Escaping a cash-only culture

In May 2020, a video of a crying Vietnamese woman went viral. She was trembling tearfully, repeatedly thanking a man next to her. She had lost her bundle of cash sent from relatives to pay for her mother’s dialysis treatments and the young man had found the packet and returned it to her. Unknown to him, this small act of kindness likely allowed the woman to avoid months and perhaps years of financial hardship.

Among the many advances Vietnam has faced in the last two decades, the relatively rapid shift from cash-based to digital payments is one of the most recent. Though the government mandate was already in place, COVID-19 has propelled the process forward, creating the foundation for a vast digital ecosystem for Vietnamese consumers. With much of the infrastructure in place, where does healthcare fit in and how can we capitalize on this progress by creating innovative fintech solutions for low- and moderate-income people to access and pay for their healthcare?


The process of going digital

There is no doubt that investing in “critical digital infrastructure like information systems, connectivity, cybersecurity, and tools to collect and analyze data are fundamental to a digitally-enabled system,” a fact the Vietnam government knows well. Building on the National Financial Inclusion Strategy, The State Bank of Vietnam (SBV) governor highlighted non-cash payments, digital banking, and green banking as top three priorities for the industry from now until 2025. The country has also loosened regulatory restrictions around cashless payments and built up the technological infrastructure needed to create an ideal digital payment ecosystem. A plan for extending these services to small businesses and those in rural areas is now also in view.

In the last few years, Vietnam witnessed a surge in funding for fintech companies and startups, ranking second in terms of total investment for fintech in the region, with much of these investments going to payments companies. The number of fintech startups in Vietnam grew more than 179% between 2017 and 2020 with the payments sector representing 31% of all fintech startups. In addition, the total value of digital transactions in Vietnam increased 124% in the first quarter of 2020 compared to 2019.


Building on the digital foundation

In healthcare, a strong digital payments ecosystem can serve as a first step to unlocking new pathways for access to financial services to people who have traditionally been left out (the unbanked and underbanked). These populations are particularly vulnerable to the shocks of healthcare costs that are not sufficiently covered by social insurance (e.g. innovative medicines for cancer care). Outside of social insurance, most do not hold private insurance and do not have sufficient savings for a major health illness or event. This is a problem in a country, such as Vietnam, where out-of-pocket spending for health services remains high (41% of total health expenditure). In addition, about a third of the population borrows money – including for healthcare needs – from unofficial lenders who impose high interest rates, making it next to impossible for low- to moderate-income people to pay back these loans.

The Vietnamese government, in an effort to address these issues, has made it a priority to digitally-enable all healthcare systems in the country. According to SBV, more than 30 hospitals have introduced systems for electronic hospital fee payment. However, it is worth noting that this number has not changed since 2019, and the national goal of digitizing 50% of the hospitals in major cities by 2019 has not been reached. There have been many obstacles to implementation such as low rates of adoption and buy-in, connectivity troubles with banking software, and communication and compatibility issues between intermediary services and hospital information systems. Further regulatory advances – such as considering integrating the national ID system to sign up for digital banking services instead of requiring in-person signatures – should also be considered.  In addition, these services should be extended to rural areas and the benefits of adopting the cashless system adequately explained to businesses and consumers with low digital literacy.


The opportunities

With this changing digital culture, what are the opportunities for fintech and healthcare to come together to address the high out-of-pocket payments? A good place to start is by utilizing Vietnam’s growing digital infrastructure to develop new tools that provide access to financial services to underbanked and informal sector workers to help address their health needs. For example, can a fintech-enabled health savings accounts help a person set aside small amounts of money that can be put specifically towards these costs?

Second, what unique partnerships need to be made that integrate health and fintech services? Last year, MoMo and Viet Duc University Hospital signed an agreement to integrate MoMo’s payments platform onto the hospital’s payments system, allowing users to pay for their outpatient and inpatient healthcare services via the app’s e-wallet. By going cashless, Viet Duc aims to reduce wait times, simplify processes, and altogether eliminate the need for cash. Momo’s e-wallet users are ubiquitous and collaborations such as this one can allow even the unbanked to easily pay for their healthcare needs when and where they want.

Finally, in addition to payments, we look at how services like insurtech (such as Papaya), peer-to-peer lending, health savings accounts, and crowdfunding (like Betado) can take advantage of this movement towards digitization in hospitals. Can they extend the health system’s digital reach into rural areas and have a positive impact on out-of-pocket spending? The Fintech for Health program is exploring  these opportunities.


The road ahead

The progress made in 2020 uncovers how much ground there is still yet to cover in the area of fintech for health.  Within one lifetime, an emerging economy is shifting from  a cash-based society to taking a multi-sectoral, whole-of-government approach to implementing widespread digital payments. Through an increasingly digital Vietnam, we have an opportunity to leverage innovations in finance to solve for healthcare.  Partnerships between healthcare and fintech can help the country achieve its goal for  more accessible, affordable healthcare for those who need it most.