Kazakhstan poised to be a centre for fintech startups

By: Public Communication Department, Astana International Financial Centre (AIFC) Aug 2019

Astana International Financial Centre (AIFC) shares its plans about the development and prospects for the fintech industry in Kazakhstan


Today, fintech - which combines finance and technology - is a dynamically developing segment that complements the traditional financial world and provides new opportunities for consumers and the financial market in general. When a single country begins to talk about plans for the development of fintech, it might be met with with scepticism. There are many questions about why this is needed - how to compete with the leading countries of the world that have spent many years developing the relevant industries? How to address that most important topic of regulation? Here one must ask a very simple question: is there any sense in doing nothing, and watch as the world goes farther and farther every day? The answer is obvious. Pessimists do not change the world.

When the Astana International Financial Centre (AIFC) was still a concept, the thinking behind it came from the fact that fintech is inadvertently tied with the future of the entire financial sector. What’s more, fintech is an industry where even countries that have not been at the cutting edge of progress can achieve impressive results in historical terms. Today one of the global leaders in the development of the fintech segment is China; the country has made technological breakthroughs in a relatively short time because 15 years ago it wasn't well known in this space.

We are sure that this type of fintech success can be emulated in Kazakhstan as well. It is worth noting that today the fintech market in Kazakhstan is still in a fledgling state. This, of course, creates certain difficulties associated with the newness of market regulation, some hesitancy from established players, and an insufficient number of venture capital investors. The effect of a low baseline and a generally favourable environment has already allowed fintechs in Kazakhstan to show impressive growth. An independent study by Deloitte has shown growth in the volume of this market of 356% in 2016 (compared to 2015), a market that has increased by 12 times since 2014, to 8.9 billion tenge. It is also worth noting that, on average, there are 42 employees in a typical Kazakhstani fintech company, and they have been trading, on average, for five years, which indicates good longevity for these start-ups.

Current situation

Modern Kazakhstan, moving from a commodity model of the economy to an innovative one, is looking to become a centre of attraction for companies in the fintech sector. According to a report from Ernst & Young, four main factors influence the successful development of the fintech sector today: 1) demand for services; 2) access to qualified professionals; 3) regulation; and 4) access to finance.

Last year, together with the Swiss fund Seedstars and the Kazakhstani business incubator Most, an international acceleration programme called FintechStars was launched in Nur-Sultan. Nine start-ups from 30 countries of the world have become participants of the accelerator with projects in the fields of insurance, financial technologies and e-commerce. Moreover, 144 applications were submitted for participation in the competition. One of the selection conditions was that companies had to show a monthly income of $5,000.

Finally, in March 2019, the AIFC and Visa announced the launch of the largest fintech programme, the Visa Everywhere Initiative. This is the global innovation programme for Visa, which sets goals for start-ups to solve the tasks of tomorrow in the sphere of payments and commerce, for improving their products, and providing future-oriented solutions for the network of Visa partners.

Conditions for fintech

When one looks at Kazakhstan's opportunities, it is impossible not to notice that it has all the conditions to ensure the rapid development of this market.

First of all, there is a huge undeveloped market in the region where, according to estimates from the World Bank database, there are about 200 million people with a 50% unbanked adult population. This is a huge number.

Secondly, the enormous wealth of human capital. This is due in part to the post-Soviet heritage in the form of a mathematical school in Kazakhstan itself, and the favourable immigration regime of the AIFC to attract foreign specialists. In addition, it is worth mentioning that more than 12,000 Kazakhstani students studied in world-class universities abroad under the Bolashak programme as part of training personnel and specialists for the sectors that are a priority for the country's economy.

Thirdly, there is a favourable legal environment in the AIFC conducive to the development and implementation of innovations in the financial sector. The fact is that, despite the 'romantic' image of a start-up 'from the garage', that grows into a billion-dollar business from scratch, the question of success in most cases lies in a slightly different, more prosaic plane. Namely, the success of a fintech-start-up often depends on the availability of a well-established regulatory system in the financial sector.

Over the past few years, many regulators have taken concrete steps to regulating the activities of the fintech industry. Today, a 'regulatory sandbox' is considered a successful mechanism for improving financial market regulation, within which new business models, solutions and technologies in the financial sector can be tested, with the possibility of building effective regulation for them. Also, there has been a great deal of work done on creating conditions for young entrepreneurs, boosting protection of intellectual property, and assistance in attracting investment. Given that Kazakhstan is located in the heart of Eurasia, AIFC, like nothing else, is suited for the role of a regional fintech hub.

Today, the cluster of the new financial technologies of AIFC - Fintech Hub - has several main activities. This includes the development of the fintech community as a whole, and the creation of partnerships with traditional banks, financial companies, regulators, associations, as well as support for start-ups by providing expertise, training, and advice to their founders. Of course, it goes beyond that.

In practical terms, the direct task of the AIFC is to attract investments through cooperation with investment funds and private investors, to prepare projects for fundraising, and also to organise work on the development and coordination of new legislative initiatives in the field of fintech.


An important component of the Fintech Hub of AIFC is the regulatory sandbox, the importance of which was discussed above. Today, 16 companies with projects in the field of banking services, blockchain and other financial technologies have already been accepted into the sandbox of the AIFC.

Also, on 31 January 2019, the AIFC joined the Global Financial Innovation Network initiative, also dubbed the 'global sandbox'. This is an association of 29 global financial regulators and organisations, created with the aim of cooperation and exchange of experience in the field of innovation. The network allows start-ups to test innovative products, services or business models in several countries at once, including the UK, the United States, and Singapore.

Going forward

Here, in our opinion, the AIFC and international companies have a huge potential for cooperation. Investments are growing in the region every year. According to CEO Magazine, in 2013 there were only $18.9 billion volume of transactions in the fintech sphere. By the end of 2018, this figure was already $111.8 billion.

Today there is no reason to think that this trend will slow down, and therefore, private companies can effectively cooperate with the AIFC by participating in the development of an industry that, in the foreseeable future, will have a huge impact on the landscape of the global financial system.

This is an advertorial from Astana International Financial Centre (AIFC)