Vietnam’s Consumer Finance Market Pivots from Rapid Expansion to Sustainable Quality Growth

Oanh Tran, Senior Manager of Market Research & Consulting Services at FiinGroup, discusses the evolving dynamics of Vietnam’s consumer lending landscape.

What is driving the divergence between banks and finance companies in the consumer lending market?

In 2025, outstanding consumer finance loans expanded by approximately 26 percent year-on-year. Commercial banks continued to dominate, posting growth rates nearly double those of consumer finance companies. This divergence stems from distinct strategic priorities rather than a fundamental shift in competitiveness.

Banks have benefited from the real estate market’s recovery since late 2024, which has fueled demand for secured retail products such as home purchase and home improvement loans. This segment grew strongly in 2025, playing to banks’ inherent advantages in funding costs, underwriting expertise, and risk management. Simultaneously, many banks have accelerated their retail strategies by leveraging digital platforms and existing customer ecosystems, while foreign banks have expanded their footprint in credit cards and personal cash loans.

Conversely, finance companies have navigated a period of consolidation following the disruptions of 2022–2024. Facing heightened credit risk amid post-pandemic economic pressures and geopolitical volatility, these firms shifted focus from loan growth toward asset quality improvement, debt resolution, and portfolio restructuring. Consequently, the current growth gap reflects different starting points and strategic imperatives, not a deterioration of the finance company sector.

Does the faster growth of bank lending signal a change in the market’s competitive structure?

The critical issue is not merely growth velocity but the blurring boundaries of competition. Historically, a clear division existed: banks targeted prime borrowers with strong credit profiles, while finance companies served the mass-market and underbanked segments. Today, digital banking has drastically lowered customer acquisition and servicing costs, enabling banks to penetrate segments traditionally dominated by finance companies. Meanwhile, finance companies are migrating toward higher-quality borrowers to enhance portfolio quality and mitigate risk. The industry is entering a new phase where competitive advantage hinges less on physical networks or disbursement speed and more on ecosystem development and the effective utilization of customer data.

Is the shift away from cash lending cyclical or structural?

This represents a structural transformation. During the market’s rapid expansion phase, personal cash loans served as the primary engine for customer acquisition and profit growth. However, these products carried elevated credit risk, particularly during economic downturns when repayment capacity weakened. Recent challenges have prompted finance companies to fundamentally reassess their strategies. Instead of relying on a single high-margin, high-risk product, firms are actively diversifying into asset-backed lending, installment financing, and ecosystem-based products. Digitalization is accelerating this transition; richer transaction data, spending behavior insights, and digital footprints allow for more granular risk assessment and tailored product design. The market is undergoing a business model transformation, not merely a product cycle shift.

What factors will determine competitiveness over the next three to five years?

Traditionally, scale, distribution networks, and acquisition capabilities defined competitive advantage. While still relevant, these factors are no longer sufficient for sustainable differentiation. The decisive capability going forward will be the ability to collect, analyze, and operationalize data. Data enables precise customer understanding, personalized offerings, and—most critically—accurate risk pricing, which is essential as competition intensifies and margins compress. However, data alone is not a moat; the true advantage lies in converting data into effective business decisions. Future winners will be those that successfully integrate data analytics, technology infrastructure, and risk management frameworks, positioning them for stronger, more sustainable growth.

What is the outlook for Vietnam’s consumer finance market?

After years of breakneck expansion, the market is transitioning from a scale-centric mindset to one centered on the quality of growth—a sign of maturation rather than a slowdown. In the next cycle, leadership will not necessarily belong to the most aggressive balance-sheet expanders. The victors will likely be institutions that successfully rebalance growth with risk, customer acquisition with asset quality, and technology with governance. The race continues, but the rules have changed: adaptability is now the defining determinant of long-term success.

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