On call with us this week is Huy Nghiem⁠, CEO and Founder of smart investment platform ⁠Finhay⁠⁠! ⁠A year after his last conversation with Paulo⁠, he returns with updates and learnings from the fintech’s growth, now serving more than 3 million users.

He also brings with him insights and stats painting a picture of Vietnam’s economic resilience, an uptick in stock market activity in Q2, and the continued rapid development of its digital economy. A must-listen conversation for anyone looking for an update into Vietnam’s macro outlook, or insights on how to navigate one of ASEAN’s fastest growing digital economies⁠ amidst market uncertainties. 

Timestamps and Highlights

(01:31) An Update on Finhay;

“…we now have more than 3 million registered users, and our acquisition of the security firm has created a new wave of security firms in the market. In April, we contributed to the market with over 10,000 new traders, and in May, we contributed to almost 20,000 new traders…”

(05:01) Learnings from becoming a Smart Investment Platform for more than 3 million Vietnamese;

“We are no longer just a micro-investment platform, but a smart investment platform. What does smart mean? So far, the insight that we have gained from the market research on the semi-pro investors or traders is that they generally have full-time jobs and are quite busy…As a business service provider, a smart investment platform means we provide concise and relevant information to them. For example, basic information on revenue growth of listed companies, and we also provide tools for them so they can make trades with the click of a finger. We also create smart portfolios so that they can invest in that smart portfolio in a few clicks instead of having to choose a strategy, etc…We are making more and more smart tools available on the platform, allowing users to invest easily and seamlessly.”

(10:56) How Vietnam’s economic resilience led to product growth for a smart investment platform;

“In the last few weeks, we have seen trading volume increase quite drastically. Normally, it was about 500 million to 600 million in a day. Now, it is jumping to 800 million in a day quite consistently, and the sentiment itself has been quite positive. We found out that it’s actually a very good opportunity for us to offer margin trading in the market for our semi-pro and pro traders within our platform. Within only a few days in beta to very few people, we have seen almost a large amount of [activity], creating a new revenue stream for the company. It’s actually a very good product we have seen so far in the last few weeks.”

(16:24) How Vietnam’s Digital Economy has evolved and Finhay’s place in it;

“Regarding digitalization, the Vietnam market is evolving rapidly. When I returned to Vietnam in 2017, 40% of the population was unbanked, but now it’s estimated to be around 15%. Cash on delivery was more than 90% in 2017, but now it has reduced to 40% or less. Payment methods have also evolved, with more people using QR codes and digital banks. It’s not just payment or banking that’s changing, but also insurance, stock trading, investing, and even tax payment.”

About our guest

⁠Huy Nghiem⁠ is the founder and CEO of ⁠Finhay⁠ as well as Chairman of Vina Securities. 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.

The content of this podcast is for informational purposes only, should not be taken as legal, tax, or business advice or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any ⁠⁠⁠⁠⁠⁠Insignia Ventures⁠⁠⁠⁠⁠⁠ fund.

Transcript

Transcripts have been edited for clarity. 

An Update on Finhay

Paulo J: Just to recap for our listeners, in June of last year, Finhay announced its Series B funding round. At that time, they had surpassed 2.7 million users and were seeing significant growth in their stock trading product. Despite market uncertainty that continues to this day, how has Finhay grown since then? Could you summarize it in three key numbers?

Huy N: Yes, last year was a challenging year for many businesses due to inflation, hikes, and other factors affecting the global economy, including Vietnam. As a financial sector company, we were not immune to these challenges. However, during this time, we were able to acquire a security firm, which took us one year and four months to restructure and launch just three weeks ago in Vietnam. This time allowed us to focus on improving our product, back-end, and server, rather than pushing new products and marketing campaigns.

In terms of internal numbers, we now have more than 3 million registered users, and our acquisition of the security firm has created a new wave of security firms in the market. In April, we contributed to the market with over 10,000 new traders, and in May, we contributed to almost 20,000 new traders. We are pleased with the results of our restructuring and look forward to seeing more positive results in the future.

“…we now have more than 3 million registered users, and our acquisition of the security firm has created a new wave of security firms in the market. In April, we contributed to the market with over 10,000 new traders, and in May, we contributed to almost 20,000 new traders…”

Learnings from becoming a Smart Investment Platform for more than 3 million Vietnamese

Paulo J: Yeah. Currently, we have over 3 million users. In the past two months (April and May), we had 10,000 and 20,000 new traders respectively. This represents a new wave of security firms, as you mentioned. 

Speaking of restructuring, you mentioned that Finhay has also evolved as an organization. Could you speak a little bit about what that means exactly? What has restructuring meant for Finhay? I think Finhay has also evolved into what we call a smart investment platform, right? All of its products are authorized by the State Securities Commission in Vietnam. Could you talk about that and what it means for Finhay moving forward?

Huy N: Prior to the security firm that we bought, we positioned ourselves in micro-investment. We had a lot of what I call small and medium-sized investors. There are a lot of them out there in the market. 

At the same time, we saw potential in the mass affluent segment. This is a new target segment that we want to capture since we already have 3 million of the mass market already. But the potential for mass affluent is still huge in the market. Having a security firm that we bought strengthens our positioning. 

We are no longer just a micro-investment platform, but a smart investment platform. What does smart mean? So far, the insight that we have gained from the market research on the semi-pro investors or traders is that they generally have full-time jobs and are quite busy. 

In a week, they can make around one trade per day. It’s a very micro transaction, and they don’t have a lot of time to do in-depth research into the company’s performance. As a business service provider, a smart investment platform means we provide concise and relevant information to them. 

For example, basic information on revenue growth of listed companies, and we also provide tools for them so they can make trades with the click of a finger. We also create smart portfolios so that they can invest in that smart portfolio in a few clicks instead of having to choose a strategy, etc. That is the positioning of our smart platform. 

We are making more and more smart tools available on the platform, allowing users to invest easily and seamlessly. We are also incorporating AI applications. ChatGPT was made available last year and GPT4 is pretty much available already. We have a lot of data, business data, so we want to aggregate them and then feed relevant data to users without having a number of analysts behind the scenes feeding data to end consumers. That AI component helps improve that smart component that we have within our platform.

Paulo J: Yeah, actually, I wanted to ask about that AI component a little bit later on. So for listeners, stay tuned, we’re gonna get to that. 

But first, I just wanted to recap. So this transition from a micro-investment platform to a smart investment platform really represents a shift in focus or an expanded focus, either in terms of the market that you’re looking at, right? Not just the mass audience, as you mentioned, but the mass affluent, who actually are interested and have the money to trade and make these investments but need information, need more education, and accessibility and convenience when making these investments.

In our last podcast, you talked about all these different products that Finhay has. Apart from the stock trading, there’s also savings. There’s also, I think, gold investment as well. So have you noticed any particular new interesting trends in terms of investor behavior on the Finhay platform over the past year?

Huy N: With what has happened around the world and in the Vietnam market at the end of last year, we have seen users being more conservative. I’m sure it’s similar to other platforms around the world. 

So we have seen users change behavior from risk-taking into a more conservative approach. So they put a lot more money into the fixed income product. However, recently the market has been performing quite okay. We started to see the shift in money flow from fixed income into equity, specifically stocks, and our volume has been increasing in the last few days. 

The Vietnam market is also increasing volume to show that the market itself is quite correlated with the index and our trading board. However, we still have a group of users that are still using fixed income. They’re quite female dominant. They would like to save and have a solid return. However, male users tend to be more risk averse. In the event of a market up trend, they shift their fixed income into equity investment, which is quite interesting.

“We are no longer just a micro-investment platform, but a smart investment platform. What does smart mean? So far, the insight that we have gained from the market research on the semi-pro investors or traders is that they generally have full-time jobs and are quite busy…As a business service provider, a smart investment platform means we provide concise and relevant information to them. For example, basic information on revenue growth of listed companies, and we also provide tools for them so they can make trades with the click of a finger. We also create smart portfolios so that they can invest in that smart portfolio in a few clicks instead of having to choose a strategy, etc…We are making more and more smart tools available on the platform, allowing users to invest easily and seamlessly.”

How Vietnam’s economic resilience led to product growth for a smart investment platform

Paulo J: I think that the way Vietnamese people think about savings and money might be a cultural thing. You mentioned the recent increase in market activity, investment activity, and equity assets. Does this have any implications for the Vietnamese economy as a whole? How has Vietnam’s economy been responding to the global economic uncertainties that have persisted this year? And how has Finhay been adapting to these stresses?

Huy N: Based on my observations in the market, the Vietnamese government has responded quite well to what has been happening around the world. We have already reduced our interest rates a couple of times, and we have seen the effects in the market. By the end of last year, the interest rate for a one-year term at banks could go up to 12% per year. 

We had a couple of increases in our interest rates, but this year we started to see the central bank of Vietnam step in and create pressure, requiring banks to reduce their interest rates. They have also reduced their normal interest rates, asking the banks to reduce their interest rates as well. So the one-year term interest rate in Vietnam is going down to around 8% per year, which is quite similar to the Covid period and is expected to go even lower. 

So I would say that the market itself and the government regulators have been responding quite well to what has been happening around the world, and also to what has been happening internally in Vietnam. 

The inflation rate is actually under control. In the last quarter, it was controlled, and the oil price has been very well controlled. It used to be around 1.5 per liter in Vietnam, but now it’s going down to less than a dollar. There was a time when it actually went down to 85 cents, which is quite long. Overall, the macroeconomic situation is doing quite well.

Paulo J: So you’ve talked about all these macro trends, and things are looking up for Vietnam. Could you talk a little bit more about how specifically this has impacted Finhay’s various product activities and user activities on your investment platform?

Huy N: With all those market macro updates and data that we offered in the last few months and also at the end of last year, we did see a certain side that actually supported the trading volume sooner than we expected, especially on the fiscal policy from the government of Vietnam, which has been pushing to spend on government spending, infrastructure investment, and improving infrastructure. 

So that means money will flow back to the market. At the same time, with monetary policy, inflation is being reduced, and the saving rate is no longer attractive. So given that the real estate market is still in trouble, the investment option is very limited. 

So where else can they put their money but the stock markets? In the last few weeks, we have seen trading volume increase quite drastically. Normally, it was about 500 million to 600 million in a day. Now, it is jumping to 800 million in a day quite consistently, and the sentiment itself has been quite positive. 

We found out that it’s actually a very good opportunity for us to offer margin trading in the market for our semi-pro and pro traders within our platform. Within only a few days in beta to very few people, we have seen almost a large amount of [activity], creating a new revenue stream for the company. It’s actually a very good product we have seen so far in the last few weeks.

Paulo J: You talked a lot about this rebound of the stock markets. Do you see the factors driving this to be more long-term or more short-term? What’s your sense of that?

Huy N: My sense is that this is more short-term, and the increase from a 600 million trading volume in a day to 800 million is not guaranteed to continue in the next few months. 

If it doesn’t keep up at 800 million and goes down to, let’s say, 715 million, it’s still better than the normal 100 million per day, which creates a new benchmark for the market. So we do see this as a potential short-term jump in trading volume, but it creates a new benchmark. So I would say it’s short-term. However, there’s a lot of long-term uncertainty, all around the world, including Vietnam.

“In the last few weeks, we have seen trading volume increase quite drastically. Normally, it was about 500 million to 600 million in a day. Now, it is jumping to 800 million in a day quite consistently, and the sentiment itself has been quite positive. We found out that it’s actually a very good opportunity for us to offer margin trading in the market for our semi-pro and pro traders within our platform. Within only a few days in beta to very few people, we have seen almost a large amount of [activity], creating a new revenue stream for the company. It’s actually a very good product we have seen so far in the last few weeks.”

How Vietnam’s Digital Economy has evolved and Finhay’s place in it

Paulo J: And I think you also addressed a similar question in our last podcast. You talked about how Finhay’s platform offers a holistic investment option for users, including fixed income and diverse asset classes. This allows clients to diversify their money within the platform with just a few clicks, without having to jump around different apps and services.

Now, let’s shift gears and talk about another theme you always mention in our podcast episodes. This is your third time here, and I noticed that you always talk about how Vietnam and the Vietnamese government, in particular, are pushing for digitalization. FIN Hay is playing its own role in that digitization initiative. Can you speak a little bit about how these digitization efforts have evolved over the past year? As a FinTech CEO, what are the biggest challenges ahead for Vietnam’s digitization efforts?

Huy N: Before answering that, I want to comment on what you mentioned earlier. The whole idea of Finhay’s platform is to provide a diverse investment option for users, so they don’t have to go anywhere else. They can invest in fixed income during market turbulence and in stocks during good times. They can even balance their portfolio and invest in more traditional assets like gold with us.

Regarding digitalization, the Vietnam market is evolving rapidly. When I returned to Vietnam in 2017, 40% of the population was unbanked, but now it’s estimated to be around 15%. Cash on delivery was more than 90% in 2017, but now it has reduced to 40% or less. Payment methods have also evolved, with more people using QR codes and digital banks.

It’s not just payment or banking that’s changing, but also insurance, stock trading, investing, and even tax payment. Recently, the Vietnam government has been pushing for eID, which means we may not need a physical ID anymore. This will be very helpful in the coming years.

Another example is car tolls. Before 2021, there were still booths where people had to pay cash, but now it’s 100% digital. Vietnam is heavily enforcing and transforming digitization, and this trend is not just in the government sector but also in the private sector.

As for our platform, our main audience is still from 25 to 30 years old, but we do see an older age group using our platform. In 2019 and 2020, we were the first in the market to introduce a virtual account concept to end clients. This has become very popular, and other services are now using virtual accounts from banks.

Virtual accounts create a sub-account within the main account, so every time someone transfers money to that sub-account, we know for sure where the money comes from. This helps with businesses that have a lot of clients sending money to their company.

“Regarding digitalization, the Vietnam market is evolving rapidly. When I returned to Vietnam in 2017, 40% of the population was unbanked, but now it’s estimated to be around 15%. Cash on delivery was more than 90% in 2017, but now it has reduced to 40% or less. Payment methods have also evolved, with more people using QR codes and digital banks. It’s not just payment or banking that’s changing, but also insurance, stock trading, investing, and even tax payment.”