Finovate Global Uzbekistan: Fintech Innovation and Banking Breakthroughs in Central Asia

You by no means know the place Finovate World will take you on any given week. In our final version, we frolicked in Spain with wealthtech GPTadvisor. Earlier than that, we had been speaking about Eire’s Central Financial institution and its seek for prime fintech expertise, new funding in cellular funds within the Philippines, and the tempo of digital transformation in India’s monetary companies sector.

This week, we flip to Uzbekistan, a Central Asian nation and former Soviet republic with a inhabitants of simply over 37 million. The doubly-landlocked nation (one among solely two on the planet) has been transitioning towards a market financial system for years and has been credited by the Brookings Establishment for its excessive financial progress and low public debt. A serious producer and exporter of cotton, Uzbekistan has leveraged main pure gasoline provides to be one of many largest electrical energy producers within the area. HSBC has predicted that the nation can have one of many fastest-growing economies within the subsequent few many years.

We interviewed Oliver Hughes, former CEO of Tinkoff and present Head of Worldwide Enterprise for TBC Financial institution Group – which not too long ago expanded to Uzbekistan. In our prolonged dialog, we mentioned TBC’s objectives in Uzbekistan, nature of banking in Central Asia, what key monetary companies are in essentially the most demand, in addition to how enabling applied sciences are serving to monetary establishments within the area higher serve their prospects.

You joined TBC just a few years after the financial institution expanded to Uzbekistan. First, what drew you to TBC?

Oliver Hughes: Becoming a member of TBC in Uzbekistan was an ideal alternative for 2 causes. First, the market itself is stuffed with potential and ripe for disruption. A younger, rising inhabitants of 37 million individuals, of which 59% are underneath the age of 30, financial reforms and liberalization, a good macroeconomic surroundings and an under-penetrated digital banking market create big demand for world-class on-line banking companies, so I may see a transparent path to success.

Second, I knew that TBC Uzbekistan can be an ideal place to work and an surroundings that will permit me to make an impression. Since coming to Uzbekistan in 2019, TBC has constructed a world-class staff, secured a banking license, reached profitability inside two years, and outlined a imaginative and prescient that aligns with my earlier expertise of constructing and scaling a best-in-class, worthwhile digital banking ecosystem.

Uzbekistan was TBC’s first worldwide market exterior of its native Georgia. Why Uzbekistan?

Hughes: Uzbekistan is a hidden gem, beforehand largely missed by the worldwide funding neighborhood, however slowly getting on the radar of buyers and fintech heavyweights. It’s Central Asia’s largest nation by inhabitants, which is younger and getting youthful annually. This helps demand for contemporary digital monetary companies. The nation has additionally launched into a large-scale program of financial reform and liberalization, empowering the personal sector and beginning to appeal to extra worldwide funding.

TBC Uzbekistan is a part of London-listed TBC Financial institution Group and we’re proud to play our half in attracting main world buyers to the nation. By TBC, massive world funding funds like Constancy, JPMorgan Asset Administration, Schroder, BlackRock and Vanguard have been investing in Uzbekistan, and extra buyers are coming in each month.

The macroeconomic image is robust, with GDP increasing at a median annual fee of round 6% for the previous decade and forecast to nearly double to $160 billion between 2023 and 2030.

As well as, Uzbekistan has a deep tech expertise base. It’s each due to its extremely educated home workforce – a product of a robust schooling system, and likewise as a result of Uzbekistan is benefiting from an inflow of returning expats and a broad vary of worldwide tech specialists from neighboring international locations.

What does the monetary companies ecosystem appear to be in Uzbekistan? What’s the degree of curiosity in fintech innovation there?

Hughes: The monetary companies sector remains to be largely dominated by main state banks, which command round 70% of the market. Nevertheless, competitors is rising as the federal government continues its drive for privatization and different reforms. A latest instance of this was with Hungary’s OTP, which in June 2023 turned the primary worldwide participant to take part within the privatization of the Uzbek banking sector, buying former state-owned Ipoteka Financial institution. And not too long ago, Kaspi introduced its intention to take part within the privatization of Humo, Uzbekistan’s second largest open-loop home fee system.

TBC Uzbekistan is a part of London-listed TBC Financial institution Group PLC, which additionally operates Georgia’s main tech-enabled business financial institution. Regardless of being a part of a multinational group, we take into account ourselves to be an area participant as a result of we function as a standalone firm in Uzbekistan with a separate tech stack and separate staff purpose-built for this nation.

When it comes to the ecosystem as an entire, it’s a mixture of state banks, worldwide operators, and native Uzbek gamers, in addition to a growing fintech scene masking every thing from funds to crypto.

The extent of innovation within the native fintech market may be very superior, due to open banking. The important thing improvement, which has not but been replicated in developed markets, is the total banking interoperability that open banking allows in Uzbekistan. In observe, it permits prospects to seamlessly work together with a number of monetary establishments.

For example, when a buyer of 1 financial institution opens an account with one other establishment, the brand new financial institution beneficial properties visibility into the client’s transaction historical past and account balances from their unique financial institution, whereas the brand new financial institution can be in a position to provoke fund transfers or debit transactions from the client’s account on the unique establishment. This helped TBC enter the market in 2019 through the acquisition of the main P2P funds app Payme to rapidly obtain worthwhile progress and entry to an enormous buyer base.

Let’s speak just a little extra particularly about TBC Uzbekistan. How is it structured? What’s its mission?

Hughes: Our mission is easy – to make individuals’s lives simpler. As I described earlier, the monetary companies sector has been and remains to be to some extent dominated by state establishments that function in a conventional trend. We see that there’s demand for contemporary, digital banks that present an ideal, handy person expertise and that’s what we’re constructing.

At current, there are three elements to TBC Uzbekistan: TBC Financial institution Uzbekistan (TBC UZ), a mobile-only financial institution; Payme, a digital funds app for people and small companies; and Payme nasiya (Payme instalments), an installment credit score enterprise. London-listed TBC Group owns 100% of each Payme and Payme nasiya and is the foremost shareholder of TBC UZ, with a 60% stake. The opposite 40% stake in TBC UZ is break up between two institutional buyers: the European Financial institution for Reconstruction and Growth (EBRD) and the Worldwide Finance Company (IFC), a part of the World Financial institution Group.

What are a number of the greatest areas of alternative in your opinion?

Hughes: We see some actually thrilling alternatives in Uzbekistan. At current, we’re centered on customers and particularly shopper lending. Regardless of over 45 million playing cards in circulation throughout the nation, product choices stay restricted and retail lending is very underdeveloped, representing simply 12% of GDP.

Demand from customers for monetary companies is already important and persevering with to develop, with point-of-sale (POS) digital fee volumes tripling to over $22 billion within the three years ending in 2023, with the variety of POS terminals and financial institution playing cards in circulation doubling over the identical time interval.

There are fascinating alternatives in different areas as nicely, together with a brand new, product-rich debit card, monetary companies for SMEs, insurance coverage and brokerage, with the latter two being at a reasonably nascent stage of improvement in Uzbekistan. So, we plan to leverage these as nicely sooner or later.

TBC Uzbekistan not too long ago raised a big quantity of capital. How will the brand new funding assist the financial institution?

Hughes: Our enterprise in Uzbekistan is scaling quickly, however there’s nonetheless important potential for additional progress, together with by way of diversifying our providing to deal with market demand. The latest funding is getting used to extend our mortgage ebook — which we’re at the moment doubling year-on-year — advance monetary inclusion, and speed up our progress in launching new product strains.

Along with powering our progress, new funds assist us to proceed to diversify our funding base.

What are some issues about Uzbekistan that these of us on the skin could also be stunned to study?

Hughes: Uzbekistan is a rustic that largely exists exterior the mainstream consciousness within the West. Some individuals might need their preconceptions, and can be stunned to study in regards to the superior state of open banking within the nation. Constructing on that, the extent of innovation in monetary companies is fairly spectacular in Uzbekistan. The fintech sector is flourishing and strongly supported by the federal government and the broader ecosystem that’s fueled by native and worldwide tech expertise.

When it comes to different issues which will shock you about Uzbekistan, it’s the meals scene. The meals right here is unimaginable, so I urge everybody to come back over and take a look at it!

There’s a variety of discuss enabling applied sciences reminiscent of AI. Are any of those main areas of innovation in Uzbekistan’s fintech scene?

Hughes: Synthetic Intelligence is a key innovation space and one which I’m proud to say that TBC is main amongst friends by integrating AI into our companies.

Our plans are formidable. We’re constructing an AI Digital Assistant that takes customer support to the following degree. The most typical customer support answer proper now’s chatbots, however we’re skipping that stage and going straight to an interactive voice assistant. What’s extra, we’re enabling performance within the Uzbek language and, sooner or later, in different native languages reminiscent of Tajik and Karakalpak, which are likely to get missed by main tech giants.

We in the end envision this Digital Assistant with the ability to information our customers throughout all of our product choices inside TBC Uzbekistan, together with those we plan to launch sooner or later, reminiscent of insurance coverage, brokerage, journey and ticketing.

How do you see TBC Uzbekistan rising over the following two-to-three years?

Hughes: Since launching in 2019, TBC Uzbekistan has scaled considerably and established itself as a number one participant available in the market. As disclosed in our latest half-year outcomes, now we have grown our person base to 16 million distinctive registered customers and achieved an working revenue of $61 million, up 87% year-on-year, with TBC Uzbekistan accounting for 7% of complete revenue for the group, in addition to 13% of income and 44% of shopper loans on the group degree. This can be a very important contribution, which is ready to increase additional.

We plan to proceed to develop quickly over the following 2-3 years, launching new product strains and gaining an elevated proportion of market share. That is mirrored within the steering now we have issued to the market: a internet revenue for TBC Uzbekistan of $75 million for the total yr of 2025, with 30% of the Group’s mortgage ebook coming from TBC’s operations in Uzbekistan.

The place may TBC increase subsequent? Are there any areas of particular curiosity?

Hughes: We’re not but on the stage the place we are able to level to a particular market. Nevertheless, I can inform you the sorts of markets we’re contemplating. Our consideration is on rising markets with a inhabitants of round 30 to 70 million individuals, scope for progress and different favorable traits. For now, we nonetheless have a variety of thrilling issues to do in Uzbekistan.

Right here is our take a look at fintech headlines all over the world.

Sub-Saharan Africa

South African fintech Glad Pay locked in $1.8 million in pre-seed funding in a spherical co-led by E4E Africa and 4Di Capital.

Ghanaian crypto platform, Mybitstore, went stay in Nigeria this week.

Nigerian fraud detection firm Regfyl raised $1.1 million in funding.

Central and Japanese Europe

Germany’s Commerzbank partnered with Deutsche Börse subsidiary, Crypto Finance.

Instanbul, Turkey-based fintech Colenda AI launched new AI answer to assist monetary establishments improve decision-making and enhance mortgage efficiency.

Bulgaria-based Paynetics teamed up with inform.cash to launch its Affirmation of Payee (CoP) service.

Center East and Northern Africa

UAE-based B2B funds platform Xpence teamed up with Egypt-based Paymob to boost digital funds within the area.

Egyptian fintech SETTLE raised $2 million in pre-seed funding.

Mesh built-in with digital asset buying and selling platform CoinMENA FZE to boost crypto transfers and account administration for purchasers within the MENA area.