Financial Crime World

Fintech Market Faces Challenges in Central Asia

Introduction

The Fintech market is growing rapidly around the world, but it faces significant challenges in Central Asia. According to a recent report by KPMG, countries such as Uzbekistan, Tajikistan, and Kyrgyzstan are lagging behind Kazakhstan in terms of FinTech development.

Challenges Facing Fintech Development

  • Low internet penetration
  • Small markets with low maturity and competition
  • Unstructured government and regulatory strategy on digital financial services
  • Lack of targeted and effective promotion of digital channels by financial institutions
  • Cybersecurity risks and currency risks are significant concerns for FinTech companies operating in the region
  • Lack of a clear Fintech development strategy and broader institutional support for FinTech

Kazakhstan’s Progress

Kazakhstan has made significant progress in Fintech development, with the government introducing laws on digital infrastructure and creating a regulatory sandbox to promote innovation. However, even Kazakhstan faces challenges such as:

  • Poor infrastructure
  • Monopoly of state-owned telecom providers
  • Uncertain business environment for new players
  • Limited access to finance and investments

Statistics and Tracking Progress

Each country lacks accurate statistics on digitalization and online transactions, making it difficult to track progress and identify areas for improvement.

Potential for Fintech Growth

Despite the challenges, experts believe that Fintech has the potential to transform the financial landscape in Central Asia. Key drivers of FinTech growth in the region include:

  • Increasing internet penetration
  • Liberalization of new electronic features
  • Development of regulatory laws on digital infrastructure

Overcoming Challenges

To overcome the challenges facing Fintech development in Central Asia, governments and financial institutions must work together to create a supportive ecosystem for innovation. This includes:

  • Introducing policies and regulations that promote digital literacy
  • Attracting investors from abroad
  • Executing statistical reports to track progress

Conclusion

The Fintech market faces significant challenges in Central Asia, but with the right support and strategy, it has the potential to transform the financial landscape in the region.

Contact Information

KPMG Tax and Advisory LLC Nur-Sultan, Kazakhstan Tel: +7 7172 591415 Fax: +7 7172 591417 Email: company@kpmg.kz

Authors

  • Bolat Mynbayev, Head of Strategy & Operations
  • Konstantin Aushev, Head of IT and Digital Advisory
  • Anastassiya Sembina, Consultant, Strategy & Operations

Source

KPMG Tax and Advisory LLC, “Fintech in Europe and Central Asia: Maximizing Benefits and Managing Risks” (February 2020)