In this episode of East-West Connect, we loot at Kazakhstan’s fintech growth, its shift toward cashless payments, and efforts to combat cybercrime through international collaboration.
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00:00How is Kazakhstan rapidly becoming a cashless society, thanks to a boom in the country's
00:14fintech sector?
00:16It's changing people's daily lives in shopping, banking, work and play, with apps that make
00:21it easy to do pocket finance.
00:23And we'll tell you about something called the Octopus Project.
00:28Welcome to EastWest Connect.
00:29I'm Chris Burns.
00:30We're highlighting business and economic developments in Kazakhstan and the wider Central Asia region,
00:36connecting with Europe and beyond.
00:40In 2024, about 90% of all transactions in Kazakhstan were digital.
00:45That's in part due to the country's youthful, tech-savvy population.
00:49We look at how Kazakhstanians can now use their banking apps for a wide range of actions,
00:54like accessing digital documents, renewing their driver's licenses, transferring car
00:59ownership, registering businesses, paying taxes, registering a marriage and getting
01:04a birth certificate.
01:06The government's Digital Kazakhstan program, launched in 2018, is helping fuel that boom
01:11that's seen fintech startups multiply from around 50 in 2018 to 200 in 2024.
01:19What are some of those companies doing and who are their users?
01:22Well, to find out, we spoke with Magjan Madiev, CEO of Astana Hub.
01:28It's a kind of incubator for startups with a techno part.
01:33Maybe the first startup that comes to my mind is Zippel AI.
01:37Zippel AI.
01:38Yeah.
01:39And this startup originally was born in Tajikistan.
01:44So they have very talented founders.
01:49And he just came and joined Astana Hub in 2022.
01:52It was just a pre-seed stage, just early stage startup.
01:57But now he has shown tremendous growth.
02:03And now the valuation of this startup is $35 million.
02:06Now when he came here to your Astana Hub, what sort of support did you offer to his
02:12company to make it worthwhile?
02:14Yeah.
02:15We provide wide ecosystem to every startup that joins us.
02:21For example, we are exclusive partner of Google for Startups in this region.
02:28So Zippel AI joined our acceleration program.
02:31And so it was a three-month training program.
02:35So we provide expertise, we provide master classes, seed funding, co-working space, community.
02:45And of course, zero tax regime.
02:48Say I'm a company, I'm a startup in Europe or the US or somewhere else.
02:53And I'm thinking about moving to Central Asia.
02:57Why Kazakhstan?
02:59Why should I set up here?
03:02We believe that Kazakhstan and specifically Astana Hub provides the best ecosystem in
03:10terms of tech business in the whole region.
03:14For example, only Kazakhstan in this region could provide British common law within the
03:19Astana International Financial Center.
03:21You could start your startup in the rural place of Kazakhstan because we have 17 tech
03:28hubs in every region of our country.
03:31But then we provide you a journey map, let's say journey map, to reach Silicon Valley.
03:38So we have programs over there.
03:40We could provide good conditions in terms of setting up a local R&D center.
03:47Because wages and costs of running R&D center in Kazakhstan is much cheaper.
03:56The fintech firm Cosby has become a unicorn in Kazakhstan.
04:00That is a startup worth more than $1 billion.
04:04Cosby caters to consumers and merchants.
04:07Besides e-commerce purchases, its app also lets customers access credit called Buy Now,
04:13Pay Later or BNPL.
04:15They can also renew their driver's licenses and register their businesses.
04:19In the banking sector, fintech is helping drive the shift toward digital finance.
04:23For that, we spoke with Binur Zhalyanov, he's chief digital officer of the National Bank
04:29of Kazakhstan.
04:31The idea is to build a central bank that is fit to digital economy in a number of ways.
04:38So first of all, as a central bank, we play a key role in enabling financial institutions
04:44to build innovations.
04:45So we have something like interbank payment systems.
04:49So every time consumers send money from one bank to another, that is our payment systems
04:55which process these payments.
04:57We also have other components of digital financial infrastructure like digital ID,
05:01biometric identification for consumer onboarding.
05:03We also do believe that our view would help to make this regulatory framework pro-innovative
05:12and flexible so that more fintech startups and more innovative ideas will come to our
05:17market.
05:18Yeah, flexible.
05:19Can you give an example of that?
05:20So for example, digital assets, right?
05:22That's quite a topic now, cryptocurrency and all this stuff, digital assets, etc.
05:27So we do realize that it's already too big to fail.
05:30And it's already a thing that we have to live with.
05:33And it's better to build a proper regulatory framework than simply ban that.
05:38Now, what about consumers?
05:40How does that directly impact consumers?
05:43So the idea is that any consumer should be able to transfer their money from one bank
05:50account to another bank account with phone number.
05:54It's peer-to-peer transfer just with your phone number.
05:57We also work on what we call unified QR.
06:00That means that you have application of one bank and you can scan the QR terminal of other
06:05bank and conduct your payment.
06:07How can this, the digital central bank, help in access to finance for startups who really
06:12do need better access to finance?
06:15At the very core, the issue of financing is all about risk appetite of financial decision.
06:23We as a central bank, we are a huge warehouse of different data sources.
06:28And the idea with our digital central bank concept is to increase access to data for
06:35financial institutions so we can enable better decisions for them in providing money, etc.
06:43How could this digital central bank here in Kazakhstan have impact on the region?
06:47When we have digital Tengir, for example, our colleagues in Kyrgyzstan has digital SOM
06:52and direct integration between these two platforms will enable more secure, cheaper,
07:00faster, and more secure cross-border transactions within our region and enable better trade
07:05in the end of the day.
07:08And now the Octopus project.
07:10As Kazakhstan expands its fintech sector, it's also stepping up its efforts to fight
07:15cybercrime, financial fraud online.
07:18It's working with the Council of Europe's Octopus project, which supports countries
07:22working to join the Budapest Convention on Fighting Cybercrime.
07:26The Octopus project recently held a workshop in Kazakhstan with techniques for tracing
07:31digital financial flows and fraud schemes, handling and seizing virtual currencies, ransomware
07:37response, blockchain analysis, and tracking down darknet operations using the program's
07:43tools as tentacles to catch a thief.
07:47Well that's it for now on EastWest Connect.
07:49Be sure to check out euronews.com for all your latest news.
07:53Thanks for watching and see you next time.