Financial Crime World

Kazakhstan’s Fintech Industry Thrives

Favorable Business Environment Drives Growth

Kazakhstan’s fintech industry is experiencing a surge in growth, driven by a combination of favorable business conditions, robust banking infrastructure, supportive government policies, and effective fintech regulations. According to a recent report by RISE Research, Kazakhstan’s MOST holding, and Fintech Consult international consulting company, the country’s tech-savvy population and strong account and internet access make it an attractive destination for foreign fintech investors and companies seeking growth opportunities.

The report highlights several key trends in Kazakhstan’s fintech market, including:

  • Rise of Digital Payments and E-Commerce: The country is seeing a significant increase in digital payments and e-commerce transactions.
  • Ecosystems and Super-Apps: Kazakhstan is witnessing the growth of fintech ecosystems and super-apps that offer a range of financial services to customers.
  • Digitization of SMEs: Small and medium-sized businesses (SMEs) are adopting digital payment solutions, driving financial institutions to improve their credit scoring models using non-traditional data.
  • Democratization of Capital Markets: The democratization of capital markets has become one of the key trends in Kazakhstan’s financial sector, with legislative changes increasing retail investors in the country.

Strong Account and Internet Access

Kazakhstan ranks first in the number of people who have a bank account, with 81 percent. The country also leads in digital payment usage, with 78 percent in 2021 compared to Uzbekistan’s 42 percent and 39 percent in the Kyrgyz Republic.

Cashless Transactions on the Rise

The report notes that the volume of cashless transactions has experienced a staggering growth from $5 billion in 2017 to $158 billion in 2022. Key technologies changing the payment landscape include:

  • Biometrics
  • Advanced Data Analytics
  • Instant Transfers
  • Customer Digital Consent Management
  • Open Banking
  • Central Bank Digital Currencies (CBDC)

Fintech Companies on the Rise

The report highlights the rise of fintech companies, with Kaspi bank being a pioneer in this area since 2014. The bank has 11.2 million monthly active users in the country with a population of 19.7 million.

Banking Applications as Access Points to Government Services

Banking applications are also being used as access points to government services, simplifying the process for citizens and benefiting banks and the government. For example, Kaspi.kz (Kaspi bank) and Homebank (HalykBank) banking applications offer access to multiple public services, such as tax payment, individual entrepreneur registration, and car sale and registration.

Regulatory Framework for Investors

The report notes that Kazakhstan has a classic fintech stakeholder setup, with two different jurisdictions operating under English Law and the AIFC providing numerous benefits. This regulatory framework offers a favorable environment for investors looking to enter the Kazakhstani market.