Vietnam is one of Southeast Asia’s fastest-growing economies and this year in spite of the current economic situation, it has become the only Asian economy apart from China set to see GDP growth this year. But for small to medium investors investing in this economic growth can be quite difficult and expensive, especially for younger millennial consumers who comprise the majority of Vietnam’s population.
This is where Finhay stepped in three years ago to make investing more accessible to the youth. Since then they’ve become Vietnam’s leading platform for small and medium investment. And thanks to more consumers now demanding online platforms for financial transactions, Finhay is riding a new wave of growth and today to talk about riding a new wave of growth, we’re calling Finhay founder and CEO, Huy Nghiem from their bustling headquarters in Hanoi. This call was recorded October 1st.
01:18 Joolin introduces Huy;
02:17 Why Huy returned to Vietnam and started Finhay;
04:12 Financial markets in Vietnam back in 2017/2018;
05:10 How Finhay scaled and found product-market fit;
06:31 Thought process behind rolling out multiple wealth management products;
08:08 How Finhay approaches partnerships with traditional financial players;
09:45 Story of how customers benefit from Finhay;
11:19 Similar businesses Huy admires from other markets (Acorns, Yuebao, Toss);
13:26 Impact on COVID on Finhay’s growth;
14:21 Outlook on Vietnam’s financial markets and wealth management space in next 3-5 years;
15:47 Huy’s favorite activities to de-stress and go-to travel spots in Asia;
Paulo: Welcome everyone to On Call with Insignia, where we go on call with Southeast Asia’s emerging technology startup leaders and investors. Today I’m joined by my colleague and principal at Insignia Ventures, Joolin Chuah, as co-host for today’s episode.
Vietnam is one of Southeast Asia’s fastest-growing economies, with a GDP/capita upwards of $2500 and more than $250 billion capitalization in stocks and cash markets. And this year in spite of the current economic situation, it has become the only Asian economy apart from China set to see GDP growth this year. But for small to medium investors, investing in this economic growth can be quite difficult and expensive, especially for younger, millennial consumers, who comprise the majority of Vietnam’s population.
This is where Finhay stepped in three years ago, to make investing more accessible to the youth. So customers can start investing on Finhay with as little as $3. Since then they’ve become Vietnam’s leading platform for small and medium investment, and thanks to more consumers now demanding online platforms for financial transactions, Finhay is riding a new wave of growth. And today to talk about Finhay’s new wave of growth, we’re calling Finhay founder and CEO, Huy Nghiem! So Joolin, how did Insignia get to know Huy?
Joolin: Thanks Paulo. And also, thanks Huy for joining us today. We have known Huy since 2018 and then we have met him in person in Vietnam, and it has been our honor to have the opportunity to partner with Huy since then. We were very impressed with his background knowledge that he has gained in the wealth management space in Australia. And we have also seen how Huy grew over time. We are very thankful to have more investors supporting us along the way. And of course, congratulations to Huy for making it to the Forbes 30 under 30 Asia list. And welcome to the show, Huy!
Huy: All right. Thanks guys for having me today, such an honor. First time for me doing podcasts and hopefully, my sharing would be helpful to everyone.
Joolin: Nice. Like I mentioned earlier, it has been a privilege to have supported Finhay since early on. And we’re happy to finally have you on the show. To start I’d like to turn back the clock to your pre-Finhay days back in Sydney. We’ve often encountered founders who studied or started working abroad before deciding to return to start their own company. Can you share with the audience what influenced your decision to return to Vietnam?
Huy: Yes, coming back to let’s say ’14, ’15, and ’16. That was the time that I finished my jobs at a couple of companies. And I think the most well-known one was AMP in Australia. And then I think that’s a mix of working as a financial advisor and keep looking back at the country, reading news about the economy and so on, just to realize Vietnam back in ’14, ’15 started to have many good numbers in terms of GDP growth. The economy, in general, has been receiving a lot of regulation that are pro-private sector. So I think that was really a big move [for the] country moving towards a private sector-oriented country. And I think that was the very first hint to look at Vietnam, such a good opportunity.
And then, I think it’s more of a personal level where my friends actually just started to go back to the country and actually triggered my thought, “Okay. Should I also go back? Friends of mine are all going back.” So that was the second reason.
And I think the third reason was simply because of the family. I haven’t been back for years. I think that was seven years since I’ve been away from Vietnam and so I just wanted to go back. And then I think, back in ‘16 and ’17, I took a few trips back to the country and then came back to Vietnam and worked on Finhay full-time.
In summary, there were a few reasons. I think the opportunities, the economy was growing and the second was seeing friends of mine back in Australia also moving back to Vietnam and not just Australia, but also other countries.
We see lots of talents from overseas coming back to the country which just show a good sign that Vietnamese, from overseas are coming back. So it means we have a good source of talent.
And the third is just the simple reason of family reasons. So those were the three reasons that I decided to go back.
Joolin: Nice. And besides all these kind of GDP or economy and the fact that family’s back in Vietnam, what was the landscape back then, you know, 2017, 2018. How was the landscape or the environment when you returned?
Huy: Back in ’17, the fintech landscape was really concentrated in the payment sector. So from my memory, we had 80 plus fintechs and a majority of them were payment, e-wallets, and P2P lending. So personally I saw a big gap between wealth and payments — so technically it’s a blue ocean, we don’t see many wealth fintech in the country. Not to mention the other sectors like crowdfunding, eKYC, and blockchain were considered fintech back then but I think now it’s more moving in the tech sector.
So I think it’s such a blue ocean for retail investing or wealth management. I think even now we started to see good opportunities for wealth fintech in the country.
Joolin: So, spotting the blue ocean and you were looking to ride the wave of the gap in wealth management and the fact that, you know, the space is becoming more widespread in Vietnam. And one thing that we found remarkable with Finhay is that the scale that we have witnessed with you, what do you think were the factors that enabled this to happen?
Huy: First was the learning curve that we had in the first two years. So totally agree with you on your viewpoint where even though it’s a blue ocean, it means it’s early in the country. So ’17 when we first launched the product, we didn’t have much traction. It’s more of a learning curve.
And also I brought my experience from overseas back to Vietnam. So the behavior of Vietnamese users were completely different. The first two years was more learning curve.
And then afterward we started to fit in with the culture and design our system and the product to fit in with the behavior of Vietnamese consumers. So that was the first sort of learning.
Then I think the second reason was I think timing. Why? I think COVID-19, it just turned people from sort of offline to online, and people are more accepting of online services and Finhay is not excluded.
And the third reason was, I think after March 2020, the stock market going down and the interest curve just going down. That was the time that Finhay launched our money market fund product with TienViet Asset Management. And then it just outperformed any others. And we started to see money coming in and then traction booming since then.
Joolin: Nice. Can you share a little bit further in terms of the products given that you have a couple of different products today — mutual funds, ETFs, money market funds, and also what was the thinking behind rolling out these different offerings besides a little bit COVID-pulled kind of effect?
Huy: So I think coming from a product perspective so for example, in Australia, when we design a product, it tends to be more simplistic. So simple product design and it’s easy to use.
And when we [went] back to Vietnam where we have a simple sort of single line of product and Vietnamese consumers tend to see this app lack content.
So when we did the research on user behavior, we see that it is a different country, different behavior in terms of understanding the product. And then, we started to jam in more product lines, and then we started to see more engagement, which is kind of funny, you know, I think that’s why in Southeast Asia, we see the idea of super apps, but from the Western world, it’s more of a specialized product. Finhay is not an exception.
So when we first launched our mutual funds product line the traction was okay. And then afterward because the interest curve is going down and our money market fund launch, and then we started to see engagement coming in. The money split into money market fund and then also in mutual funds, and ETFs. And now we have more product lines, and then we do see traction keep coming in. I think that [helps] to retain our users coming back to the app where they come in, they do see different product lines and they explore and they engage more often within the app.
Joolin: Yes, that is very helpful sharing. And thanks for that. Besides the kind of products and also the engagement that you’ve managed to gain from the user’s perspective. I believe that one of the growth has also been the partnerships that you have with banks, e-wallets, you know, fund managers and so on and so forth.
What is the outlook of all these more traditional financial players when it comes to fintech in Vietnam? And how does Finhay approach all these partnerships?
Huy: So, the first year when we approached them most of them said no and, “why, why would I have to partner with you when I can do it myself?” and then second year when we started to have traction and then started to have a brand out there, and then the third year is when we actually come back and partner more with them.
They actually really welcomed [us] because I think not just that we created a long [term] relationship. But also the Vietnamese government has been promoting digital transformation really hard in the last three years. I’m sure you heard a lot about the 4.0 revolution. So that was the sort of tagline the government has been promoting the entire country to transform their business model, and then the same with the traditional players.
And now they’ve realized, digital transformation is really the key, especially after COVID, so now we do see a lot of traditional players, actually approach us and want to partner with us given that we have created strong traction and at the same time we created a long [term] relationship.
The first few years were really hard and recently it’s getting much better and they changed their mindset in terms of working with fintech and they do realize that fintech actually becomes more efficient than what their normal operations are doing. But I know that there are few traditional players still using Excel and old ways to record their transactions. I think that it’s not scalable and working with Finhay has helped them to scale easier.
Joolin: It’s good to hear that. Do you also have any interesting stories of how your users or customers have benefited from using Finhay?
Huy: Yes. So I think let’s use a personal story. So he’s actually from the rural area and he read about Finhay on the media and he did the research on us and watched our YouTube and one of the Shark Tank member YouTube channels. And then he started to use that initially, just to give it a try.
But after trying, he actually loved the idea of saving up a small amount of money because from his perspective, he didn’t have much money. And he just wants to get the habit of saving money and the money actually working for him. And he found Finhay.
I think in the first few weeks he just committed one deposit in a week. But nowadays from when we tracked the number, he actually does that twice a week, which he created really a sort of a positive habit. And then he sent a thanks letter to us saying, “because of using Finhay, I actually save more than what he had been doing,” because when he has a small amount of money, he just tends to spend it on sort of a coffee and milk tea and so on. But using Finhay actually saved him a couple of hundred dollars after using the product.
So I think that is the most inspiring story that we have at Finhay — that the people from rural areas actually use our product and save more with us.
Joolin: Nice. The story is very inspiring. And, you know, given that Finhay has launched a couple of products that suits the users that you have been serving right now, what are the models globally that you admire or you see in the market? And what are the differences that you see between these models be it in the US or China versus the one that you are running in Vietnam?
Huy: So there are few models that we really admire. The first one is Acorns, and Jeff created a really wonderful product. And I actually got inspired from that product a lot — a simple design, really modern and targeting millennials, first time investors, giving them a chance of being an investor.
So that is from the American side. In China, Yuebao. Yuebao in China, which is saving a treasure, a small amount of money from Alipay into […] fund. And in Korea, Toss has been doing it really well. I think those are the guys that we actually really admire and they have been doing great jobs in their countries, America, China, and Korea, and same with Finhay in Vietnam, hopefully we can be creating sort of a first one in Vietnam.
And the difference, you mentioned about what the difference is. So if you look at Acorns when they design their product, it tends to be really focused. But look at Asia in general, so look at China and look at Toss in Korea. The way they design products is more jamming in, adopting a lot of product lines. I think that is something that in Asian culture, maybe they have a similarity.
In Vietnam, when we first launched a simple product with one product line, our end users tend to complain about its lack of content, but now we have more content coming in and more product lines, we see more engagement.
So we can see that, you know, that from the Western perspective in Acorns Australia, […] Australia, they are really focused but in Asian perspective then Toss having so many product lines Yuebao having a lot of product lines and the same as Finhay. So I think that is a difference between the two where it’s more about focusing on one product line. But the others are more sort of jamming more product lines in.
Joolin: Nice. Thanks for that. And I think there’s one question that all the audience would be very interested to understand, is that what has your growth been like in the first half of the year during the COVID situation? Has any of your purchases changed, any differences, so on and so forth?
Huy: Yeah, we were lucky, we were the one of very few businesses that are actually doing well during this time.
Our traction has grown more than 10x so far and transaction volume also increased, average value per order also increased, brand awareness also has improved significantly.
So when we did our brand check, three out of five people heard about Finhay or at least use Finhay, which is a really good sign. And for our partners, especially with financial institutions, when we approached them, we mentioned that we are from Finhay, they know straight away. I think those are really positive key metrics and size that we see, after the COVID-19 and our brand has actually been known in the market and people tend to hear it from somewhere.
Joolin: That’s really exciting. And what’s your outlook on the next three to five years for Vietnam’s financial markets and the wealth management space. And what will Finhay’s role be in the sector moving forward?
Huy: From my perspective, in three to five years, the financial market in Vietnam is going to boom I would say, significantly, and there are few reasons for it. For example, the government has been issuing different projects to the state bank of Vietnam, state securities commission, and ministry of finance on financial inclusion.
So what it means is the government wants to improve the financial market in the country. They want to lift up our market. So currently we are ranked as a frontier market. And the government wants to push it into the emerging market and we’ve been working really hard into it.
One of the key metrics that the government is pushing really hard is to improve financial literacy and encourage people to trade on the stock market. So currently we have 2.5 million trading accounts and in the next five years, the government wants to push it into 5 million-plus. That is the project, the different ministries have been working really hard to make it happen.
And as Finhay, we do play a role into this to now having more accounts accessing the financial market, actually helping push the financial market.
And also in the future when we roll out into different product lines, then that also helped with the number of accounts trading and so on as well. That is the role of Finhay. We should take part of this project as well.
Joolin: And we’re looking forward to what you have in store for Vietnam’s small to medium investors. To close things off we always ask our guests to share some of their favorite things in our rapid-fire question round.
What is your favorite activity to de-stress?
Tennis, traveling, hanging out with friends
What is your favorite, go-to destination for travelling?
Japan and India
About our guest
Huy Nghiem is the founder and CEO of Finhay. Prior to Finhay, Huy built his expertise and experience in the financial markets as a financial advisor at AMP in Australia. He also co-founded and led tech companies and business initiatives during his time in Australia. He graduated from the University of Sydney with a Bachelor degree in Accounting and Marketing. He is currently part of the 2020 Forbes Asia 20 under 20 list.