Nora Hocke:

In most mature markets, banking evolved in steady steps, from branches, to websites, to apps.

Annika Melchert:

Some younger markets have taken a different path, and Central Asia is one of the clearest examples of that.

Nika Kurdiani:

I am a big believer that customers do not need a bank.

Nora Hocke:

In this episode of Fintech Files from BCG Platinion, we are exploring how Central Asia became one of the fastest-moving digital banking markets in the world and what that acceleration might tell us about the next generation of financial services.

Annika Melchert:

To understand that shift, we first have to understand the region itself. It's a cluster of post-Soviet nations connected by history, language, and a shared financial past.

Nora Hocke:

Today, we're making sense of how this transformation is unfolding on the ground with Nika Kurdiani, CEO of TBC Uzbekistan, one of the leading digital banking players in the region.

Nika Kurdiani:

Central Asia is a region which consists of several countries. The biggest one in terms of population is Uzbekistan. Uzbekistan has 38 million people approximately. And then the next one is Kazakhstan with approximately 20 million people; then comes Tajikistan, which is around 10; and Kyrgyzstan, which is around 5; and Turkmenistan, which is more or less the same size. All of them are post-Soviet countries, so when talking about banking landscape and how the banks are built and how the customers use financial services, I would compare mostly the Central Asian scenealways goe with other markets like Russia, Ukraine, Belorussia, Georgia, Azerbaijan, because all of them were somehow formed more or less similarly, and also the fact that we all more or less speak Russian too. Being the second language in most of these countries, this makes experience exchange much easier.

Annika Melchert:

Under the Soviet system, these countries shared a single, highly centralized banking model. Wages were paid in cash, most people never dealt with banks directly, and credit was aimed at state enterprises, not families.

Nora Hocke:

Nika Kurdiani:

When we talk about digitalizing financial services, we always say that the biggest competitor we have is cash and offline processes and offline experience. I think the trust item is more important in this concrete case than infrastructure. Infrastructure, in my opinion, always goes a little bit ahead because banks innovate, they want to somehow fight this cash trend, but in reality, the trust is the one that is lagging behind.

So when people trust the form factor and they are persuaded that this form factor is secure and it will deliver the purpose of the transaction, would it be utility payment or P2P transfer or whatever, then they trust. So once the psychological element clicks and people start to trust and to understand that this tool is basically something that they can use on daily basis, then things accelerate. We know these super successful examples from Africa, like M-PESA, right? I mean, when people were doing everything offline and then M-PESA came up with the service, this was a massive game-changer.

Nora Hocke:

The example Nika is referencing, M-PESA in Kenya, is one of the clearest leapfrog moments in global finance because it marked the rise of mobile money in East Africa. Until that point, nearly every transaction in the region was done in cash. Just as was the case in Central Asia, people didn't trust the banks, most didn't have accounts, and formal infrastructure was thin.

Annika Melchert:

Nora Hocke:

Now, that shift didn't happen evenly across the population. It began with younger users, those who weren't carrying decades of financial trauma.

Nika Kurdiani:

The generational shift is basically felt very strongly in post-Soviet space and also in Uzbekistan. Why? Because basically we are just 30 years out of Soviet times and things changed massively in this region. The economical liberalization, the different services came in, and altogether the modernization of the infrastructure helped to shift the behavior. I mean, if you look at the younger part of the population, they are all doing things digitally, they trust digital more than offline. And if you look at the elder ones, they prefer cash, and cash is dominated mostly in the elder generations, so I would say 35 years and plus. So definitely the younger part of the population is super digital.

Overall, Uzbekistan is one of the few countries in the world that is getting younger every year. Basically, last year, it was almost one million people net addition to the population. So now the population stands at 28 years on average, and when I started working on Uzbekistan expansion of TBC Group, basically it was approximately six years ago, the average age was 29. And I mean, the growth is so massive. I mean, the population back then was 31 and a half million people. Now we are saying it's 38 million people. And definitely the population pyramid is super young, and that's why basically we know that in several years we'll have millions of millions customers who are preferring to have mobile as a form factor.

For instance, if you take Telegram, the communication app, the chat app, Uzbekistan for Telegram is, as far as I know, is the biggest in terms of penetration in the world. Telegram is the main channel of communication in Uzbekistan. And again, why? Because the population is relatively young, and the adoption is very high. Smartphone penetration in Uzbekistan is above 80%. Internet penetration is above 80%. So altogether, the country is very digitalized, very young. And if you compare this generational difference, definitely you see the difference.

Of course, there are also people are changing their habits, and we see this also because we have more and more customers for elder generations too. For instance, we were the first ones four years ago, approximately, three and a half years ago, who launched the digital cash loan, so end-to-end digital process, you get the loan in one minute, and we see how the elder generations are coming to that product too. We were one of the first ones to have the fully digital deposit product, and we see now more and more elder people starting to kind of open deposit products for them.

Nora Hocke:

Annika Melchert:

Nika Kurdiani:

The second-biggest change I would say is when the industry started talking about the ecosystem place when the banks understood that being solely a bank is not enough anymore, so you have to cross integrate and maybe create many touchpoints around the customers and embed your financial services into the daily journeys of the customers. And once you think this way, you understand that you don't have to be a bank always. You may be a marketplace that embeds financial services into it. And this is, for instance, what we saw with Mercado Libre or Kaspi. Kaspi actually went the other way around. It was a bank which basically transformed into a marketplace, the biggest marketplace in the region definitely. And Kazakhstan did miracles through Kaspi, which was in the avant-garde for QR payments in Kazakhstan. And if I remember the statistic correctly, 80% of all transactions in Kazakhstan are done through Kaspi QRs, and now they're opening it up for other banking institutions too.

Nora Hocke:

Nika Kurdiani:

To be honest, we were underestimating Uzbekistan's readiness for digital, because for you to launch digital businesses, you not only have to have a population that is ready and big enough to adopt your services, but also the government infrastructure and the country infrastructure has to be ready. There are lots of government services that need to be digitalized and given to you through APIs and many other aspects. And in reality for us, everything works. If you just do this kind of a test question, now we are five years old and we have 22 million registered altogether. Would it be possible in a country that would not be digitally ready in terms of population and government and infrastructure to build such a big digital business? If these things would not exist, I would say no. We have already around 22 million registered users. More than six million approximately is monthly active transactionally, so we call it engagement, monthly active usage.

Nora Hocke:

Let's pause on that number for a second, 22 million users. To put that into perspective, in a country of 38 million people, that is well over half the population, making TBC the largest in leading fintech in Central Asia, in the center of a growing ecosystem of payments, marketplaces, and everyday financial tools.

Annika Melchert:

And all of this was built without the traditional layers of banking, no branches, no legacy system, just the digital-first model designed for this market.

Nika Kurdiani:

What is in our ecosystem? I think the most important central asset is digital bank, TBC Uzbekistan. The second-biggest player in our ecosystem is PayMe. That is the payment card aggregator that allows certain services through its app, like P2Ps, utility payments, QR payments, and other things around payments. We have PayMe in Asia that is the BNPL (Buy Now, Pay Later) and POS lending company. It is also one of the leaders on the market already. In Georgia, we have massive experience, and the bank in Georgia was also built from scratch; it was not a legacy coming from post-Soviet times.

However, I would say that in Uzbekistan, the key learnings are not directly linked to Georgian experience because in Georgia we still run a, I don't like the word traditional, but in terms of business model, a universal bank, which has branches and different segments like corporate, for instance, or leasing, which we don't do in Uzbekistan. In Uzbekistan's case, we definitely decided to set up a bank from scratch. Of course, in that case, we had the regulatory support as well because the regulatory in Uzbekistan was supporting the idea for us to launch a bank from scratch, because in many markets, this is not possible. You are not given the license easily, so you need to buy a bank to start. And in Uzbekistan, we definitely ensure that we have as less headaches and mistakes as possible because we were building things from scratch.

Nora Hocke:

Across Central Asia, digital finance has accelerated at a remarkable pace. Young, mobile-first consumers, lighter legacy systems, and governments modernizing services have all played a part. Uzbekistan was no exception.

Annika Melchert:

For TBC, turning that regional momentum into a bank trusted by millions came down to entering the market at the right moment and making a series of choices that shaped how quickly they could scale.

Nika Kurdiani:

I think the critical success factor for many digital players in the world is knowing and understanding that the market has to be big enough for you to scale and scale quickly. So I definitely think that if you try to create a digital business in a country of, I don't know, 4, 5, 7, 10 million population, it's still four times less than Uzbekistan's population. So total addressable market in terms of number of people is super important success factor.

Second is where you put the accents, and I think a strong accent should be put on a digital acquisition. Some people disregard this, and having a very strong digital acquisition machine built in-house and not outsourcing it and investing lots of money and effort and attention into building it is super critical from day one. Many, many companies say that we will have the agency that helps us. Now we went without the agency; we built the team internally. And of course, you get freelance support from external parties because you need to learn, and learning doesn't come easily quickly, and that's why you may ask somebody to help you to understand things. But building things in-house, like digital acquisition machine from day one, is super important.

And adding to acquisition is... When building a digital business, doesn't mean that you have to build the whole acquisition machine digitally. I mean, you can do things offline as well. For instance, now we have around 1,000 people walking around the streets in Uzbekistan, acquiring customers and onboarding customers and delivering cards and delivering experience basically by explaining our products in the markets, on the streets, and in bazaars and stuff. So depends very much on the country, but I think thinking about acquisition as a big, important, strategic item for your go-to-market strategy is important, and you have to diversify the acquisition channels as well, telesales, digital, offline, direct sales agents, we call it, and all these kind of things. For instance, now we also launched our AI digital agent. Basically, it's a speech tech. Basically, the telephone agent calls you and talks to you in Uzbek and offers you our products and services. And we are scaling it now, and proves to be super successful. The conversion rates are better than of a human being and offers us a huge potential.

And I would say the third factor is having the right talent. Having the right mindset in how you want to build things and how you want to build the products from day one is super important. I mean, it's like, I would say, one of the most critical things, because if you do things wrong from the very beginning, then you are building on these wrong things more and more, and then you end up having legacy very soon. It is a super pragmatic approach. And definitely we are all into digital and we want to be fully digital and we don't have any process, for instance, that runs through a human being on the back. So all products are end-to-end automated.

However, when you talk about acquisition, when you talk about certain things, you may leverage physical presence too. We don't have to have branches, and we will never have branches, but going to the markets where people do their business and, for instance, selling QR code payments through digital and assuming that a merchant on the bazaar will come to your website and download the QR code and do the digital onboarding, I mean, yes, you can assume and wait for quite some time until the whole country is fully digitalized the way that they would even download the QR online, but if you want to win and leapfrog, you go to the customer yourself and explain.

Nora Hocke:

What started as a shift to mobile is now evolving into something much bigger, the early architecture of a new financial era across Central Asia, a landscape where services become more connected, more intelligent, and more embedded into the ways people already live.

Annika Melchert:

And Nika says the next transformation is already underway.

Nika Kurdiani:

So in my opinion, the next interesting move will be that the mobile banking experience will transform into AI banking experience where in the mobile banking app, you will have your assistant embedded, and we already see some examples in the world, and this assistant will become stronger and stronger and stronger in knowing you and understanding you and basically helping you to bank and move your money and do your financial different operations. And it may move us out from mobile experience or internet experience, or branch experience altogether.

Annika Melchert:

It's impossible to talk about the future without talking about AI, but Nika sees another shift ahead: financial services planning into the platforms people already use every single day.

Nika Kurdiani:

We do video calls on a daily basis with our families. We shop online. We do this on our mobile phones. We do not go to our bank or mobile banking app to transfer money for purchases. We do these purchases on the platform, so the embedding is seamless.

And this is also what we see in Uzbekistan or in Georgia, and in TBC, that financial services embedding will be a massive trend and it will further accelerate, because I am a big believer that customers do not need a bank. What they need is they need to move their money and they need to somehow get the assistance in moving their money. And if the money movement thing is embedded into different platforms, then this is where the customer will be the happiest.

Of course, there will be a vault, and this vault is the bank, and this is your current account where you would look at your savings and you may build your investment portfolio, or you may initiate a transfer as well because this is one of the forms of money movement, but most of your money movement operations will be embedded into the different platforms, would it be marketplaces or delivery apps or something like this. And this is definitely what is happening in Uzbekistan too.

Nora Hocke:

Now, embedded finance can make payments feel almost effortless, but it also spreads our data across multiple platforms, making that information more vulnerable and raising questions around privacy and oversight. Who's responsible for keeping that information safe? How transparent are these systems about what they collect and how they use it?

Nika Kurdiani:

And as additional players, not just banks, handle the way people spend, save and borrow, what does accountability look like?

Nora Hocke:

As we leap further into a digital financial future, the answers to these questions will be just as important as the technology itself.

Annika Melchert:

This has been Fintech Files from BCG Platinion.

Nora Hocke:

This season, we're digging deep into the groundbreaking ideas that are reshaping the future of fintech. We've got amazing guests lined up, so make sure you're subscribed so you never miss an episode.

Annika Melchert:

Thank you so much for tuning in. We'll see you next time on Fintech Files.