An Overview of Kazakhstan's Fintech Ecosystem

Instant money transfer, pay bills from your smartphone, pay loans online in 5 minutes, and mortgage bills online in 20. In Kazakhstan, the largest country in Central Asia, this is no surprise to anyone. Every month, we have a new mobile wallet, credit platform, payment solution, financial literacy service, neobank, or blockchain project.

The fintech market’s bar is set by giant Kaspi.kz — the second largest bank in Kazakhstan by assets — which has developed into a fintech, marketplace, and payment company. Kaspi’s market capitalization reached $18 billion this year, and more than 12 million people use the application — this is 90% of the country's adults.

I have 30 years of experience in IT entrepreneurship and 9 years in the venture business. Through my involvement as a business angel and startup consultant, I saw the rise of fintech happening before my eyes.

Here is an overview of Kazakhstan's fintech ecosystem, reflecting all global fintech trends.

How Kazakhstan Became an Advanced Digital State

The boom of fintech startups in Kazakhstan followed the state's digital reform, which began over a decade ago. The main catalyst for the development of the industry was the law that opened up access to state registers. Entrepreneurs have the opportunity to compile ratings, conduct scoring and other analyses, and, based on this, provide residents of Kazakhstan with various fintech services.

Further events unfolded rapidly. The country has launched eGov — an online platform through which all government services are run. Then, the Astana International Financial Center was opened, where all disputes were resolved by English law with tax benefits. We also built Astana Hub, the largest technopark in Central Asia, where there are full-scale opportunities for the creation and growth of startups: from accelerators to grants. Finally, in 2022, digital documents in Kazakhstan were equal to paper documents.

The fintech infrastructure was developing at the same time. Now, 92.3% of residents have access to the Internet, 91% of residents over 15 years old use a cell phone, and the share of non-cash transactions has grown to 86.2%.

All these factors have spawned an ocean of fintech opportunities. What looked like science fiction ten years ago has become a reality. Now, I travel around Kazakhstan with no paper documents and no cash. At the bank and airport, I show my ID on my smartphone, and I can make contactless payments for any purchase. Almost everything in Kazakhstan can be bought in installments; I recently learned that you can even drink installmentally in our bars.

Fintech Trends in Kazakhstan

Last year, RISE Research, MOST Venture Fund, and Fintech Consult presented a study on Fintech in Kazakhstan. It showed that Kazakhstan's fintech market is keeping up with global trends. Here are 9 key trends in our fintech industry:

1. Growth of digital payments and e-commerce. In 2022, the volume of non-cash transactions increased by a quarter compared to 2021, amounting to $158 billion. Several factors influenced this: One of them was the launch of a biometric identification system to recognize bank customers by face. It can be used to open an account remotely, order a card issue, or apply for a loan. The launch of instant payment systems on cell phone numbers also played a role.

   
   

2. Development of ecosystem services and super applications. For example, the Kaspi application offers about 10,000 services, from online payments, insurance and investments to booking an airplane ticket or a hotel room. Other banks in the country are following Kaspi’s footsteps.

   
   

3. Access to government services through banking applications. On banking applications in Kazakhstan, you can: obtain marriage, divorce, and birth certificates, file tax returns, view the history of a car’s purchases and sales, register individual entrepreneurship, and do much more.

   
   

4. Development of a Central Bank Digital Currency (CBDC), DeFi, and digital assets. The digital tenge will be issued in token form, and payment options will include NFC, QR codes, biometrics, and offline methods. Now, Kazakhstan is testing the digital tenge and is developing rules for centralized crypto exchanges concurrently.

   
   

5. Launch of BNPL (Buy now, pay later) service. Instead of paying at once, this tool allows you to distribute the balance of a purchase in equal installments over a certain period. The main difference between BNPL and bank installments is that processing is faster, and there is no need to sign a loan agreement.

   
   

6. Development of neobanking. The first neobank with digital cards in Kazakhstan appeared in 2021. Two years later, there were four of them.

   
   

7. Non-banking support for SMEs. In October 2023, more than 2.2 million SME companies were registered in Kazakhstan. This motivated the emergence of online services for accounting, invoicing, legal support, and so on.

   
   

8. Democratization of capital markets. In 2020, banks and other financial organizations in Kazakhstan received the right to provide brokerage services for retail investors. Two years later, the number of retail investors' bank accounts exceeded 580 thousand.

   
   

9. Growth in the number of fintech startups and investors. In 2020, Kazakhstan had a population of 20 million people and more than 150 fintech services. Now, this number has increased. In 2023, fintech accounted for 40% of all venture deals, totaling over $80 million.

Most Promising Projects

I am excited about fintech development in Kazakhstan and investing in projects that interest me. I will name a few of our startups that I believe have the potential to conquer global markets.

One Vision. The service helps accept various online payments. For example, cards, QR codes, tokens, and also provides credit and installment services. At the 2021 Investment Readiness Accelerator, the startup was valued at $1 million and raised $100K.

Prosper Pay. With this service, employees of Kazakh companies can track how much they have earned as of the current date, and withdraw the advance at any time by paying a commission. On payday, the employee receives all the money earned, except money withdrawn through the service.

In 2023, the startup received $250,000 from Kazakhstani business angels at a total project valuation of $3 million.

IKapitalist. A licensed investment and lending platform that enables Kazakhstanis to finance medium and small businesses directly, earning up to 20% per annum. In turn, companies can get up to $5 million in financing per deal, without going public or to a bank. On the platform today, more than 1,000 investors have concluded more than 1,000 deals.

Solva. The service provides collateral-free microloans for small and medium-sized businesses in Kazakhstan. In 2023, the startup was named “Fintech of the Year” and announced a $20 million investment. It has 1 million users.

Tayyab. A digital Islamic bank that provides classical banking services in compliance with Shariah norms and principles For example, it considers regular charitable payments and prayer schedules. Works in the Kazakhstan, Uzbekistan, Turkey, and UAE markets.

Bueno.Money. The startup operates in Singapore and offers a service akin to bank factoring. Upon closing a deal, sellers get paid immediately, eliminating business cash flow issues. On the other hand, buyers can pay for deals in installments. Bueno.Money earns on commissions; the transaction is completed online in 30 seconds.

In early summer 2022, the startup had a $4.5 million valuation and received $500k from Singaporean angel funds Iterative.vc and XANetwork.co. In 2023, $10 million worth of transactions went through Bueno.Money, with an average check of $10k.

Rapid Growth of the Industry Will Continue

Against the backdrop of the government's digitalization reform, fintech in Kazakhstan began to develop rapidly. Startups quickly realized the benefits of open government registries, eGov, and widespread Internet and mobile communications. Using their capabilities, they offer dozens of different financial services for b2c and b2b. As a result, Kazakhstan has become the main fintech hub of Central Asia in just a few years.

While projects initially offered standard solutions for the local market, they soon picked up global trends: new payment services, various types of installments and deferred payments, neobanking, blockchain, and others. Now, there are examples of Kazakhstani startups that create a globally competitive product, set trends in the industry, and successfully conquer international markets.

Fintech is leading in Kazakhstan’s venture capital investments, and I do not doubt that the industry will offer many more advanced solutions to the global market.