We’re back with a returning guest, Huy Nghiem, CEO and Founder of Vietnam’s leading digital investment platform Finhay. Back in Season 2 in 2020, he talked about the rise of retail investors in Vietnam and more Vietnamese people wanting to save and manage their finances. Then in early 2021, along with other founders in the region in Clubhouse session, he talked about finding PMF, developing company culture, and hiring for hypergrowth.
Now he’s back on call to tell us what’s happened since then, from their acquisition of VinaSecurities, the launch of their stock trading product, and the ecosystem of products they now offer which contributed to 150% growth in users over the past year, to raising a US$25M Series B round co-led by Openspace Ventures and VIG. He also speaks to driving long-term adoption amidst market volatility as well as Finhay’s impact on the Vietnamese people, public markets, and economy. Join Huy at Finhay. This call was recorded on March 2022.
Highlights and Timestamps
(00:14) Paulo introduces Finhay and Huy; “In my opinion, the Vietnamese investor has always been investing for a long, long time…they don’t let their money stay sitting [still] and doing nothing, and they start to optimize their money quite smartly…the retail trading behavior of Vietnamese are quite unique as they have that entrepreneurship in them and risk-taking in them.”
(03:06) Finhay’s Expansion into Stock Trading; “I had a chance to talk to a couple [of] owners of those traditional players, and most of their time, [they’re] actually not solving their clients’ problem, but instead solving their brokers’ problem. For Finhay, our focus is to solve our clients’ problems and optimize the experience and improve [their] experience [through] the mobile-first experience that we are going into.”
(13:10) Driving Long-Term Adoption of Digital Investment Platforms Amidst Market Volatility; “For us at Finhay, because we already have a wide range of products for end-users where they can let’s say during the market turmoil, they can switch their assets from stock to let’s say mutual funds or even start buying gold on our platform. So we have now asset classes for users to switch around on our app…So the user can switch around and that has helped retain users on the platform.”
(19:05) Finhay’s Impact on Vietnam’s People, Public Markets, and Economy; “…we have changed the way people think about how stock trading works, and how it looks like, and changing the perspective that stock trading is not a really terrible market… we have seen users from traditional players actually using our platform for the simple reason that our fees are much more competitive and more straightforward because they’ve been using other players and they charge a number of fees.”
(27:15) Rapid Fire Round;
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’s degree in Accounting and Marketing. He was part of the 2020 Forbes Asia 30 under 30 list.
Expanding into Stock Trading
Paulo: We’d love to hear from you and for you to catch up our listeners on what Finhay has been up to since our last chat in 2020.
Huy: So Vietnam in the last 24 months has grown really significantly in terms of the number of traders in the country. So we have seen new 1.5 million trading accounts opened just in 2021 alone and in the financial market, the trading volume per day increased from on average about US$5 million to around US$2 billion in assets today.
From my understanding, the trading volume in Vietnam today is more than in Indonesia. Our country’s population is around a hundred million and GDP per capita is staying around US$3,500, and may be based on other unofficial data that could be around 3,700 or 4,000, which is still relatively low, but then I [saw] a lot of shifts from people, [where] instead of saving money, [they are] investing in the capital markets in Vietnam, [which] was super exciting, and we had really, really good months [of growth] back then.
And because of that, we have seen the really, really big positive impact [on] the market, as well as the growth and traction of Finhay, and based on that data, what we have been observing and also [with] the market trend, we do see the huge potential in terms of growing even further in the Vietnam market as well.
I mean, there are a few other data points why people are moving away from savings as well, but then, it has been a really, really good market in the last 24 months.
“Our country’s population is around hundred million and GDP per capita is staying around like US$3,500…which is still relatively low, but then I [saw] a lot shifts from people, [where] instead of saving money, [they are] investing in the capital markets in Vietnam, [which] was super exciting…”
Paulo: Thanks for sharing those numbers. Some really significant stuff, especially considering the current situation with the public markets, but Vietnam is still very much going strong. And just for those who aren’t familiar [with] Finhay’s products, their [initial] product [was] mutual funds [investments], so users could invest into mutual funds and get exposed to different stocks, and that’s how they’ve grown over the past few years.
But more recently you guys have just announced — so to our listeners out there, you’ve probably heard the news that Finhay has recently acquired a stock brokerage license [though its acquisition of Vina Securities].
And it’s a great milestone to celebrate, but would also love to know what were the factors — apart from what you mentioned earlier with the macroeconomics, and what are the other factors made you decide that it was the right time for Finhay, in particular, to expand into stock trading?
Huy: So other than what we discussed earlier, the macroeconomics based on our current data, you know as well we have seen behavior from users moving toward trading behavior or trading-like behavior. Also, we have seen our AUM has been growing quite organically already.
And we started to see a demand from users based on their discussions and conversations on our community channels. And they’ve been talking about when we will have stock trading, or when will stock trading be available on Finhay, and they also talk about other stock trading products from generational players. They wondered whether that [would] be again available on Finhay or not.
So it’s all [these] sentiments [that] just gave us the idea [that] we need to do something about it and then the early start of that will be finding our own brokerage firm so that we can own our own user experience, our own system, and our own users as well. So that was why we started to apply for a stock brokerage license and introduce the stock trading feature to our end users.
And not just that, during the time that we started to look into licenses, we started to realize that actually there was a time back in 2021 [where] one of our exchanges had a problem with the system jamming or congesting because a number of transactions [or] the orders coming to the system were really significant.
So before we can track 10 units per lot, because the number of transactions based on the 10 unit lots was significant, it jammed the system. So the exchange increased the limit to 100 units per lot so that they can reduce the pressure on the congested number of orders going through the system.
And we started to see opportunity [there]. Before they just needed a dollar or 10, 20 bucks to start investing. But now, cause of the 100 unit lots, they easily pay for like 500 or 300 per transaction. As for a first-time trader, generally, they will top up not that much. They wanna give you an [trial] around like hundred first.
So that’s why lowering the barrier to entry will be the opportunity for Finhay to start entering this market. Coming back to sort of our very, very first initiative back in 2017 or 2018, we reduced the barrier to entry to mutual fund units. So those were all the factors behind the reason why we started to offer stock trading
And just to share more with you on the stock trading. Since we launched our stock trading, in late December, and early January, we already contributed to around 35% of the new trading account opened in the market on a monthly basis already. The market opportunity is huge.
“…we started to see a demand from users based on of their discussions and conversations on our community channels…by lowering the barrier to entry, this will be the opportunity for Finhay to start to entering this market.”
Paulo: Just in the first few months since you guys launched [your stock trading product], it’s already clear that there is that kind of demand for this kind of service, especially to be able to be accessed digitally. Just to recap all those reasons, there’s obviously the lower barrier to entry which has happened sort of institutionally, as you mentioned, where people can now invest a lot more into stocks, and then [second] are also the indicators that you’ve seen even within your business, with your AUM growing organically, as you mentioned. It made sense for you guys to get into the stock trading business at this point in time.
And so you talked about there being sort of generational stock brokerages [or securities companies], so what are the pain points in terms of the experience of stock trading? Maybe you could elaborate a little bit more on what Finhay is solving through this digital approach.
Huy: So unlike traditional players where they invested heavily into human brokers to service clients and to actually make trades for clients by a brokerage service or by a human service. We realized there’s no need at this point in time or at this age that we need to invest in a large number of [people] to actually sort of sit in the office to sell to clients or service our clients, and our approach is an online and mobile-first experience.
Users with smartphones can self-serve and can start placing trades by themselves. So that’s how we started our initiative, and that is going to stay the same for a long, long time because we realized that for the traditional model where you have a lot of brokers, the time and the focus to solve client’s problem is reduced need to solve the internal conflicts among brokers. [For example], Broker A gets a commission, then Broker B gets a different commission and Broker C gets a different sort of benefit, and so on.
So a lot of those internal conflicts might happen because of the inconsistency in their policy and the conflict of interest over that. I had a chance to talk to a couple [of] owners of those traditional players, and most of the time, [they’re] actually not solving their clients’ problem, but instead solving their brokers’ problem.
For Finhay, our focus is to solve our clients’ problems and optimize the experience and improve [their] experience [through] the mobile-first experience that we are going into. The way people make trades will be simpler, easier, and faster instead of having really complicated, jargon-filled keywords placed on the app and people have no clue what it is [abot].
Clients can get access to more complex products without engaging with brokers, for example, in margin trading, where with a single click, they can get access to margins without waiting for a broker to get approval and waiting for them to get back how much margin you can get. So that is how we wanna approach [the market] with our product and [improve the] experience for our users. So in summary, it’s more [about] solving our clients’ problems instead of solving brokers’ problems.
“I had a chance to talk to a couple [of] owners of those traditional players, and most of their time, [they’re] actually not solving their clients’ problem, but instead solving their brokers’ problem. For Finhay, our focus is to solve our clients’ problems and optimize the experience and improve [their] experience [through] the mobile-first experience that we are going into.”
Paulo: Yeah, I really like that point where there’s now this shift from solving the brokers’ problems to focusing really on the investor who at the end of the day is the one who is — for some of them, even their lives are changed by this kind of access to these products.
So I was curious to know about Vietnam in particular, because, in our portfolio, we’ve also talked to Ajaib in Indonesia about this whole phenomenon, and so we’d love to ask you as well if in Vietnam, what makes the Vietnamese retail investor and retail investment market unique in Vietnam compared to say the rest of Southeast Asia or even the world?
Huy: In my opinion, the Vietnamese investor has always been investing for a long, long time. I think it’s happened everywhere in the world, but the Vietnamese are special because we share the same culture with China, and we really have that entrepreneurship [culture]. And that’s why you can see a lot of people in Vietnam want to have their own shop or want to have their own business.
That entrepreneurship characteristic is really strong among Vietnamese. So that’s why for that risk-taking or willingness to [make investments] is another option for them to put in money down. And another one is gambling and I don’t want to [discuss] it here, but that is also a sentiment. So that’s why we can see the behavior of investing is strong and the sentiment also strong so that’s why I would say the Vietnamese [the market is] quite unique.
And a bit of insight sharing here — back in 2020 to 2021 and as of right now [March 2022], we started to see a shift from clients’ money from banks to the stock market, simply because the market was bullish, and also the real estate was kind of slow during the COVID period.
So the money that was supposed to be invested in real estate was bought into the stock market. So again, you can see in general, they don’t let their money stay sitting [still] and doing nothing, and they start to optimize their money quite smartly. Every month as of Q4 2021, you see three billion in new cash injected into the stock market, and on a monthly basis, we get around 100 thousand new trading accounts opened, so you can see money dropping into the financial market.
And again, in summary, the retail trading behavior of Vietnamese is quite unique as they have that entrepreneurship in them and risk-taking in them. So that’s why they’re willing to invest.
“In my opinion, the Vietnamese investor has always been investing for long, long time…they don’t let their money stay sitting [still] and doing nothing, and they start to optimize their money quite smartly…the retail trading behavior of Vietnamese are quite unique as they have that entrepreneurship in them and risk-taking in them.”
Driving Acquisition and Retention
Paulo: Vietnamese people are more willing to take risks, and not let their money lie dormant and they want to make sure their money’s productive. And so Finhay is really just [well-positioned] there to provide that easy avenue to be able to make their money more active, and who knows, you guys might be funding new generations of entrepreneurs who are able to grow their starting capital through Finhay.
On that note, if you already have this culture that’s geared towards investing and you already have the existing sort of infrastructure, how do you approach driving adoption or acquiring users through this digital platform. I noticed you guys do a lot of interesting marketing campaigns, videos, and all of that stuff. So maybe you could speak a little bit more about that.
Huy: Our focus still remains to be SEO and SEM-focused. And why? Because traditional business players, do not have a strong presence on the internet, the Vietnamese internet. So that’s why we want to optimize our keywords for investing, trading, and online investment, that will be directed to Finhay. And the option is still blue, not red yet amongst our SEO or SEM sectors, and that has helped in driving traffic.
Another channel that we’ve been investing in quite heavily is branding. Vietnam is a low-trust society. So building branding and building trust are really important. I think it’s happened everywhere in the world, but for Finhay, at least in the Vietnam market, the earlier that we start, the better over the long term because the brand, the presence out there, and the awareness are strong.
So we did a brand health check in December 2021, and it turns out Finhay has become the top of mind for online investment. So that was run by an independent brand audit checker in Vietnam. So they did surveys and a lot of user research amongst our generation and it turns out Finhay is a top-of-mind [platform]. I think that has really helped. Now when I go to random people and ask whether they know about Finhay, probably they heard about us.
So that is really important to invest in. And so that will create that awareness. And later on when they actually have the intention to invest, Finhay will become top of mind for that. So that’s the second sort of channel that we’re investing in so that more long-term awareness is [already] working for us as of right now.
And the third one that we would like to share is KOLs. So we work with mini-KOLs and top KOLs to constantly review our product, not just saying like Finhay is a really wonderful app, but instead, again, spreading the purpose of why we need an app like Finhay and what pain points that we’re trying to solve and that has helped in driving traffic to our website as well as our app.
“Vietnam is a low-trust society. So building branding and building trust are really important. I think it’s happened everywhere in the world, but for Finhay, at least in the Vietnam market, the earlier that we start, the better over the long term because the brand, the presence out there, and the awareness are strong…We did a brand health check in December 2021, and it turns out Finhay has become the top of mind for online investment. So that was run by an independent brand audit checker in Vietnam.”
Paulo: You’ve talked about all these different methods for acquiring users, and I also wanted to touch on, since Robinhood, for example, really thrived on Reddit, building communities of retail investors there. And we talked to Yada from Ajaib, where she talked about IG or Instagram for Indonesians. We’d love to know what is it for Vietnamese? Like where do the retail investors congregate, and where do you engage and reach out to them the best?
Huy: The number one social network that we use for engaging with our users is Facebook. So we have a community of more than 50,000 active users on our Facebook community and Facebook page, where they share tips and talk about their personal finance. They talk about their trading activity and share their balance as well on Facebook. So that’s the number one channel that we use to engage with our users.
The second one that we’ve been approaching is TikTok, and the third one is Instagram, and then we rarely use Zalo. Zalo is another social media network, so we use the other three as a top-three [channels]. We also use YouTube as the content channel to produce what we call 101 stock trading, where users learn about the very basic concepts of stock trading.
“The number one social network that we use for engaging with our users is Facebook. So we have a community of more than 50,000 active users on our Facebook community and Facebook page, where they share tips and talk about their personal finance.”
Paulo: This community is definitely there for education and how to best utilize the tools that you have on Finhay. Since we thought about acquisition, would also love to hear your thoughts on retaining these users over time, especially as you know, when it comes to the stock market, things fluctuate all the time. And obviously at this point in time, especially the past year or so, it’s been a very bullish market. but going into 2022, at least globally, there’s a lot of stocks that haven’t been performing [well], so how do you think about retention given this kind of environment that we’re in?
Huy: So given that the environment that we are in right now with all the things happening around the world, at least luckily from the Vietnam market, we do see the impact, but then the financial market is not significantly impacted, which is a good thing for our end users.
And for us at Finhay, because we already have a wide range of products for end-users where they can let’s say during the market turmoil, they can switch their assets from stock to let’s say mutual funds or even start buying gold on our platform. So we have now asset classes for users to switch around on our app. We also have what we call the daily cash account with CIMB Finhay, where users, just in case, say, “I don’t want to expose my money to even bonds. Then I can put it under cash and wait for the opportunity and then go back to the market.”
So we had that sort of cash-wrapped accounts on our platform. So the user can switch around and that has helped retain users on the platform. And even with…what happened in Europe, we don’t see a big impact [where users] would draw money out the system, but instead they still leave it there it to go. And recently we have seen them switching from cash to going back to the stock market.
“For us at Finhay, because we already have a wide range of products for end users where they can let’s say during the market turmoil, they can switch their assets from stock to let’s say mutual funds or even start buying gold on our platform. So we have now asset classes for users to switch around on our app…So the user can switch around and that has helped retain users on platform.”
Finhay’s Impact on Vietnam’s People, Public Markets, and Economy
Paulo: Yeah, I really love that you guys have that flexibility. Again, we’re talking a lot about the stock trading feature because obviously, that’s what Finney has just recently launched, and that’s the most recent asset class that you’ve gotten it into, but you guys have all of these other like asset classes that you’ve been offering for a long time now.
And also importantly, it all serves as a wallet in some respects. For users, if they wanna reduce exposure and then it’s easy for them to get back into [the financial markets], but obviously apart from bridging access for users, that’s a great short-term gain from the product.
But I think the real long-term effect is really uplifting the lives and economic wellbeing of a lot of Vietnamese. And outside of this call, you’ve told me a lot of different stories of different Vietnamese people whose lives have been changed by Finhay. So would love for you to actually share one of those with our listeners.
Huy: After we launched our stock trading, we started to see even our team members being super active with stock trading. So [this team member] actually hasn’t been trading before for a couple of reasons. So first she thought she would need a lot of money to start investing.
Second, she thought going to the market [only meant] they would lose money — I mean, that depends on how you trade. And the third reason is she had no clue what all those candlesticks, bands, and [what all those signs] means. So we at Finhay designed the very first MVP as this is the popular stock name Vingroup, let’s say, okay, you get used to it…you start buying from one stock…get exposed to it. And they start to understand, okay, that is a stock that you buy…and then the price is going up or the price is going down. So that learning curve was really fast for her. And that changed way she thinks about stock trading because, in her mindset, stock trading was something that if you put money there, you only lose money for sure.
So that changed the mindset. And now she actually became more active in terms of stock trading. She owns more stock now, and her diversification from savings to investment become larger. So I think we have changed the way people think about how stock trading works, and what it looks like and changed the perspective that stock trading is not a really terrible market. So that’s one of the examples.
And the other example that I can think of right now is we have seen users from traditional players actually using our platform for the simple reason that our fees are much more competitive and more straightforward because they’ve been using other players and they charge a number of fees…SMS fees, trading fees, margin fees…brokerage fees, all kinds of fees.
“…we have changed the way people think about how stock trading works, and how it looks like, and changing the perspective that stock trading is not a really terrible market… we have seen users from traditional players actually using our platform for the simple reason that our fees are much more competitive and more straightforward because they’ve been using other players and they charge a number of fees.”
Paulo: So I really like that you brought up those two examples, because one, you’re talking about a new investor who hasn’t had experience at all, and then somebody who was already using traditional services, but made the switch, for a couple of reasons, as you mentioned, like the cost itself and convenience, apart from other things as well.
And so I I’d like to ask, as of this time of recording, you’ve also seen a lot of tech companies going public in Indonesia in particular. Obviously a lot more consumers who are using these same products are now able to also own a part of these companies as well.
How do you see that kind of environment evolving in Vietnam? Maybe it’s not at that same point right now, but how do you see say more tech companies going into stock exchanges in Vietnam and say like retail investors or users of Finhay being participants in that?
Huy: So generally, we have seen Vietnamese really like financial sector, so they own bank stock they own security brokerage firm stocks, and consumer lending stocks, so even banks contribute to like 30% of the market cap in Vietnam. So we have seen people being exposed to that. The next one is real estate and then the other one is manufacturing.
So in Vietnam, we don’t have that much tech stock available in the stock market yet. However, at least in our generation, we have seen the demand for, let’s say, I wanna own a piece of VNG, I wanna own a piece of Tiki or a piece of Momo, so those stocks may be attractive to younger generations but unfortunately we haven’t seen them become available in the stock market.
“So generally, we have seen Vietnamese really like financial sector…but in Vietnam, we don’t have that much tech stock available in the stock market yet. However, at least in our generation, we have seen the demand for, let’s say, I wanna own a piece of VNG, I wanna own a piece of Tiki or a piece of Momo…”
Paulo: And so I want to shift gears a little bit and talk about — since Finhay by this time as well, they’ve also just [announced] their series B as well. So would love to know, now being a series B company, how has this influenced your own leadership approach as CEO, now that your focus is a lot more in bringing in leadership talent in Finhay? What’s your approach to that as CEO?
Huy: Going to this stage of the company, my leadership style has changed quite significantly. I would say because at least my day-to-day job has changed a lot for me now. So I spent a lot of time being a product owner prior to Series B, but after, I’m spending time fundraising and also working with the new investors and also existing investors, the time for being a product owner has been reduced.
So during that time, I started to be like, “Now we need to look for more and more top-notch players to join the team, to not just be a product owner, but also in different departments, for example, investment.” So we recently onboarded our chief investment officer.
So he had really long extended experience with a very popular investment firm in Hong Kong and Korea as well, so really glad that he became part of Finhay. So instead of focusing on measuring the team, my role now changed a lot being more of a headhunter myself and trying to get more and more talent to join the firm.
And the conversation with the other C-levels in the team has shifted a lot as well. Prior to that, it was more of a product [conversation], because I was taking a lot of time being a product owner, but now it’s changed to conversations about what’s the strategy. If we have more talents coming in, how the person can fit in and onboard them quickly.
So it has changed a lot to be a Series B company, at least for myself, at the moment. And there are a lot of other things happening as well. Now we have 150 people at the company now and expect reach another 25 people by half of the year. it means there will be more new problems we have to deal with on how to bond the team [better].
“Going to this stage of the company, my leadership style has changed quite significantly. So I spent a lot of time being a product owner…[now] I’m spending time for fundraising and also working with the new investors and also existing investors and the time for being a product owner has been reduced.”
Paulo: I really like how you described it as a shift from focusing more on the product, being a product owner to now focusing more on leadership, being a recruiter or headhunter, and really bringing in the right people with all of this experience and expertise, like as you mentioned, talking about your chief investment officer which you brought into the team.
So it’s really great and if anyone’s listening out there who wants to be a part of the team I will leave a link for any of the open roles, and also we’ll leave Huy’s LinkedIn as well if you’re looking for a leadership role in the company.
Looking towards the future, how do you see Vietnam’s retail investment and wealth management space, evolving in the next five years, maybe from a regulatory or technology perspective or user perspective, and what role will Finhay play in this wave?
Huy: Based on the current sort of news are still going around, plus a lot of decisions coming from the government saying that Vietnam wants to push the tech transformation really hard in a good way. So it means a lot of services in the country will become online and self-services.
So it means it will drive the behavior of the end consumers and a lot of businesses, and also schools, and universities will follow suit. I think we are in a good area and good timing where we are focusing on online services where users are going to become more familiar with all those, and that will help drive the growth of the economy.
And when it comes to the financial market, we believe it’s still going really well. In 2020, I have seen the traction, so we expected to onboard back then 3.5 million accounts. By the end of 2025, we expected to have 5 million trading accounts in the entire country. But as of today, it’s 4.3 million already. So the growth has increased significantly.
So in the next three years, probably we’re gonna reach maybe 7 or 8 million and Finhay will be a part of it. So I think again that’s a good opportunity at least for Finhay, and a lot of money we call FDI or foreign direct investment coming from Japan, coming from Korea, and other countries around the world as well [going] into Vietnam creating more pressure on the government to improve the infrastructure. So logistics become much better. So I mean the whole sector, it is just being uplifted and the GDP per capita is still increasing. So on the macro level, it is looking good, and for the end consumer, it’s also looking quite good. I mean again, I’m quite bullish.
“We are in a good area and good timing where we are focusing on online services where users are going to become more familiar with all those, and that will help drive the growth of the economy…the growth [in trading accounts] has increased significantly…a lot of money…[going] into Vietnam creating more pressure on the government to improve the infrastructure… the whole sector, it is just being uplifted and the GDP per capita is still increasing.”
Rapid Fire Round
What are the top 3 traits a startup CEO should have?
Huy: Passionate, trustworthy, and disruptive. I think just wanna say [that] actually, [those are the] core values at Finhay, [those] three traits: disruptive-ness, passion, and trustworthiness. Yeah.
What digital technology/innovation or sector (apart from the tech you are working on) excites you the most today?
Huy: Blockchain of course.
What’s the most memorable class you’ve been in?
Huy: I would say finance [class], back in the first year of university. So I joined a class, and back then, honestly, I had no clue what stock trading was when I was 18 or 19, because it was super early in Vietnam.
What’s your favorite go-to destination in Southeast Asia? / What trip are you most looking forward to taking?
Huy: Singapore is the place. Again, you know, haven’t been able to catch up with, even with the team at Insignia in person for so long, and then I’m sure there’s a lot of other investors around the region who are there as well, and I haven’t been able to catch up with them, so Singapore will be the place.
Favorite activity to de-stress?
Huy: Sleeping, at least for me, that’s how [I do] it, after a long day, going to work around like 8:00 AM and then get back home around 8:00 PM. And then having dinner, taking a shower, chatting with my wife and then taking a good sleep, then getting back to work. I think so far it works well for me.