Kazakhstan, the world’s largest landlocked country, has enjoyed recent fintech growth and sits in a strong position to foster further success in the future. But is all as rosy as it seems? We take a look at the evolution of the fintech ecosystem in the country.
Kazakhstan has a population of over 20 million people, of which 40 per cent are under the age of 25 and about half are under age 30. With a gross domestic product (GDP) per capita of just shy of $15,000, Kazakhstan has also recently shifted from being considered a migrant-sending country to a migrant-receiving country.
Two of Kazakhstan’s main export commodities are oil and natural gas, while the country relies mainly on two of its neighbouring countries, Russia and China, for the majority of its imports.
Positive signs for Kazakhstan’s financial sector
Kazakhstan boasts a young country, with improving digital infrastructure and a growing e-commerce sector, which now accounts for 12.6 per cent of all retail trade in the country. Banking accessibility also appears to be on the rise, while foreign direct investment (FDI) levels have also grown, thanks to the launch of major digital wallets (including Apple Pay and Google Pay), as well as various government initiatives.
In 2017, the government launched the ‘Digital Kazakhstan‘ programme, aiming to accelerate the growth rate of the republic’s economy and improve the quality of life of the population through the use of digital technologies, in addition to creating the foundation for the country in the long term to create a digital economy.
Kazakhstan’s government is also strongly supporting the growth of its financial services sector. In 2018, it established the Astana International Financial Centre (AIFC) and its independent regulator the Astana Financial Services Authority (AFSA).
AIFC aims to become the major financial centre for Central Asia, the Caucasus, the Eurasian Economic Union (the Republic of Armenia, Republic of Belarus, Republic of Kazakhstan, Kyrgyz Republic and Russian Federation) and beyond.
Crypto boom
Following the ban on crypto mining activities in China in 2021, Kazakhstan experienced an influx of cryptocurrency miners. According to Global Legal Insights: “This massive influx of miners exposed Kazakhstan’s unpreparedness for the rapid and sudden expansion of the market, resulting in a subsequent exodus of miners from Kazakhstan.”
However, the situation enabled Kazakhstan to optimise and improve its fintech legislation and address the technological challenges it faced during the influx.
Meanwhile, cryptocurrency trading platform and digital asset exchanges have emerged in the country, such as ATAIX, and have enjoyed notable growth.
In September 2024, Binance Kazakhstan received a full regulatory licence from AFSA. As a result of this new licence, Binance Kazakhstan is one step closer to becoming the first digital asset trading facility (DATF) operator to be fully regulated in the country. The company has undergone an extensive review process to achieve its licence. This includes an external financial audit and obtaining ISO certifications following an audit of the entity’s information systems.
Cash-akhstan no more
Kazakhstan is now a regional leader in digital finance, with the share of non-cash payments reaching 89 per cent in May of this year. There are also at least 200 fintechs currently operating in the country. Examples include Kaspi, a provider of software solutions for banking management; IMAN, an online platform for point-of-sale financing, and ForteBank, a digital bank for individuals.
In 2021, the county took 13th position among Asian Pacific Region countries in the ‘Global Fintech Index 2021’. It is clear that fintech has the potential to further elevate Kazakhstan and the wider Central Asian region – building on the strong foundations it has already established.
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