Kazakhstan’s fintech sector is booming

Kazakhstan is becoming a leader in cashless transactions, supported by strong competition and a favorable regulatory environment.

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

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% as of May this year.

In fact, according to Binur Zhalenov, president of the National Payment Corporation of Kazakhstan, the country is a world leader in the development of cashless transactions.

“Competition pushes the market to improve services and introduce innovations,” he says. “Transparent ‘rules of the game’ and fair access to digital financial infrastructure, overseen by Kazakhstan’s National Payment Corporation, are key to fostering this competitive environment.

“We intend to continue to support and develop innovative solutions to ensure that end consumers benefit from better, cheaper and more convenient financial services.”

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

In 2023, the sector accounted for 40 percent of all venture capital funding in Kazakhstan.

A young and technological country

The transformation of the payments landscape in Kazakhstan has been driven by several factors: favorable demographics, growing digital readiness, increasing e-commerce, improved banking accessibility, infrastructure developments (such as local payment systems and QR codes), the launch of major digital wallets (Apple Pay, Google Pay), and government initiatives.

Kazakhstan has a young population of around 20 million, with a median age of 30. According to the World Bank, 62 percent of its population is between the ages of 15 and 64. This young demographic is more tech-savvy and open to digital payment methods, which drives the adoption of non-cash payments.

The rise of e-commerce in Kazakhstan has also contributed significantly to the growth of cashless payments. As more and more people shop online, they prefer digital payment methods. In 2023, e-commerce accounted for 12.6 percent 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 the development of financial and payment technologies in the country. Meanwhile, the number of non-bank fintech startups has quadrupled in the past five years.

More specialized areas have emerged, including cryptocurrency exchanges such as AtaxeKYC companies including Verigram AND AlaqanAML, anti-fraud and digital lending, which indicate 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 this country. This confirms the high level of integration of our market into the global financial ecosystem and the readiness of local players to enter the international arena. I believe that fintech companies in Kazakhstan have all the possibilities and opportunities to achieve this goal,” says Andrey Sedenko, CEO of Tarlan Payments.

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

Stay ahead

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

However, despite the country’s success in the fintech sector, this is not the time for Kazakhstan to rest on its laurels, suggests Ainur Zhanturina, founder of RISE Research.

“It is crucial for fintech market players to not only observe current trends, but also to actively engage with them, stay ahead of them and dictate the pace of the market,” he says.

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

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