The Consumer Finance (CF) market has witnessed significant growth of 59% annually over the period of 2014-2018. The last year has been particularly eventful, with at least four new entrants to the market (VietCredit, EasyCredit, Lotte Finance, SHB Finance), putting pressure on the market shares of the Big Four (FE Credit, Home Credit, HD Saison and Prudential Finance). M&A market was also active, as companies with CF license became hot targets for acquisitions. Overall, given the market’s growth potential, interest from domestic and international were heightened significantly.

However, as more competitors enter the market, more concerns have been raised regarding some of the high-risk products such as unsecured cash loans, as well as social impact from debt collection activities. The State Bank of Vietnam (SBV) has tightened its supervision and monitoring on FinCos’ operations and lending activities, such as the draft for amendment of Circular 43/2016/TT-NHNN, putting a limit on the percentage of cash loans in FinCos’ portfolios, and restrictions on debt collecting activities to protect consumers from unprofessional debt collectors.

1. Survey methodology

350 respondents in Hanoi, HCMC, and Danang, randomly were chosen to test the penetration and awareness about consumer finance services.

650 respondents who were already aware of consumer finance were asked to answer 25 additional questions about their experienced with finance companies (selected list including: HD Saison, Home Credit, FE Credit, ACS Vietnam, Mirae Asset, Prudential Finance, JACCS, SHB Finance, MobiVi, Mcredit, Dr Dong and Others).

Those 650 other respondents were divided into three groups (1) who have used consumer finance service (2) who intend to use consumer finance service in the future and (3) who know but do not intend to use consumer finance in the future.

2. Awareness

Awareness about CF products and services has increased significantly after two years with HoChiMinh City (HCMC) consistently ourperforms Hanoi and Danang in awareness of CF with many new FinCo entrants debut in the South. FinCos are now a consideration for customers’s funding needs, especially for cash loans – an improvement since 2017.

Among peers, FE Credit and Home Credit are the most well-known FinCos. Although HD Saison has the largest network of POS, the company only ranked No. 3 in people’s awareness, a drop from 2017’s ranking. The presence of FinCos with parent banks (Mcredit, HD Saison, SHB Finance, etc.) have increased FinCos’ reputation with the consumers.

3. Factors affecting customers’ decision to use CF

While interest rates and simple procedures remain the top concerns in deciding to borrow from FinCos, short appraisal time has risen to top 3. Potential customers are attracted to FinCos with simple documentation and quick loan appraisal process.

4. Customers’ satisfaction

Customers are generally satisfied with their CF experience. Over 80% of customers would use CF again and would recommend to friends and family. As “simple procedure” being one of the top factors of satisfaction, “fees and fines” is the top for dissatisfaction. When asked about positive impressions about CF, respondents most likely talked about quick disbursement, simple procedures, and friendly staffs, as opposed to negative comments including high fees and interest rates, and especially in HCMC, frequent debt reminders and unprofessional debt collector. For those customers who do not want to borrow from CF, while high interest rates and fees are main deterrents, bad impression about FinCos plays a role in 25% of our respondents.

5. Company Ranking

With a more competitive CF market, more people now want to change to new FinCo (21% of customers would like to change to a new FinCo, up from 17% in 2017). Home Credit maintains the top position in customer satisfaction. Mcredit, a new entrant, also maintains high customer satisfaction score. Meanwhile, HD Saison does not do as well in terms of procedures, no. of payment methods, customer services, online channels, etc.