BFC Bulletins Monthly News Digest
Mastercard has released a comprehensive analysis of Uzbekistan’s fintech market, highlighting the main observed trends as well as identifying key opportunities and challenges. Here is an overview of what was found:
- Main trends:
- Slow bank digitalization has spurred digital wallet growth, both among individuals and businesses.
- There has been an increase in the adoption of complete ecosystems, with many market players aiming to become superapps.
- The e-commerce market has shown a consistent upward trend, with a penetration rate of 2.2% in 2022 (a significant increase from 0.6% in 2018).
- There has been a significant growth of neobanks serving both individuals and businesses, with a particular focus on micro-, small- and medium-sized enterprises (MSMEs).
- There is a strong demand for Islamic finance.
- Buy-now-pay-later (BNPL) is emerging as a significant catalyst for the growth of e-commerce.
- The development of the crypto industry as an alternative investment source, has been controlled.
- Market opportunities
- Uzbekistan has a young, fast-growing and urbanized population.
- Urbanization, increased purchasing power and a thriving economy have driven growth in the fintech market.
- The government is actively addressing financial inclusion while also fostering an enabling environment for fintechs.
- Banks are starting to realize that their prior focus on the corporate sector has led to uneven banking services for SMEs and different segments of the population.
- Uzbekistan’s fintech sector is attractive to the large number of IT specialists immigrating from Russia.
- The e-commerce market is continuing to develop with the adoption of new technologies such as QR code usage among individual entrepreneurs.
- Key challenges
- The country’s digital infrastructure, including internet adoption and broadband availability, may not be as developed as in other similar economies, impacting business’ capabilities to reach a larger consumer base and compete effectively.
- There is limited smartphone availability due to high mobile data costs and low internet speeds in some regions.
- There is a low level of business process automation, especially among MSMEs.
- IT systems have a number of vulnerabilities, making cyber threats even more dangerous.
- Banking service coverage is currently limited, leaving many unbanked/underbanked.
- There is a heavy financial burden on SMEs and some segments of the population.
- Access to financing and investment opportunities in the country are still very limited.
