The COVID-19 pandemic is signficantly changing the landscape of the consumer credit market as consumers tend to tighten their budget and pay more attention to healthcare, environment and lifestyle as well as switching to online shopping.
According to Can Van Luc, a member of the National Financial and Monetary Advisory Council, financial companies will reshape their business strategies after the pandemic, depending on changes in consumers’ habits and behaviour.
Specifically, consumers tend to tighten their budget and pay more attention to healthcare, environment and healthy lifestyles. Digital technologies, e-commerce and online shopping are becoming popular in the operation of enterprises and consumption of residents.
“Consumer lending is gradually shifting from traditional methods to using technologies like consumer data, online marketing, online verification through big data, artificial intelligence and direct disbursement to customers’ accounts and electronic wallets,” he said.
A survey by FiinGroup found that the pandemic caused a decline of 25 per cent of the world’s consumer market in 2020, pushing up bad debts by 100 per cent and profits down by nearly 200 per cent.
Market research company Ipsos found that about 80 per cent of surveyed Vietnamese said that their incomes were negatively affected by the COVID-19 pandemic, with 41 per cent seeing a drop of more than 20 per cent. The pandemic also urged consumers to limit using cash and switch to electronic wallets and online payments.
The COVID-19 pandemic is also changing the landscape of the consumer finance market which urges financial companies to move towards consumer trends of cashless payment.
Nguyen Thanh Phuc, deputy director geneeral of FE Credit, said that as the pandemic was under control in Viet Nam, the borrowing demand was predicted to increase. However, the ability to repay was assessed to be lower due to the impact of the pandemic on incomes.
Phuc said that financial companies must be very cautious in evaluating customers.
He is also optimistic about the potential of the consumer market of Viet Nam in the long term, given the country’s anticipated economic growth.
Viet Nam was becoming an attractive destination for production in the global shift, opening job opportunities which would help improve incomes and promote consumer demand, he said.
Phuc expected Viet Nam’s consumer finance market would post stronger growth than other countries in the region with a population of nearly 100 million, 60 per cent of whom had low and medium incomes.
Luc said that the consumer finance market had large development potential with economic growth anticipated at 6.5-7 per cent per year in 2021-30 period and income growth at around six per cent per year by 2020.
The Government also aims to promote the healthy development of the consumer finance market to prevent black credit.
He urged financial companies to diversify products to meet demand.
The outstanding consumer credit was estimated to total VND1.8 quadrillion at the end of 2020, accounting for around 20 per cent of the total outstanding loans in the economy and 2.5 times higher than 2012. — VNS