Representatives from Tala stated that they are the first US fintech startup to establish a legal entity in Vietnam. Previously, US businesses and investment funds typically engaged in the fintech market indirectly through venture capital deals, rather than maintaining a direct presence.
Tala has raised over 500 million USD from investment funds such as Google Ventures, PayPal Venture, Notable Capital, and IVP. Vietnam marks Tala's 8th market, following its operations in other regions including the US, Kenya, Mexico, and the Philippines.
According to Steven Truong, general director of Tala Vietnam, the parent company plans to inject 5 million USD in the initial phase to build technology infrastructure and local personnel. He assesses the market size as substantial due to the high rate of bank account ownership among the population, yet limited access to formal credit, which often leads to predatory lending.
In its previous markets, Tala operated as a consumer finance company, focusing on the low-income segment. Its primary product involved small loans, typically around 100 USD, with an average term of 30 days. Last year, the company disbursed a total of 1,7 billion USD and recorded revenues exceeding 370 million USD.
Upon entering Vietnam, Tala will function as a technology service provider, not a credit institution or finance company. All initial lending services will be facilitated through its partner bank, CIMB.
The two parties anticipate the first loan disbursement to occur in the first quarter of this year. Loans will have a maximum limit of 30 million VND and a duration of 61 days. CIMB is providing a total credit limit of 100 million USD over at least three years for borrowers using the Tala application.
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Users interact with the Tala application. Photo: Tala |
According to the head of Tala Vietnam, a significant difference compared to other consumer loan products on the market is that borrowers can settle their loans at any time without incurring early repayment fees. They benefit from a debt ceiling, meaning they know the maximum principal and interest they will have to pay.
"We want to gradually change the reality where borrowers face overwhelming debt burdens, sometimes with interest many times the original principal", Steven Truong said.
Vietnam currently has around 200 fintech companies, primarily operating within the banking sector. Since the middle of last year, the government issued a decree on a controlled testing mechanism, or sandbox, for fintech solutions in banking, such as peer-to-peer lending, credit scoring, and data sharing via open application programming interfaces.
The State Bank of Vietnam has indicated its readiness to collaborate with fintech companies to foster innovation and financial inclusion in the country's banking sector, while simultaneously ensuring effective risk control.
Phuong Dong
