ASTANA—Kazakhstan’s fintech sector is booming: the number of fintech startups has grown from around 50 in 2018 to 200 in 2024, according to the July fintech market report.

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The report, compiled by RISE Research, National Payment Corporation of Kazakhstan, Mastercard and Tarlan Payments, highlights the rapid growth and development of the fintech sector in Kazakhstan.

Banks play a crucial role in this effort, fueled in particular by the absence of legacy banking systems, enabling rapid technological transformation. Major banks are making substantial investments in payments infrastructure, improving the efficiency and reliability of the service.

Proactive cooperation between banks and government electronic systems is integrating various services, promoting digital transformation. Multiple public services are now available to Kazakh citizens via banking apps, including accessing digital documents, renewing driver’s licenses, transferring car ownership, registering companies, paying taxes, registering a marriage, and obtaining a birth certificate, among other government services.

Digital financial services booming

Growing consumer demand for digital financial services, including mobile banking and e-wallets, is driving the market forward. Analysts point to an increase in the use of online banking, as well as all financial technology-related services and products.

In 2023, the number of active online banking users reached 23.1 million.

“Between 2019 and 2023, active online banking users in Kazakhstan increased 4.6 times due to technological improvements, regulatory support, high demand, market competition, and increased adoption of the Internet and cashless payments,” the report said.

The use of online banking benefits from high banking penetration, the spread of the Internet and the share of cashless payments.

In 2021, 81% of the country’s population had access to banking services, including a checking account. At least 92% had access to the Internet in 2024, and 89% of all transactions are conducted digitally.

Increase in cashless transactions

Cashless transactions have seen tremendous growth in Kazakhstan over the years. This is the result of a concerted effort by the government, financial institutions, and a tech-savvy population embracing the convenience and security of digital payments.

According to the National Bank of Kazakhstan, as of June 1, there were 77.4 million payment cards in circulation. As of May 2024, the volume of payment card transactions reached 15.4 trillion tenge (32.5 billion US dollars), with 1.1 billion transactions.

At the same time, compared to the same period in 2023, the number of non-cash transactions increased by 13.3%, reaching 1.1 billion transactions, with the volume reaching 13.3 trillion tenge (28 billion UAH).

According to the report, Kazakhstan has seen a three-fold growth in the number of tokenized transactions, such as through Apple Pay and Google Pay, between 2021 and 2023.

Binur Zhalenov, President of the National Payment Corporation of Kazakhstan, said that Kazakhstan is a world leader in terms of the development of cashless transactions.

“Over the past five years, the number of non-cash transactions has increased more than twenty-fold, now accounting for 89% of retail turnover. Competition pushes the market to improve services and introduce innovations. Transparent rules of the game and equal access to the digital financial infrastructure, overseen by the National Payment Corporation of Kazakhstan, are key to fostering this competitive environment. We intend to continue supporting and developing innovative solutions to ensure that end consumers benefit from better, cheaper and more convenient financial services,” Zhalenov said.

The fintech market is set to grow

The report highlights that the payments landscape in Kazakhstan is undergoing a profound transformation, driven by several factors, including favorable demographics, growing digital readiness, increasing e-commerce, improved banking accessibility, and infrastructural advances such as local payment systems and QR codes.

The young, tech-savvy population, with 62% aged 15 to 64, is increasingly adopting digital payment methods.

E-commerce, which accounted for 12.7% of total retail trade in 2023, is further driving the shift towards cashless payments. According to the Bureau of National Statistics, this is a substantial growth compared to 1.8% in 2019. Kazakhstan seeks to Bring to increase the percentage to 20% by 2030.

Overall, analysts expect all fintech markets in Kazakhstan to continue growing, with at least a double-digit compound annual growth rate between 2022 and 2027.

According to the report, financial technology has emerged as the leading investment category in venture capital deals in Kazakhstan. In 2023, it accounted for 40% of all venture capital financing in Kazakhstan.

Sanzhar Zhamalov, Mastercard Country Manager for Kazakhstan and Central Asia, highlighted Kazakhstan’s efforts to become a regional leader in fintech development.

“We have seen rapid growth in this sector in recent years: new payment solutions such as tokenized payments, fintech solutions for SMEs [small and medium enteprises]“AI and Blockchain projects, investment platforms, digital insurance products and much more are actively developing,” he said.

The report highlights seven key trends shaping the country’s fintech market. These include artificial intelligence, govtech-fintech synergy, digital products and services for SMEs, buy now, pay later (BNPL), and central bank digital currencies (CBDC).

However, it is crucial that market participants not only monitor trends but also stay ahead of them, said 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 in the market. Banks should implement BaaS [banking as a service]collaborate with fintech startups and integrate govtech and AI tools into their processes,” Zhanturina said.

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