For many years, Vietnam has always been considered one of the most attractive consumer finance markets in Southeast Asia. The population size of over 100 million people, the young population structure, the per capita income are continuously improving along with the accelerating speed of digitalization, which has created favorable conditions for the development of consumer credit.
Unlike many countries where consumer lending can be carried out by relatively diverse non-bank financial companies, Vietnamese law adopts a stricter approach.
It is not difficult to see the attraction of this market through the presence of a series of international financial institutions. From Japan, South Korea to Thailand, many large financial corporations have sought to have a presence in Vietnam through investment deals or mergers and acquisitions in the field of consumer finance.
However, if we look at the number of successful deals over the past ten years, we can see a remarkable fact: the number of investors who want to participate in the market is much larger than the number of investors who actually enter the market.
The reason lies in the fact that consumer unsecured lending activities in Vietnam are not only a conditional business line but also a field subject to special management by the State. Market access is therefore subject to the simultaneous regulation of investment law, banking law, competition law, foreign exchange law and increasingly regulations on personal data.
Not all businesses are allowed to lend
Unlike many countries where consumer lending can be carried out by relatively diverse non-bank financial companies, Vietnamese law adopts a stricter approach.
According to the amended Law on Credit Institutions 2024, credit extension activities are banking activities and are only carried out by credit institutions licensed by the State Bank.
This means that a foreign investor cannot simply establish a foreign-invested enterprise and then register the "consumer lending" industry. Even fintech models are not allowed to directly carry out credit extension activities without proper licenses.
This is the first barrier that many technology investors or foreign investment funds often encounter when accessing the Vietnamese market.
In fact, many foreign businesses assess that the demand for consumer credit in Vietnam is still very large and think that market participation will be similar to the provision of financial services in other countries. However, after the process of legal research, many investors realize that market access in this area is significantly limited.
Establishing a new consumer finance company: legally feasible but difficult in practice
In principle, Vietnamese law does not completely prohibit foreign investors from establishing foreign-invested credit institutions.
However, the establishment of a new consumer finance company is in fact a completely different story.
In addition to the conditions of charter capital, investors must also prove their financial capacity, experience in international operations, risk management system, internal control ability and conformity with the development orientation of Vietnam's credit institution system. More importantly, the licensing is not mechanical.
The State Bank has the right to assess the impact of the establishment of a new credit institution on the stability of the financial system and the objectives of monetary administration.
In the context that the regulator is prioritizing the control of consumer credit risks and improving the quality of operations of the existing credit institution system, the possibility of the emergence of more new consumer finance companies is not large. This makes the majority of foreign investors choose the M&A route.
Why has M&A become the "main door" to enter the market?
If you look at the largest transactions in Vietnam's consumer finance industry in recent years, it can be seen that almost all of them are carried out in the form of mergers and acquisitions.
In 2021, Japan's SMBC Consumer Finance spent about $1.4 billion to buy 49% of FE Credit's charter capital. In 2022, Thailand's Krungsri completed the acquisition of 100% of SHB Finance. In 2025, Home Credit Vietnam will be transferred to Siam Commercial Bank of Thailand[1].
These deals reflect an important reality.
For foreign investors, a license to operate in the field of consumer finance is sometimes more valuable than the tangible assets of the target business.
Through M&A, investors can immediately access the customer system, technology platform, credit data, sales network and most importantly, the operating license that has been issued.
However, M&A in this area is not an easy path.
In addition to the usual investment procedures, the transaction must also pass the appraisal process of the State Bank and in some cases must carry out the procedures for controlling economic concentration.
If in the past the most important asset of a consumer finance company was the sales network, now customer data is the most valuable asset.
Foreign ownership limits are still a big problem
One of the issues that foreign investors are most concerned about is the maximum ownership rate allowed to be held in Vietnamese credit institutions.
According to the current legal framework, the ownership of capital by foreign investors in Vietnamese credit institutions is strictly controlled.
Although the Government has issued Decree 69/2025/ND-CP with some adjustments in the direction of more flexibility to support the restructuring of the banking system, the general principle is still to control the foreign ownership ratio to ensure financial security and stability of the monetary system.
For many international financial corporations, especially those that want to consolidate their operations and adopt a global governance model, the inability to possess an absolute control ratio can significantly reduce the attractiveness of the investment.
This is one of the reasons why the process of negotiating consumer finance deals often takes longer than conventional M&A transactions.
Customer data: the most valuable asset, but also the most sensitive
If in the past the most important asset of a consumer finance company was the sales network, now customer data is the most valuable asset.
Consumer finance companies are holding huge volumes of data on customers' identities, incomes, credit history, consumption behavior, and payment habits.
For foreign investors, this is both an opportunity and a risk.
Since the Data Law 2024, the Personal Data Protection Law 2025 and its guiding documents came into force, data mining in consumer finance M&A transactions has become an independent legal issue that needs to be considered separately.
Investors not only need to evaluate the quality of data, but also assess the legality of its collection, processing, sharing, and transfer.
In many international transactions today, the issue of personal data has even become an important due diligence content as well as assessing the quality of credit portfolios.
Risks that investors often underestimate
Experience from many transactions in the field of consumer finance shows that foreign investors often focus on outstanding debt growth and market share without fully assessing legal risks. (1) The first risk is the quality of the loan portfolio. (2) The second risk is the ability to comply with regulations on debt collection. (3) The third risk is the processing of personal data and credit data. (4) The fourth risk is the increasingly stringent requirements for the prevention of money laundering, terrorist financing and customer verification.
In many cases, these risks are the factors that determine the real value of the target business, not the size of outstanding loans or the number of customers.
Not only a legal story but also a policy story
From the perspective of state management, the control of conditions for entering the consumer finance market is not merely aimed at restricting foreign investors. The larger goal is to ensure the safety of the financial system and protect consumers.
Unlike many other business sectors, the risks arising in credit activities are likely to spread to the entire banking system and have a direct impact on macroeconomic stability. Therefore, regulators often tend to prioritize the quality of investors over the number of investors. This is also why the due diligence process in the consumer finance sector is often significantly longer and more rigorous than in many other industries.
The consumer mortgage lending market in Vietnam remains one of the most attractive markets in the region for foreign investors. However, that attraction comes with significant barriers to entry.
Practice in recent years shows that the most feasible way for foreign investors to enter the market is not to establish a new consumer finance company but through M&A transactions or strategic cooperation with existing credit institutions. Even if you choose this route, you still have to pass multiple layers of conditions related to foreign ownership, regulatory approvals, risk management, personal data, and money laundering prevention. In that context, entering the consumer finance market in Vietnam is no longer just an investment decision. This is essentially a combination of business strategy, compliance and adaptability to one of the most highly regulated sectors of the economy. Successful investors will not be the ones with the most capital, but the ones who best understand the legal limitations of the market they want to participate in.
Lawyer Nguyen Van Phuc
HM&P Law Firm
