In June 2022, Finhay completed the acquisition of Vina Securities Joint Stock Company (VNSC), becoming one of the first Fintech companies in Vietnam to own a securities company. One year after owning VNSC, the intelligent investment platform VNSC by Finhay was officially launched, marking a significant transformation for the 6-year-old startup in the finance market.
In an interview with us, Mr. Nghiem Xuan Huy – Chairman of VNSC by Finhay said that as a comprehensive financial institution, VNSC by Finhay aims to help investors approach investment products easily and equally, manage and increase assets in a sustainable manner, optimize resources and time.
What made a Fintech company like Finhay daringly acquire a securities company during a time of market volatility?
At that time, Finhay always wanted to own a securities company or a fund management company to provide investors with a reputable investment platform with high reliability. The $25 million fundraising deal of Finhay in 2022 helped the company have more resources to expand business and strengthen technology infrastructure after acquiring VNSC.
Owning a securities company asserts that we are not just a Fintech company but a comprehensive financial institution, applying technology to support customers in managing assets and providing financial brokerage services.
How did VNSC by Finhay adapt in the face of a difficult market and many securities companies suffering losses?
It may sound optimistic but I don’t find it difficult at all. On the contrary, the volatility in 2022 opened up an opportunity to acquire a securities company at a very reasonable price. Looking in the long term, the stock market in Vietnam still has a lot of potential and minor fluctuations in a big wave are quite normal in every market.
The number of securities trading accounts has exceeded the threshold of 7.3 million, with an estimated average of 3 accounts per person, which means there are about 2.5 million participants in the stock market. The stock market of other countries has been around for hundreds of years while the Vietnamese stock market is only about 24 years old, so there is still a very large room for growth.
After acquiring VNSC, how has Finhay changed?
Before the M&A deal, VNSC mainly focused on advisory and brokerage services. After being acquired by Finhay, the company provides a diverse range of financial products for individual investors, from stock trading to fund certificates. Our goal remains the same, which is to use technology to help Vietnamese people, especially professional investors, easily access and have equal investment products, thereby managing and increasing assets optimally in terms of resources and time.
Currently, we have more than 130,000 accounts, including 66,000 accounts that have stock depository numbers, and on average we open about 10,000 new accounts per month for the market.
In the market so far, many large securities companies focus on brokerage, investment banking, proprietary trading, etc. With the positioning as a young securities company, VNSC by Finhay needs to choose the appropriate segment, and we believe that the fund management segment is necessary for the long term.
What makes VNSC by Finhay decide to restructure into a digital securities model while it requires a large investment and long-term profit?
Being positioned as a digital securities company, we focus on customer portfolios rather than traditional brokerage models. In the long term, digital securities will be much more optimized than using human brokers. Investing in a technology system may require an investment of $1-2 million, although the quick return on investment may be difficult, but the goal of recovering the investment within 5-10 years is completely feasible.
With the current trading volume, securities companies can use humans to serve. But if the trading volume increases, such as when algorithmic trading is applied, without investing in a technology system, it will be difficult to meet the demand. Not to mention that the main customer base of VNSC by Finhay mainly consists of people with account balances from 20-500 million, they may not trade a large amount of money but place a lot of orders. If the model is not digitized, it will be difficult to serve customers.
Without using brokers, why does VNSC by Finhay target “small retail” investors, while the majority on the market still prefer to be “donated stock”?
The customer portfolio preferences trading and “donating stocks” is just a part of it, not to mention that the market is not just about the “three-letter” story – (stock code – PV) because it is not “healthy”. With the possibility of an explosive increase in the number of investors in the future, we need to professionalize asset management, and professionalism should not always revolve around today’s stock code or how it will increase or decrease tomorrow, because no one knows. Instead, investors should focus on the goal of accumulating assets through various products such as bank deposits, bonds, and fund certificates, which will be more standardized.
The market talks about the story of 3 million stock investors, but we look at a broader story of there can be 12 million people participating in the market in the future. With the prospect of the market continuing to expand in the long term, VNSC focuses on the 12 million people, among whom there are many investors with investment needs but lack knowledge and time to monitor the market. That’s why we focus on the professional investor group.
What products does VNSC by Finhay have to pioneer the digital securities model?
Our products focus heavily on technology to optimize user experience. AI will be one of the key technologies to help VNSC by Finhay overcome the difficulties and barriers of professional investors during their working hours and investment activities.
Among them, AI Speed Reporter is a feature that has the advantage of searching, synthesizing, and transmitting the latest information within 5 minutes about the stocks that investors are following/caring about, at the same time providing an assessment of the impact of that news on the stocks. Thanks to this, investors have more important information to immediately take appropriate actions with their investments without spending a lot of time searching, reading, and evaluating information on the internet.
In addition, the Schedule Investment Plan (SIP) feature – a tool that supports automatic investments in fund certificates helps investors proactively establish investment strategies such as automatic dollar-cost averaging (DCA) according to specific schedules, without spending time monitoring.
This platform also provides a simple investment experience with intuitive tools and basic operations such as depositing – withdrawing funds, placing orders… completed in less than 1 minute.
Other securities companies in the market are also constantly developing technology, how does VNSC by Finhay compete?
Other securities companies are also pursuing a digital strategy, but for VNSC by Finhay, we have the gene of applying technology, and that is an invisible advantage in coordinating work together, leading to results such as continuous and very fast update frequency..
In addition, technology is only a part and there are many other factors that decide. Because technology is very easy to build and no one owns exclusive rights, other units in the market will have similar technology.
A more important factor than technology is distribution channels. By following the digital securities model, it will be much easier for VNSC by Finhay to focus on the young customer portfolio compared to using brokers to attract customers.
The “zero fee” race is increasingly heating up in the market, does VNSC have plans to implement it?
Not at the moment. Because the company focuses on the remaining customer base with account balances of tens to hundreds of million VND – this is the customer base that many brokers are neglecting. Based on the current behavior that we capture and analyze, the transaction fee is not a major issue for those investors, so the company will not go in the direction of positioning itself as a fee-free securities company.
Targeting asset management, but the lack of new listed companies in the market is a challenge for companies like Finhay because the basket of goods cannot be diversified?
In terms of financial commodities, most funds invest in VN30, VNFinlead. Currently, many funds are interested in real estate investment trust funds (REITs), commodity trading regulated by the Ministry of Industry and Trade, … However, these products will be more professional and better if they go through a fund. Although there is a lack of commodity diversity in the market in general, I believe that the commodity market will soon be supplemented.
Digital securities usually need to come with an ecosystem, Momo has an e-wallet, DNSE integrates with Zalopay to allow investors to trade on e-wallets. Does VNSC have plans to build such an ecosystem?
The company still works with banks, fund managers, but the possibility of deploying on e-wallets is unlikely. VNSC is going on the path of expanding partnerships with fund management companies and securities companies to exploit and increase value for customers. However, how to approach customers and manage operations still needs time for research.
In the market, there are more than 49 banks, we focus more on banks that do not have a “backyard” as securities companies. VNSC is also one of the few securities companies that remain neutral, avoiding conflicts of interest, specifically, we distribute all fund certificates on the market.
Currently, VNSC focuses on the internal ecosystem with a community of over 200,000 members participating in the Facebook Group, and this is a loyal customer base from the moment of establishment to the present. Our community is supportive in investment and tightly controls content to avoid “tips” like many other groups.
As an agent for distributing fund certificates, profitability is very thin, while VNSC does not aim to be a broker or proprietary trader, how can the company grow its profits?
In the short term, profitability will depend on diversifying investment products. In addition to continuous customer transactions that bring good revenue to the company, VNSC also focuses on bonds and “hunting IPOs”, most recently being the official distribution channel for an IPO deal of DNSE.
In fact, I see a “pain point” in the stock market is that many professional investors find it very difficult to buy shares of companies preparing to list, and usually have to ask for OTC purchases. Brokers usually only guide their relatives or customers with very large accounts, so where do small retail investors from 20-100 million go? With the desire to make IPO shares transparent and expand the opportunity for customers to buy IPO shares in the early stage of a company, VNSC by Finhay created an “IPO hunting” section to help customers have the opportunity to buy shares early on. Our task is to work with many securities companies in the market to obtain distribution shares for customers. It is also a way to diversify financial products for customers and increase revenue for the company.
What is your assessment of the stock market’s development in 2024? How does it impact the business operations of VNSC by Finhay?
The stock market is currently undervalued with a P/E ratio of about 13 times. Short-term turbulence is very normal and looking at the long-term, the market still has a lot of potential. The bright spot of the market recently is that the money flow remains positive at around VND 13-14 trillion, while before Covid, it was only about 8,000 – 10,000 billion VND.
However, looking to 2024, there are still many unpredictable variables when the actions of the Fed are not yet clear. If the Fed “reverses course” and continues to maintain a high-interest rate, the stock market in 2024 is likely to continue to operate as in 2023. However, there is still a possibility that the Fed will turn around and lower interest rates by 0.5%/phase, which can lead to a strong boom in the stock market.
In addition, corporate profits may still not improve significantly as exports have yet to truly recover, gold cards for fisheries businesses have not been approved, … All of these factors affect business operations.
VNSC’s strategy this year is to be cautious in operations but always ready for growth. In that context, VNSC aims to increase revenue in 2024 by 10 times.
