Financial Inclusion in Vietnam: Reaching the Unbanked
Vietnam is currently one of 25 countries prioritized by the World Bank as part of the UFA2020 program, primarily due to the combination of having a large population and a low rate of financial inclusion. In fact, according to Global Findex, only 31 percent of adults had access to an account at a formal financial institution in 2014. Though that number increased from 21 percent in 2011, Vietnam still lags behind the regional average of around 69 percent and is home to an estimated 50 million adults who remain unbanked.
The State Bank of Vietnam is, however, working with the World Bank to develop and implement a national financial inclusion strategy to reduce the total number of unbanked adults as well as the proportion. Similarly, our team at MIX is supporting the sector by building tools to measure financial inclusion and identify opportunity areas to prioritize efforts going forward. Thanks to generous support from the MetLife Foundation, the result is the first-ever Interactive Dashboard for Vietnam, a data visualization that allows users to explore access point distribution along with demand-side indicators like population and poverty rates. What we’ve found from this analysis can help inform the Vietnam’s strategy as it looks to increase financial inclusion.
For example, according to our data, banks are the most widespread financial provider in the country, controlling more than 82 percent of the nearly 35,000 access points. Yet, perhaps because of this, more than one quarter of all access points are concentrated in the more developed cities of Hanoi and Ho Chi Minh. Meanwhile, provinces like Dien Bien only have 9 access points per 10,000 impoverished people (see chart below). Provinces like Dien Bien and Lai Chau have high rates of poverty – some over 30 percent – yet low access to financial services. Policy makers, as well as financial service providers with missions aimed at serving the poor, should look to these provinces for opportunities to reach the unbanked and underserved.
For financial service providers that are focused on expansion in areas with higher incomes per capita, our data suggests they should look to Binh Phuoc and Tay Ninh, where the monthly income per capita is slightly above the national average but relatively few access points exist (see map below). This indicates there is a supply-demand imbalance that could be offset by more financial access points. Similarly, in provinces like Ca Mau and Soc Trang, retail sales are high whereas access points are few. This may offer opportunities to expand services including credit cards or mobile banking. Finally, the northeast region has 70 districts with fewer than 5 access points and could be targeted by policy makers and service providers.
Though there are several reasons that millions of adults in Vietnam are excluded from the financial system, the great distance to financial access points is cited as one of the most impactful. Hopefully, using the geospatial data provided here and within our Market Insights for Vietnam, policy makers and service providers can increase financial inclusion in the country. We hope that this data will better inform Vietnam’s national financial inclusion strategy, as well as its implementation.
Click here to view the Interactive Dashboard for Vietnam.
Click here to view the Market Insights for Vietnam