F88, which operates approximately 1,000 pawn shop branches in Vietnam, plans to list its shares on the Ho Chi Minh Stock Exchange within the year. F88 is an "innovator" in the industry, having dispelled the "shady" image that pawn shops in Vietnam were associated with, and successfully developed a large-scale chain in an industry that was predominantly family-run. In Southeast Asia, significant transformations are progressing in the pawn shop industry across a wide range of countries beyond Vietnam. The Hong Kong magazine Yazhou Zhoukan reported.

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F88 was founded in 2013. Its founder, Phung Anh Tuan, had used a pawn shop about 10 years earlier. At that time, Tuan was struggling with financial difficulties for his own cybersecurity startup. Bank loans were "zero possibility." So, he decided to use a pawn shop, mortgaging all his household belongings. However, at the pawn shop he visited, there was a bare-chested, tattooed employee. The entire store had a very rough atmosphere, completely lacking the feel of a financial service business. This "very bad impression" at the pawn shop later led to the founding of F88.

Tuan researched trends in the pawn shop industry abroad. He then made F88's core business lending against motorcycles and automobiles as collateral. The loan period averages 5-8 months, and borrowers can continue to use their vehicles. Borrowers deposit only the vehicle registration documents with the store, and the company uses GPS to monitor the collateralized vehicles, checking the situation and taking necessary measures if there is abnormal movement.

The system of lending money by taking only vehicle registration documents as collateral had long been widely practiced in countries such as the United States, Thailand, and the Philippines. However, there was a high risk that "if the actual item was hidden or resold somewhere, it could not be recovered." By introducing GPS monitoring, Tuan dramatically reduced this risk, enabling immediate response if there was abnormal vehicle movement.

Furthermore, lending with vehicles as collateral was an extremely promising business model in Vietnam, where the penetration rate of motorcycles and other vehicles is very high. Although there are 70 million motorcycles and over 5 million automobiles nationwide in Vietnam, F88's service scope covers less than 1.5% of the motorcycle market. This means that F88 still has significant room for development.

F88 aims to expand its business beyond its core lending operations and become a comprehensive financial services company. More specifically, it has begun partnerships with major Vietnamese financial institution Military Bank (MB Bank) and Malaysian integrated financial giant CIMB Group in areas such as vehicle insurance, medical insurance, payment processing for utility bills and communication fees, and remittance services. Currently, F88 is also considering offering unsecured loans through its cooperation partners.

In Vietnam, there are a total of 23,000 traditional individually-owned pawn shops, but their number continues to decrease. On the other hand, the number of chain stores, which was little over 300 in 2019, has increased to nearly 1,300 to date. Of these, F88 accounts for approximately 1,000 stores, and Nguoi Ban Vang operates over 150 stores.

In many Southeast Asian countries such as Thailand, Singapore, the Philippines, Indonesia, and Malaysia, pawn shops have become deeply ingrained in society as "accessible and reliable financial institutions for the common people." In all these countries, there is a trend for chain development by well-organized companies to grow from a situation where individually-owned, family-run stores are predominant. Furthermore, in countries like Indonesia and Malaysia, business models conforming to Islamic teachings are observed, indicating the introduction of operational methods tailored to each country's specific conditions. According to Cognitive Market Research, a global market research company headquartered in Chicago, USA, the size of the Southeast Asian pawn shop market is expected to be nearly $1 billion (approximately 160 billion JPY) in 2025, and then grow at an annual average of about 4% to reach $1.3 billion (approximately 200 billion JPY) by 2033. (Translation/Editing by Kisaragi Hayato)