UK-Vietnam fintech collaboration aims to bridge US$90bn trade finance gap

In a concerted effort to narrow Vietnam’s staggering US$90bn trade finance gap, the United Kingdom is backing a national trade finance registry and supporting fintech innovations that could significantly expand credit access for the country’s small and medium-sized enterprises (SMEs). These moves are part of a broader strategy to enhance transparency, streamline documentation processes, and foster growth in Vietnam’s trade sector.

The initiative was unveiled during a recent event in Ho Chi Minh City, where Alexandra Smith, the British Consul General, emphasized the potential of this registry to transform the trade finance landscape. The new system is expected to facilitate improved data flows and better risk management, while simultaneously reducing the paperwork burden that currently hampers SMEs involved in international trade.

Despite accounting for 60 per cent of the country’s trade financing, Vietnam’s five largest banks still rely heavily on manual documentation and outdated verification methods. Recognising this inefficiency, British fintech firms are now collaborating with these banks to introduce digital solutions aimed at reducing fraud and increasing trust among SME clients.

However, a significant challenge remains: many Vietnamese SMEs are still unaware that they can obtain financing for cross-border trade. Complex loan application procedures and stringent collateral requirements discourage many entrepreneurs from seeking financial support. Reports from the International Finance Corporation (IFC) and the World Trade Organisation (WTO) highlight that about 12 per cent of trade finance applications in Vietnam are rejected—primarily from SMEs. Closing this gap could increase the country’s trade volume by up to 9 per cent, potentially unlocking US$55bn in annual merchandise trade.

Vietnam’s business environment is dominated by SMEs, which make up 98 per cent of the nation’s 940,000 active enterprises, according to the Ministry of Planning and Investment. These enterprises are a crucial part of the economy, yet they face some of the most significant barriers to financial access in the region. Vietnam alone accounts for over 25 per cent of the ASEAN bloc’s total US$350–US$400bn trade finance shortfall.

To complement the registry, the UK is also supporting the development of a regulatory sandbox for fintech innovations. This controlled environment will allow new technologies to be tested in collaboration with regulators before full-scale implementation. Focus areas include credit scoring tools tailored for the underbanked, secure data-sharing protocols between banks and suppliers, and peer-to-peer lending platforms. Smith underscored the importance of such initiatives, noting that regulation must evolve hand-in-hand with innovation to support a robust fintech ecosystem.

In line with these efforts, the UK is channeling $33.7m (£25m) through an ASEAN economic integration programme designed to enhance financial resilience and access across member nations, including Vietnam.

With the financial services sector currently contributing only 4.9 per cent to Vietnam’s GDP, boosting this figure is seen as essential for sustaining the country’s economic momentum. Stronger UK-Vietnam cooperation in trade and finance may play a pivotal role in this effort. Bilateral trade between the two countries has more than doubled over the past decade, reaching US$8.1bn (£6bn) last year.

UK Export Finance is also stepping in to back cross-border transactions, particularly in infrastructure and large-scale procurement—key sectors for Vietnam’s long-term development. According to Smith, this support will help Vietnam weather global trade disruptions and capitalize on new opportunities.

Vietnam continues to be recognized as a reliable trade partner, even in uncertain times. The UK’s deepening engagement with Vietnam reflects a broader commitment to promoting free, open, and equitable trade in the region.