A new step forward for buy now, pay later

For the first time, a Vietnamese BNPL startup has partnered with CIC, the National Credit Information Centre, to score the creditworthiness of individual borrowers.

Buy now, pay later (BNPL) is a payment model gaining favour worldwide. According to a Research and Markets report, the value of goods transacted through BNPL could grow as much as 21-fold to around 10 billion USD by 2028.

The service lets consumers buy goods first and repay the amount spent over a set period.

Vietnam has a large population, but around half of it still has limited access to banking services or no bank account at all.

That points to very high demand for personal finance among Vietnamese consumers even where financial services remain out of reach. Alongside e-wallets, BNPL has recently emerged as a new payment option that is accessible, safe and convenient.

One bottleneck in the model, however, is that companies must build their own credit scoring when approving a customer to buy first, relying entirely on proprietary data and algorithms.

As a result, poorly designed BNPL models put pressure on customers and raise bad debt levels in the economy.

In Vietnam, several BNPL startups have had to leave the market, partly because they judged the domestic buy now, pay later opportunity unattractive, and partly because credit scoring algorithms and data were inconsistent.

One company's failure can be another's opportunity. Five years after entering buy now, pay later, the Vietnamese startup Fundiin is still in the market and working to fix the weaknesses of the BNPL model.

Alongside its existing data and algorithms, Fundiin has formally partnered with CIC, the National Credit Information Centre, after passing rigorous appraisal and evaluation rounds.

Nguyen Anh Cuong, founder and CEO of Fundiin, called it a turning point for the company as the first Vietnamese BNPL startup to work with CIC.

Under the agreement, CIC will provide Fundiin with access to credit information products, including credit scores for individual borrowers.

Combining CIC data with its existing identity verification technology and creditworthiness algorithms, Fundiin can assess customer credit standing faster and more accurately, allowing more effective approval decisions.

Fundiin will also periodically supply CIC with credit information and on-time repayment records for its users, helping CIC update and improve the national credit data system.

Cuong said the partnership fits Fundiin's long-term consumer credit strategy in Vietnam, with the goal of delivering convenience, transparency and safety while pioneering superior benefits for consumers and society.

Through the CIC partnership, the Fundiin CEO expects to help consumers build credit scores step by step, improve their access to quality financial services and manage their personal finances more effectively.

With just 4% of Vietnam's population holding a credit card, Fundiin's goal is to deliver financial technology products that widen the share of people with a credit history in Vietnam, supporting the government's national financial inclusion strategy.

After more than five years in operation, Fundiin has set new benchmarks in Vietnam's consumer credit market. Cuong says Fundiin's bad debt ratio is below the average for the country's financial industry.

"The secret to staying within a safe threshold is focusing on categories such as fashion and cosmetics. People may default on a phone or a motorbike, but few default on a set of clothes or a lipstick," the CEO said.

Notably, Fundiin is the first and only such startup with no debt collection department. Instead, it invests in technology and data science solutions as the foundation of its risk control.

This pioneering operating model maximises the convenience, transparency and safety of the experience for Fundiin customers.

Fundiin now works with more than 600 retailers and major brands including Lotte Cinema, Pharmacity, Guardian and Kidsplaza, offering deferred payment to users across all 63 provinces and cities.

In 2022, Fundiin raised a 5 million USD Series A round co-led by ThinkZone Ventures and Trihill Capital, with continued backing from 1982 Ventures, Genesia Ventures, JAFCO Asia and Zone Startups Ventures.

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Source: TheLeader — theleader.vn. Republished to share knowledge with founders and investors in the HCM VIF ecosystem.