayment, signaling both increased comfort with debt and potential income challenges.

Surveyed borrowers have expressed a growing interest in seeking financing beyond traditional domains such as vehicles and electronics, particularly for personal services catering to diverse needs in daily life.

What are the key factors influencing customers’ decisions and implications for FinCos?

While online marketing is on the rise, customer surveys reveal a persistent preference for consulting Direct Selling Agents (DSAs), telesales, friends, and relatives when applying for consumer loans. This underscores the importance for FinCos to maintain in-person assistance and service and expand the distribution network of partner stores, enhancing accessibility and customer engagement.