MOMO FROM ZERO TO HERO

Introduction

MoMo e-wallet is developed by M Service - a Vietnamese FinTech company founded by 4 Vietnamese people After having been struggling and lacking resources for about the first 7 years, MoMo finally became one of the most successful and commonly-used ewallets in Vietnam until now with over 30 million users and 50 thousand financial partners. In 2019, MoMo was honorably the only Vietnamese representative in the top 50 FinTech innovators around the world listed by FinTech100

Among a large number of e-wallets in Vietnam, many people wonder how MoMo could develop strongly as it was despite its initial struggle during the first 7-year period Momo’s journey started with zero users and recorded 3 times changing its business model before landing its Unicorn title. Until today, Momo prides itself on being the first “homemade” E-wallet that is specially tailored for Vietnamese users However, the competition has never been restless for MoMo, considering other big players with inherent competitive advantages So what support the success of this billion-dollars startup? Will MoMo be able to maintain its leading position? This case contributes to unveiling these questions by providing a dive into the company profile and its future intention

Industry Background

What is FinTech?

FinTech stands for Financial Technology, which is commonly applied to all companies that use the internet, mobile phones, cloud computing technology, and open-source software for the purpose of improving the efficiency of the delivery and application of financial activities. FinTech consists of 4 main modus operandi [1]:

FinTechs as new entrants, start-ups, and attackers (such as SoFi, TransferWise, LendingClub): seeks to penetrate financial services using a new technological approach, often targeting niche markets The challenge for this group is the customer acquisition costs.

FinTechs as incumbent financial institutions (such as Wells Fargo, Ping An): use technology to improve performance, respond to competitive threats and capture investment and cooperation opportunities

FinTechs as ecosystems orchestrated by major technology companies to enhance existing platforms and capitalize on existing user data or relationships (eg, AliPay supports providing payment services for Alibaba's e-commerce activities)

FinTechs as infrastructure providers to support the digitization and improve risk management and customer experience of technology infrastructures Target customers are usually financial and banking institutions. Example: FNZ, Marqeta, Onfido

FinTech landscape in Vietnam

Vietnam is experiencing a boom in digital payments and e-commerce Currently, Vietnam is ranked third in ASEAN in terms of FinTech financing, attracting over 10% of the region's total FinTech investment [2]. However, the number of FinTech companies in Vietnam is still significantly lower than in other ASEAN markets like Singapore, Indonesia, and Malaysia. Vietnam currently houses nearly 200 FinTech firms [3], increasing fivefold compared to 2015 These FinTech firms offer a broad range of services including digital payments, wealth management, P2P lending, blockchain-based solutions, etc In terms of transaction value, the Vietnamese FinTech market also showed an impressive increase, from $44 billion in 2017 to $144 billion in 2021 [4]

Market structure

E-wallet and digital payment activities account for the largest proportion (31%) in FinTech services [6] This is due to the large population, Government support toward a cashless economy, and high mobile usage rate in Vietnam

E-wallet market

There are 43 organizations that are not banks that have been licensed by the State Bank (2021) to provide intermediary payment services; of which over 40 have provided ewallet services to the market. On the customers’ side, in the context of the Covid-19 epidemic, Vietnamese consumers are gradually choosing to use e-wallets as well as contactless payments and payments with QR codes. Among these, 57% of consumers [7] have up to three e-wallet apps on their phones, 55% of consumers prefer an app that can make all transactions [8] With a significantly high proportion of the unbanked and underbanked, Vietnam remains largely an untapped market and a promising land for FinTech investors

Competitive landscape

The E-wallet market in Vietnam is absolutely fierce, yet starts witnessing the first signs of market consolidation The playground is currently dominated by Big3 players: Momo, ZaloPay and ShopeePay with their unique competitive advantage.

Momo is considered the pioneer with their vision of a cashless economy in Vietnam With their strong brand presence especially among young users, MoMo is the E-wallet with the highest percentage of regular users (61%) [9] As an independent e-wallet, Momo’s success comes from its superior delivery of key functions, such as fast transactions and a wide acceptance network Earlier in 2021, Momo witnessed another milestone when they officially became the 4th Unicorn startup in Vietnam after their successful fundraising in Series E.

ZaloPay:

As for ZaloPay, this e-wallet’s aggressive acquisition strategy by offering a myriad of promotions has clearly been effective, as most users turn to ZaloPay for its convenient payment services (fast, accepted at many retailers) and promotions With its inherent users from Zalo - the leading messaging platform in Vietnam, Zalopay is also a promising candidate competing in the Ewallet market. By integrating it directly on Zalo, users can benefit from its in-app payment and transaction feature