Kazakhstan’s financial technology sector is booming

Kazakhstan is becoming a leader in the cashless transactions market thanks to strong competition and a favorable regulatory environment.

The number of fintech startups in Kazakhstan has quadrupled over the past five years, according to a major new study conducted by RISE Research in partnership with the National Payment Corporation of Kazakhstan, Mastercard and Tarlan Payments.

The study also reveals that the Central Asian country is now a regional leader in digital finance, with the share of cashless payments reaching 89 percent in May this year.

Indeed, as Binur Zhalenov, president of the National Payment Corporation of Kazakhstan, claims, the country is a world leader in the development of cashless transactions.

“Competition drives the market to improve services and introduce innovations,” he says. “Transparent ‘rules of the game’ and equal access to digital financial infrastructure, overseen by the National Payment Corporation of Kazakhstan, are the foundation for supporting this competitive environment.

“We intend to continue to support and develop innovative solutions to provide end consumers with the opportunity to benefit from better, more economical and convenient financial services.”

The growth of the fintech industry is supported by the development of the domestic venture capital sector. Over the past five years, the number of fintech startups in Kazakhstan has reached 200, strengthening the country’s position as a leader in attracting venture capital investments.

In 2023, this industry accounted for 40 percent of all venture capital financing in Kazakhstan.

A young country that knows technology

The transformation of the payment system in Kazakhstan was caused by several factors: favorable demographic situation, growing digital readiness, growth of e-commerce, better availability of banking services, development of infrastructure (e.g. local payment systems and QR codes), launch of large digital wallets (Apple Pay, Google Pay) and government initiatives.

Kazakhstan has a young population of about 20 million, with an average age of 30. According to the World Bank, 62 percent of the population is between 15 and 64 years old. This young demographic is more tech-savvy and open to digital payment methods, which favors the adoption of cashless payments.

The growth of e-commerce in Kazakhstan has also significantly contributed to the growth of cashless payments. As more people shop online, they prefer digital payment methods. In 2023, e-commerce accounted for 12.6% of all retail trade in Kazakhstan, according to PwC. This growth trend is expected to continue, further driving the digitization of payments.

However, the banking sector remains the main driver of financial and payment technology development in the country. Meanwhile, the number of fintech startups outside the banking sector has quadrupled over the past five years.

More specialized areas have emerged, including cryptocurrency exchanges such as ATAIX, eKYC companies such as Verigram and Alaqan, AML, anti-fraud, and digital lending, indicating the expansion and deepening of the fintech ecosystem and the growing sophistication of market participants.

“Both international payment systems and local solutions are actively used in the country. This confirms the high level of integration of our market with the global financial ecosystem and the readiness of local players to enter the international arena. I believe that fintech companies in Kazakhstan have every chance and opportunity to achieve this,” says Andrey Sedenko, CEO of Tarlan Payments.

The maturity of the Kazakhstan fintech market also confirms a key trend of recent years: synergy between traditional banks and startups, including those operating in fintech, e-commerce and other sectors.

Stay at the forefront

In these collaborations, banks act as key partners and investors. The development of the market throughout its history has been supported by the active role of regulators. This includes legislative reforms, programs and strategies, as well as the creation of digital financial infrastructure, which have played a key role in stimulating the growth and development of the fintech sector.

Despite the country’s successes in fintech, this is not the time for Kazakhstan to rest on its laurels, says Ainur Zhanturina, founder of RISE Research.

“It is crucial for financial technology market participants not only to monitor current trends but also to actively engage with them, maintain an advantage and set the pace in the market,” he says.

“Banks should implement BaaS, partner with fintech startups, and integrate govtech and AI tools into their processes.”

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