Option-1

Fintech Market
in Uzbekistan

Option-2

Fintech Market
in Uzbekistan

DISCLAIMER

The information in this document isproprietary to Mastercard and any use of
information must include explicit reference
to the source. Any projections, estimates,or expectations related to the market vieware for illustrative purposes and should not
be relied upon for decision-making. No
assurances are given that any of theseprojections, estimates, or expectations will
be realized, and no representation is madethat the analysis provided is error-free.

©2023 Mastercard. Proprietary and Confidential

This document contains information
related to a general market view and isprovided for informational purposes only. It
does not constitute an offer, commitment,
or agreement by Mastercard to engage innegotiations or enter into any specificarrangement with your organization(“Company”) based on the content of thispresentation. The general market viewpresented here is intended for
informational purposes and should not be
construed as a formal proposal or binding
commitment from Mastercard.

3

FOREWORD

Uzbekistan is one of priority markets for
Mastercard which has been making
remarkable strides in recent years, not onlyin terms of its economic growth but also in
its embrace of technological innovations.
Digital payments have experienced rapid
growth in Uzbekistan and development offinancial technologies has been one of such
pivotal forces driving financial inclusion,
digital transformation, and economic
development in the country. It is one of ourpriority cooperation topics under the
Digital Country Partnership signed with
the Central Bank of Uzbekistan and MoU
with the Ministry of ICT Development of
Uzbekistan.
We will continue working with local banks,
government, mature fintechs and rising
fintech stars to co-develop and scaleinnovative payment and digital solutions
for Uzbekistan.
4

The report we are about to delve into
represents a comprehensive analysis of the
Uzbekistan fintech market and will give
you insights into the trends, challenges,
regulatory environment, key ecosystem
players, emerging fintech startups, and thetransformative role fintech plays in the
lives of individuals and businesses acrossthe country.

We want to express our deep appreciation
for the collaborative efforts and expertise
contributed by our partners in analysis andmarket insights – RISE Research, Fintech
Consult, Fintech Association of Uzbekistan
and IT Park Uzbekistan.
As we embark on this journey through theworld of fintech in Uzbekistan, I encourage
you to engage, ask questions, and shareyour perspectives to collectively explore thepotential for innovation.
Your sincerely,
Suleyman Sozeri
General Manager, Central Eastern Europe
Mastercard©2023 Mastercard. Proprietary and Confidential

Welcome to this insightful presentation on
the dynamic landscape of the fintech
market in Uzbekistan.

Executive summary
4 market opportunities:
Uzbekistan fintech market in numbers
as of 31.12.2022:

77% internet penetration

Young, fast-growing, and urbanizing population
Uzbekistan is one of the fastest growing population in Central Asia. As of July 1,
2023, population stands at 36.4 mln, surpassing UN DESA predictions of 35.1
mln. The country's relatively young population, with a median age of 29, presents
opportunities for the fintech sector

76% smartphone penetrationof total sector assets

49 payment organizations that have obtained a license*70+ fintechs
61% venture funds in last 2 years was allocated to fintechs*

2.2% e-commerce market penetration (as a % of retail)10 licensed crypto-stores, 2 crypto-exchanges,
2 crypto-depositories*
5* as of October 31, 2023
Source: Statistics Agency, KPMG, EIU, Central Bank of Uzbekistan, UZVC, IT Park, World Bank, Expert interviews

Push for financial inclusion
The government is actively addressing financial inclusion, while also fostering an
enabling fintech ecosystem

Increases in spending and GDP growth
In 2022, urbanization, lifestyle changes, increased purchasing power, and athriving economy drove growth in the fintech market. Further fintech
development expected due to rising prosperity and reduced inequality

White spaces are emerging across the market
Past uneven access to banking services, particularly for various population
segments and SMEs, has created growth opportunities. While fintechs havemade progress in digital wallets and payments, there's still room for expansion
as the market matures©2023 Mastercard. Proprietary and Confidential

35 banks*. The 5 largest state-owned commercial banks account for 62%

Executive summary6

2

An increase in ecosystem andsuperapp adoption. Players offer
diverse sets of services but most ofthem aim to become “superapps”

3

The e-commerce market has shown aconsistent upward trend, with apenetration rate of 2.2% in 2022, asignificant increase from 0.6% in 2018

4

There is a significant growth ofneobanks serving both individuals andthe business sector, with a particularfocus on micro, small, and mediumsized enterprises

5

The huge demand for Islamic financewill lead to a rapid growth of thissegment in the coming years

6

BNPL is emerging as a significant
catalyst for the growth of ecommerce

7

Controlled development of the crypto-industry as an alternative source of investment
for households and businesses

1

Slow bank digitalization spurred
digital wallet growth, serving
individuals and businesses©2023 Mastercard. Proprietary and Confidential

Market leaders share 7 trends:

CONTENTS

01

02

03

04

05

Infrastructure and
Growth Factors

Fintech Ecosystem

Major Fintech
TrendsRising Fintechstars

Lessons learned andPerspectives•

Economy in figures•

Ecosystem map•

Digital wallets

•

Zood

•

Digitalinfrastructure•

Access to capital•

E-commerce

•

Billz

•

Government
support and IT
Talents•

Superapps

•

Iman

•

Neobanks

•

Marta

•

Buy Now, Pay Later•

Sug'urta Bozor•

Islamic finance•

Crypto•Banking industry

14-21

22-31

32-37

Opportunities nad
restraints•

Perspectives andfuture trends

38-41©2023 Mastercard. Proprietary and Confidential

7-13

•

7

01

Infrastructure and
Growth Factors

INFRASTRUCTURE AND GROWTH FACTORSRich in minerals and natural resources, Uzbekistan isstrategically transitioning from agriculture to energy,
metallurgy, and small businesses as part of its economic
diversification strategy

Key observations
Uzbekistan, a Central Asian nation richin minerals, is transitioning from anagriculture-based economy to one driven
by its energy and metallurgy sectors,
while also promoting small enterprises.
Under the "Strategy of the New
Uzbekistan 2022-2026", the aim is toattain a GDP per capita of 4,000 USD by2030, paving the way for entering the"upper-middle-income countries"
bracket.

Uzbekistan in figures (as of 31.12.2022)
Kazakhstan

Tashkent

Uzbekistan

Kyrgyzstan

Turkmenistan
Tajikistan

GDP and reserves
Nominal GDP, bln USD

74.7

Tashkent

GDP per capita, USD

2,164

Presidential republic

Real GDP growth, %5.5%International reserves, bln USD

35.8

447,400 km2

CapitalForm of government

Population
Population, mln

34.6

Foreign currency reserves, bln USD

11.6

Unemployment rate, %8.9%

Export / Import
Export, bln USD

19.3

Import, bln USD

30.7

Country’s credit rating
Foreign longterm rating
9

BB-

Fitch Stable (March 2023)
S&P Stable (June 2023)

Source: Statistics Agency, EIU, Central Bank of Uzbekistan©2023 Mastercard. Proprietary and Confidential

Afghanistan

Key information
TerritoryINFRASTRUCTURE AND GROWTH FACTORS

Number of users of remotetransactions, mln people

Amount of transactions throughPOS-terminals, bln USD

11

8
2018

2019

15

2020

20

6
2020

2021

2022

10

2021

The payments market and consumer
habits changed after the pandemic.
The increased demand for remote
payments for services and goods has
become a powerful catalyst for thedevelopment of digital financial
services.

•

In 2019 the “shadow economy”
accounted for 52% in Uzbekistan. To
date, government has taken several
steps to address this problem such as
implementing digital technologies,
increasing the volume of non-cash
payments, increasing the popularityof banking services.

•

Recent state-led banking reforms in
Uzbekistan have spurred the entry of
foreign entities, propelling local banks
to enhance customer service
simplicity and emphasize thedevelopment of remote service
channels like client-bank interfaces
and mobile applications.

14

2022

Value of transactions through QRonline system, mln USD

63

15
2021

•

9

Number of transactions throughQR-online system, thnd people

+119%

+56%

30

+30%

Key observations+1500%

17.0

1.4
2022

2021

Sources: Statistics Agency, Central Bank of Uzbekistan, Ministry of Digital Technologies of the Republic of Uzbekistan

2022©2023 Mastercard. Proprietary and Confidential

In recent years, remote banking has experienced significant
growth, highlighting untapped potential for enhancing
financial services

INFRASTRUCTURE AND GROWTH FACTORS

Population with access to the internet, mln people
CAGR 2018-2022:– Legal entities 28.8%– Individuals 14.3%

40%
13.4
0.4
13.0
2018

•

At the beginning of 2023, Uzbekistan
had 26,7 mln internet users,
representing a 77% internet
penetration rate.

•

There were a total of 32 mln active
cellular mobile connections,accounting for 91% of the total
population.

•

The positive impacts of state
programs aimed at advancing thedigital economy, enhancing the"Electronic Government" system, andaligning with the "Digital Uzbekistan– 2030" strategy are evident acrossvarious indicators, surpassing initial
growth targets.

77%

49%

58%

65%

16.6
0.6
16.0

19.7
0.7
19.0

22.9
0.9
22.0

26.6
1.6
25.0

2019

2020

2021

2022

Share of population with access to the internet, %Legal entities, mln

Individuals, mln

The number of subscribers of cellular mobile networks, mln people
7.8%
72%

77%

84%

91%

67%
22

24

26

29

32

2018

2019

2020

2021

2022

Share of subscribers to population, %11

Key observations

The number of subscribers of cellular mobile networks

Notes: Based on the report of the Ministry of Digital Technologies of Uzbekistan to the Legislative Chamber of the Oliy Majlis**Current indicator as of the date of the issuance of the Decree of the President of Uzbekistan No.6079 dated on 05.10.2022
Source: Statistics Agency, Ministry of Digital Technologies of the Republic of Uzbekistan, GSMA, open sources©2023 Mastercard. Proprietary and Confidential

The Covid-19 pandemic accelerated the development ofdigital infrastructure, including internet and mobile services,
driving the shift towards remote banking

INFRASTRUCTURE AND GROWTH FACTORS

Total permanent population, mln people+1.31%, 3.68 mln.
32.0

2017

32.5

2018

33.0

2019

33.5

2020

34.5

2021

Actual numbers

34.6

2022

35.1

2023

35.7

2024

36.1

2025

38.3

2030

UN DESA predictions

36.4 mln
Population of Uzbekistan as of July 1, 2023

Key observations•

The working population varies from
55% to 60% of the total population.

•

According to the World Bank, thecountry’s population is comparatively
young and remains young for nearly
10 years, with a median age 29. A highshare of the young population
provides the banking sector with anopportunity to develop new products
and digital channels.

•

With increasing economic prosperity,
decreasing economic inequality, andprogressive urbanization, theseelements are projected to increase
fintech development.

Population is growing faster than projectionsof UN DESA: for 2023 actual population is36.4 mln, which is higher than the predicted
35.16 mln.

Average income per capita, USD
+17%
106

120

150

192

220

264

2016

2017

2018

2019

2020

2021

320

2022

Working population, mln people
+4.6%

12

19.5

19.7

2017

2018

19.9

20.0

2019
2020
Number of permanent population at working age

Sources: Statistics Agency, World Bank, UN DESA

20.2

20.4

2021

2022

©2023 Mastercard. Proprietary and Confidential

Uzbekistan's demographic landscape and the consistent
growth of average income among the population further
fueling fintech growth making it a highly promising market

INFRASTRUCTURE AND GROWTH FACTORS

Priority areas of reform
Improving
efficiency of thebanking system

Loans to individuals and legal entities, bln USD

13
15%
85%
2018

Ensuring financial
stability of thebanking system

Decreasing thestate share in thebanking sector
Improvingavailability andquality of financial
services

19
19%

24
20%

81%

80%

2019

2020

Legal entities

28
22%

20

2018

2019

78%

74%

Banks began developing theirstrategies in 2020 to diversify theirloan and deposit portfolios andreduce their dependency on state
programs and funding. This led to thedevelopment of new retail products,
deposits, loans, and othercommission-based products to
attract individual customers.

2021

2022

•

Banks are required by the Central
Bank to attract private investment by
2024. Therefore, they are targeting toincrease the share of their retail and
SME portfolios.

Individuals

26

27

2020

2021

Number of ATMs
20,400
2,200
2017

13

•

32
26%

Number of issued bank cards, mln
19

Key observations

Sources: Statistics Agency, Central Bank of Uzbekistan, Ministry of Digital Technologies of the Republic of Uzbekistan

2022

34

2022

©2023 Mastercard. Proprietary and Confidential

Government announced a banking sector reform strategy
for 2020-2025 that was a start of banks enhancing theirportfolio to SMEs and individuals

INFRASTRUCTURE AND GROWTH FACTORS

Dominating the financial system, the banking sector is
primarily state-owned and highly concentrated
Key observations

Assets of the banking, bln USD, as of 31.12.2022•

Commercial banks comprise morethan 95% of total financial sector
assets. The banking sector currently
consists of 35 banks.

•

The top five state-owned commercial
banks accounted for 62% of thesector's total assets at the end of
2022.

62%

OF MARKET’S ASSETS

10.7

4.7

14

*The National Bank for Foreign Economic Activity of the Republic of Uzbekistan** Qishloq Qurilish bank*** Orient Finance bank
Sources: Central Bank of Uzbekistan

1.0

0.8

0.7

0.7

0.6

0.4

0.3

Infinbank

Asia Alliance

Tenge

Davr

©2023 Mastercard. Proprietary and Confidential

1.1

Trast

1.2

UzKDB

1.4

OFB***

1.5

Turon

1.5

Aloqa

2.2

Hamkor2.6

Mikrocredit

People's bank

Ipoteka

Asaka

Agro

Uzpromstroybank

NBU*

2.8

Ipak Yuli

3.9

QQB**

4.6

Kapital5.7

02Fintech Ecosystem•••

Ecosystem Map
Access to Capital
Government support and IT Talents

FINTECH ECOSYSTEM

Major fintech players started to emerge in Uzbekistan during the 2010s

Improvement of RBS
Legislative
regulation of crypto
exchanges
2004

2011

FinTech 1.0

2016

2017

2018

MyID

Mobile-ID

Uzbekistan Cryptocurrency Mining Pool

Law "On
Payments andPayment
Systems"

2019

Uzbekistan Blockchain Valley

Approval of theprocedure forthe creation of"regulatory
sandboxes"

2020

FinTech 2.0

2021

2022

FinTech 3.0

Rustam Rahmatov
CEO and Founder of Iman
Fintech Lab

Fintechs (start-ups)

Key players

Licensing procedure and rules for the
implementation of crypto exchanges

Development of thedigital economy

16

Sources: Open sources, expert opinions, "On measures to radically improve the activities of the Central Bank of the Republic of Uzbekistan"Kun.UZ, Resolutions "On measures for thedevelopment of the digital economy in the Republic of Uzbekistan" and "On measures to organize the activities of crypto exchanges in the Republic of Uzbekistan”, Decree of the
President of the Republic of Uzbekistan "On the strategy of reforming the banking system of the Republic of Uzbekistan for 2020-2025"©2023 Mastercard. Proprietary and Confidential

Regulatory measures

Strategy for reforming the banking system“Digital Uzbekistan 2030 strategy”

Key growth factors
include thedevelopment of
the sandbox andregulatory
advancements.
While the sandbox
has beenestablished, it isstill in its earlystages and lacks
experts, acomprehensive
understanding.

““

Historical development of the market

FINTECH ECOSYSTEM

Fintech ecosystem map

Payments and Transfers

BNPL Services

Processing Сenters andPayment Systems

SME Accounting and Finance Management

Internet acquiring

Associations and Unions

Blockchain Initiatives

Technology Parks

Digital Insurance

POS

Scoring

Electronic Money Issuers

Investments

Financial Marketplace

17

Sources: Open sources, expert opinions

Public Authorities

International Organizations

Incubators and Accelerators

Venture Capital

Education©2023 Mastercard. Proprietary and Confidential

Mobile BanksFINTECH ECOSYSTEM: ACCESS TO CAPITAL

EdTechOther
6.0%
HRTech4.0%
E-commerce 3.0%
4.0%

SaaS 22.0%

Fintech startup$7.1 mln

Deal amount, $K

Investors

2023

200

UzVC, AloqaVentures

2023,
2022

3 000

500 Global, Uzcard Ventures,
oth.

2022

250

UzVC, AloqaVentures

2022

100

UzVC

2022

200

Semurg VC

2022

250

AloqaVentures, Semurg VC

2022

200

Semurg VC

2022

100

Semurg VC

2022

650*

Sturgeon Capital, Quest
Ventures

61.0%

FinTech18

Year

Sources: data from UZVCA as of 31 June 2023, Open sources, expert opinions*BILLZ is included in the SaaS group, while offering a number of financial services“

RustamKhamdamov
CEO and Co-founderof BILLZ©2023 Mastercard. Proprietary and Confidential

Venture capital deals amount by sectors

The venture
investment market
is still in its earlystages of growth.
Only recently havethe first investors
started to maketheir presence
known. These
predominantly
include corporate
and semigovernmental
entities.

“

From 2022 to 2023, $7.1 mln was invested in 25 companies acrossindustries, with over 61% of these funds allocated to fintech companies

FINTECH ECOSYSTEM: GOVERNMENT SUPPORT AND IT TALENTS

19

The National Action Strategy for Five Priority
Development Areas was a groundbreaking movein the banking sector. It involved bringing
investments into a state-involved bank with theaim of selling its shares to foreign investors.

The Development Strategy of New Uzbekistan
for 2022-2026 aims to implement digitaltransformation in the national economy, industry,and society. It also aims to develop the digital
economy with an increase in its share by at least
2.5 times. The level of digitalization of production
and operational processes in the real sector of
the economy, including the financial and banking
sectors, should reach 70%.

2017-2021

2022-2026

2013-2020

2020-2030

2023-2027

The National Information and Communication
System Development Program 2013-2020 has
helped to ease the flow of credit to businesses in
Uzbekistan. The COVID-19 pandemic also
contributed to building trust in digital banking
systems, as paper-driven venues, signatures, andcash were digitized. This integration of digitaltechnologies into the banking sector has helped
to optimize loan portfolio growth and reduce
credit concentration risks. The government has
also supported businesses by allocating loans forgoods and services not produced in Uzbekistan.

The adoption of the Digital Uzbekistan 2030
strategy was an important milestone on thepath of Uzbekistan's digital transformation.
With a clear vision, focused objectives, and acollaborative approach, the strategy aims totransform Uzbekistan into a country with adeveloped digital economy and to reap the
benefits of a technology-based society by 2030.

The E-commerce Strategy aims to create athriving digital economy by supporting small andmedium-sized enterprises. It was developed by
the Ministry of Investment, Industry and Trade ofUzbekistan, together with the Ministry of Digital
Technologies, the E-commerce Association, andother agencies, with the support of the
Ready4Trade Central Asia project of theInternational Trade Centre, funded by theEuropean Union .

Sources: lex.iuz regulatory acts portal, open sources, experts' opinion©2023 Mastercard. Proprietary and Confidential

The Government of Uzbekistan shows strong commitment
to develop the country’s banking and fintech industry

FINTECH ECOSYSTEM: GOVERNMENT SUPPORT AND IT TALENTS

20

The current state of fintech in
Uzbekistan is in a phase of
consolidation and growth. We arewitnessing the emergence of more
players, startups, and newentrants. However, from a
regulatory perspective, there is aclear push for consolidation andincreased oversight.
Rustam Rahmatov

CEO and Founder of Iman

©2023 Mastercard. Proprietary and Confidential

Robin Butler

Partner of Sturgeon Capital

“

“

“

Sam Boboev

Fintech expert, COO & Co-Founder ofbotcommerce.io“

The opportunity is there for
fintech’s to fill the void left bytraditional institutions and build
novel data and distribution. This isbeing tackled from several angles,
whether through direct consumer
lending by companies such as
ZoodPay, SME lending by Oasis
Microcredit, or by other software
players offering embedded financesuch as Billz. The combination ofthese different approaches,alongside government support, isleading to a rapid increase infinancial adoption in the country.

““

In recent years, the government
has passed laws to foster fintech
growth, notably enabling around50 payment companies, but a newtax committee requirement has
made merchants wary of QR
payments due to data sharing with
tax authorities.

FINTECH ECOSYSTEM: GOVERNMENT SUPPORT AND IT TALENTS

•
•
•
•

7,5% Income tax
0% Corporate tax
0% Unifies social benefits
0% Custom payments on good imports for own needs

The acceleration program is designed for 3 months and provides startups withthe following:
•
•
•
•
•
•
•

Comfortable office
Mentorship
Consultation of lawyer
Accounting support
Networking
Unlimited access to business events
Angel investors and venture capitalIn terms of the infrastructure, IT Park will expand covering almost 7 hectares by 2024. 385,000 m2 will include 17
high-class buildings with conference halls, office space, an IT Academy, an IT University, a sports complex, coworking centers, an IT residence, and a hotel.
IT Park also has offices in all regions of Uzbekistan, providing office premises, co-workings and educational
infrastructure.

21

Sources: Open sources, IT Park

Dilshod Khashimov
CEO of National Venture Capital Fund UzVC
©2023 Mastercard. Proprietary and Confidential

Members of the ITPARK are exempted from paying taxes and also receive anumber of benefits“

In Uzbekistan, there are around
1,200 startups primarily in theirearly stages, facing challenges inattracting investor interest;
however, the landscape is evolving
with the emergence of players suchas UzVC, Aloqa Ventures, UZCARD
Ventures, and Semurg VC, while thecountry witnesses a rise in
incubation and acceleration
programs.

“

The establishment of IT Park is a game-changer for the techindustry. Offering tax incentives and a nurturing
environment, it presents favorable prospects and growthpotential for the sector

FINTECH ECOSYSTEM: GOVERNMENT SUPPORT AND IT TALENTS• Uzbekistan Fintech Accelerator• Startup Bridge• TEAM Hackathon – a marathon tocreate a business idea or startup• The Open Data Challenge is anannual competition for thedevelopment of technologicalsolutions using open dataTumaris.
• Hack is an online competition forgirls from the CIS countries

Contest «President
Tech award»
Every year from 2023, a competition
for the President's Prize will be heldwith a total prize fund of $1 mln.
Directions of the competition:• AI-based technologies• Digital technologies in the social
sphere• Technologies in the field of
information and cybersecurity• ASTRUMHACK Hackathon 2022

• Entrepreneurship & Financial
Technology• URBAN. TECH UZBEKISTAN• Computer and mobile games• Cybersecurity Tournament
AntiHack Challenge

22

Sources: Open sources, expert opinions

Universities• With the support of IT Park, it isplanned to open incubation centersin a number of universities in
Tashkent for students who want tocreate their own innovative
projects.
• IT Park together with EPAM
founded the first online university in
Uzbekistan, IT Park University. The
university program is aimed at
obtaining modern and sought-after
professions in the field of IT.
• “One Million Uzbek Coders” - anonline platform for teaching the
population programming anddigital skills. 2.5 mln people havecompleted this training.

“

Alim Khamitov
Managing Partner of
MOST Ventures©2023 Mastercard. Proprietary and Confidential

Accelerators, contests,
hackathons

Access to venture
capital in Uzbekistan
is improving, withgovernment support
and the emergence of
local funds like UzVCand Sturgeon
Capital. However, it isimportant to notethat the ecosystem isstill developing, andstartups should
remain adaptable,
seek diverse funding
sources, and stay
informed to maximize
their access toventure capital.

“

Numerous hackathons, competitions, acceleration, and incubation
programs are hosted in Uzbekistan, significantly fostering the growth of
IT talents and startups within the region

03

Major Fintech Trends
1.
2.
3.
4.
5.
6.
7.

Digital wallets
E-commerce
Superapps
Neobanks
Buy Now - Pay Later
Islamic finance
CryptoFINTECH TRENDS | DIGITAL WALLETS

Regions and offlinefunctionality• Targets the unbanked population.
• With a strong regional presence,
Click caters to non-smartphoneusers and those without Internet
access.

Superapp and customer
acquisition• The holding comprises Kapitalbank,Uzum Market marketplace, Uzum
Nasiya installment service, andUzum Bank digital bank (formerly
Apelsin Bank).
• The project aims to establish thecountry's largest ecosystem with arobust e-commerce presence.

Active client engagement
and urban cohort• More active in urban regions withlimited rural presence, Payme
exclusively caters to individuals.
• Payme relies on TBC Bank, part of
the TBC Group, for its banking
needs, without pursuing a banking
license.

• As the sole competitor with abanking license, it offers anextended range of services including
deposits and loans.

Key observations
The country's focus on digitalization is driving M&A activity. Several deals are worth noting, such as:

24•

Uzum's agreement to acquire Click in 2023;•

TBC bank group’s consolidation of a 100% stake in Payme in 2023.

Sources: Open sources, expert opinions“

Payme, Click and theother mobile wallets
that have alreadyestablishedwidespread usage
across the country
and are playing animportant part inincreasing digitalfinancial
adoption.

Robin Butler
Partner of Sturgeon
Capital©2023 Mastercard. Proprietary and Confidential

Digital wallets

Slow bank digitalization spurred digital wallet growth,
serving individuals and businesses“

Trend 1

FINTECH TRENDS | DIGITAL WALLETS

Click holds the preference of over 50% of merchants forpayments, followed by Payme wallet at more than a third;
notable interest for adoption centers around Uzum payments
Share of merchants accepting payment using different types of digital wallets,% (2023)
57%

36%

5%

Source: Mastercard Advisors; Stonewater Partners
Results are based on a survey of 326 businesses in Uzbekistan

1%

Sam Boboev
Fintech expert, COO & Co-Founder ofbotcommerce.io©2023 Mastercard. Proprietary and Confidential

“

20%

25

“

The fintech market in Uzbekistan istransitioning to consolidation. The
acquisition of Payme one of thebiggest fintech by Georgian TBC
and the merger of Uzum anecosystem of products with its
marketplace, payments and delivery
services and Click the biggest
fintech in Uzbekistan could be great
examples of the start of aconsolidation process in the market.
I think we should expect acquisitionsof payments companies, especiallyby foreign players that would like toenter the market.

FINTECH TRENDS | E-COMMERCE

Trend 2
E-commerce

The e-commerce market in Uzbekistan has
shown a consistent upward trend, with apenetration rate of 2.2% in 2022, a significant
increase from 0.6% in 2018

International platforms like Wildberries and ZoodMall initially dominated Uzbekistan's e-commercescene. However, a shift is observed with local entrants, notably the fintech-backed Uzum in 2022,
gaining market share.

$311 mln
E-commerce market size

E-commerce market size, USD mln (low-end)
CAGR (2022-2027): 41.4%
16,566

10,923

15,187

19,644

13,05913,95518,733

12,307

17,784

12,129

150

234

543

815

1,114

1,760

88
2019A

311

1,426

66
2018A

2020A

2021A

2022A

2023F

2024F

2025F

2026F

2027F

CAGR for 2018-2022

E-commerce Market Size

E-commerce market size, USD mln (high-end)
CAGR (2022-2027): 47.4%

10,92366
2018A

12,12988
2019A

12,307150
2020A

13,05913,955

Source: KPMG Uzbekistan

16,566

17,784

18,733

19,644

2,161
2027F

234

311

605

951

1,332

1,732

2021A

2022A

2023F

2024F

2025F

2026F

Total Retail Market Size

26

15,187

E-commerce Market Size

+40%
Forecasted CAGR for 2023-2027©2023 Mastercard. Proprietary and Confidential

Total Retail Market Size

+47%

FINTECH TRENDS | SUPERAPPS

Zood
ZoodEcosystem
Ecosystem
Sellers

Sellers

BuyersBuyersInventoryfinancing

Inventoryfinancing

BNPL

BNPL

Electronic
warehousing
solutionsElectronic
warehousing
solutions

Pick-up points

Pick-up points

Fulfillment
CenterFulfillment
CenterLast Mile ofDelivery

Last Mile ofDeliveryParcel lockers

Parcel lockers

Electronic Delivery
Management

Electronic Delivery
Management

Onlinemarketplace

Onlinemarketplace

The market's key trend is the rise of superapps. Click and Uzum
recently merged, amassing 13+ mln users and offering various
services like payments, banking, e-commerce, and food delivery.
Payme, backed by TBC bank, aims to expand its 9+ mln
customer base beyond payments. Humans, starting as a virtual
operator, now provides a range of services including cards andpayments, also entering the super app space.
Sam Boboev““

Uzum Ecosystem
Uzum Ecosystem

Zood Ecosystem

Fintech expert, COO & Co-Founder of botcommerce.io

27

Sources: Mastercard Advisors; zoodpay.com; uzum.com; ekotizim.uz, CBU, open sources, experts opinion“

Uzum Ecosystem

Inspired by Kaspi there is a lot of effort in Uzbekistan to build asimilar type of ecosystem. The two leading players at the
moment are Zood and Uzum, although they have slightly
different strategies. The other banks are trying to figure out
how they can offer an ecosystem of products and services, but
it is not in their DNA so they are struggling.
Robin Butler

Partner of Sturgeon Capital©2023 Mastercard. Proprietary and Confidential

Superapps

Players offer diverse sets of services but all of them aim to become“superapps”“

Trend 3

FINTECH TRENDS | NEOBANKING

Neobanking

There is a significant growth of neobanks serving both individuals and thebusiness sector, with a particular focus on micro, small, and medium-sizedenterprises

In 2020, the domestic
digital bank Anorbank
secured a banking license.
Its mobile app facilitates adiverse range of online
payments for various
services.
The app offers thefollowing features:• Online card orderingwith courier delivery• Application and approvalfor online credit• Online deposit accountopening• Online current accountopening for sole
proprietors and small to
medium-sizedbusinesses.

28

The bank provides retailbanking services via the
TBC UZ mobile app,powered by the innovative
fintech platform Space.
It was awarded the title of'Best Digital Bank of
Uzbekistan 2022’.
Notable features include:• Online card orderingwith courier delivery• Online credit application
and approval• Online deposit accountopening.

Apelsin, the digital bank,operates as a subsidiary of
Kapitalbank. In 2022,
Apelsin embarked on
integrating with Uzum
group's services, a move
aimed at expanding nonbank sector capabilities.
Key features include:• Online card orderingwith courier delivery• Online credit application
and approval• Online deposit accountopening• Payments through Uzum
Pay using QR codes.

• SmartBank, a digitalbank and subsidiary ofAgrobank, is poised toserve the businesssector.
• In 2022, the credit
institution obtained abanking license, enabling
it to engage in banking
activities.

Multibank is a neo-banksolution designed for micro,
small, and medium-sizedbusinesses. Its mission is tointegrate all necessary tools
for comprehensive businesssupport.
Key features include:• Banking services• Electronic document
management• Invoicing• Counterparty
verification.

©2023 Mastercard. Proprietary and Confidential

Trend 4

FINTECH TRENDS | ISLAMIC FINTECH

Islamic fintech

The huge demand for Islamic finance will leadto a rapid growth of this segment in the
coming years

For several years, the government of Uzbekistan has been working to increase the supply of halal financial
instruments in the country's economy. This initiative should make it possible to involve a huge number of individuals
and SMEs in the financial sector, who are currently deprived of access to funding for religious reasons.
With the support of the Islamic
Corporation for the Development of
the Private Sector (a subsidiary of
the IsDB), a number of Uzbek banks
are developing the principle of the“Islamic window”

9 out of 10

of the population professes Islam

Islamic Fintech is still
underrepresented in the country,
but digital halal BNPL services are
gaining popularity (all three services
have Shariah compliancecertificates)

2021

2022

With the support of the IsDB, thestate bodies of Uzbekistan beganwork on the development of aregulatory framework for Islamic
Finance (banking and capital
markets)

The Law "On Non-Bank Credit
Organizations and Microfinance
Activities", under which non-bankorganizations received the right toprovide Islamic Finance services (forSMEs and individuals)

75%
61%

56%

38%

Business

Individuals

Market players
Do not take loans from traditionalbanks due to religious beliefs
Expressed a willingness to use Islamic
financial services to meet their needs

29

Source: open sources, company websites, expert interviews“Landscaping Analysis of Islamic Finance Instruments in Uzbekistan”, UNDP, 2020. “Transformation and structural change In Uzbekistan’s
economy”, OECD, 2021

©2023 Mastercard. Proprietary and Confidential

Trend 5

FINTECH TRENDS | BNPL

Buy Now - Pay Later

BNPL is emerging as a significant catalyst for
the growth of e-commerce

BNPL (Buy Now, Pay Later) services are now highly popular in Uzbekistan and have already become a necessary
tool for many marketplaces to stay afloat for the following reasons:• Many BNPL services adhere to Sharia law, appealing to Uzbekistan's predominantly Muslim population.
• Fintech companies offer swift online installment approvals, often in under three minutes.
• Given the country's moderate average monthly salary of about $321, BNPL services make purchases morefinancially manageable.

“

There is a limited lending practice inthe country, partly due to religious
characteristics. In such a situation,
BNPL lending is a promising
direction.

“

Trend 6Madiyar Sultanov

Market players

ZoodPay BNPL is an installment service launched in
Uzbekistan in 2019, as part of the Zood digital ecosystem.
The service is also available in Lebanon, Iraq and Pakistan.
ZoodPay offers:• online and offline installments for goods of more than
4,000 local, as well as 30,000 foreign sellers• instant scoring (80% approval level)• 4 interest-free payments up to $500“

Marketplaces are becoming very
popular and active in recent years
and in the 3-5 years will certainly set
trends in fintech and payments
sectors as these two industries areclosely related. We can already see aboom in BNPL sectors and credit
cards by banks.

“

The halal installment service Paymart, launched in early
2021, was renamed Uzum Nasiya in 2022, becoming partof the Uzum digital ecosystem. In April 2023, the service
had more than 350,000 customers.
Uzum Nastya offers:• online and offline installments in more than 5,000
partner points, as well as in the Uzum Market• approval within 3-5 minutes• LimitStart - installments for 3 months without
overpayments and down payment (up to $200)• Limit Max - installments for 6 and 12 months without
down payment (up to $2,000)

Sam Boboev

Fintech expert, COO & Co-Founder ofbotcommerce.io

30

Source: open sources, company websites, expert interviews©2023 Mastercard. Proprietary and Confidential

Ex-Head of ZoodPay Uzbekistan, CEO & founderof Plat

FINTECH TRENDS | СRYPTO

Controlled development of the cryptoindustry as an alternative source ofinvestment for households and businesses

Trend 7
CryptoSince 2018, the government has been working to formalize the crypto-industry, resulting in transactions involving
crypto-assets by individuals and legal entities not being subject to taxation or currency regulations2
сrypto-exchanges

Mining is subject tomandatory registration with
the NAPP

2018

2022

2023

Presidential Decrees on theorganization of crypto
exchanges and mining
activities. The National
Agency for ProjectManagement (NAPM) was
designated as the licensing
authority

The Presidential Decreetransformed NAPM into the
National Advanced Projects
Agency (NAPP) a full-fledged
regulator in the sphere of
crypto-asset. The Decree
supplemented and clarified
the existing regulation of thecrypto-industry

Uzbek citizens and legal
entities may buy, sell or
exchange crypto-assets only
through national service
providers licensed by the
NAPP

2сrypto-depositories

10
offline and online crypto-stores3
special regime participants

31©2023 Mastercard. Proprietary and Confidential

The use of crypto-assets as ameans of payment andacceptance of payment isprohibited

A special regime (regulatory
sandbox) has been launchedwithin the NAPP, whichallows piloting innovative
products in the sphere of
crypto-asset (participants are
exempted from taxes)

FINTECH TRENDS | СRYPTO

This card integrates traditionalbanking services with access to acryptocurrency exchange,
enabling automatic conversion of
cryptocurrencies into payment
currency for retail transactions
worldwide.

“

The crypto market and the Islamic
finance market are expected toexperience rapid growth. This is dueto the existence of relevant
technologies and a better
understanding of these markets.
The growth is expected to be swift
because of the low starting point,high market potential, and the factthat many people are interested but
unsure about how to get started.

“

Kapitalbank and crypto exchange Uznex launched
Uzbekistan's first cryptocurrency card on Mastercard
platform

Rustam Rahmatov©2023 Mastercard. Proprietary and Confidential

CEO and Founder of Iman

32

04

Rising Fintechstars
•
•
•
•
•

Zood
Billz
Iman
Marta
Bozor

RISING FINTECHSTARS

Zood
History• Launch of the ZoodMall marketplace in Uzbekistan

2021• Running ZoodPay BNPL Offline• Launch of the ZoodPay loan in 12 payments2022• Acquisition of Fargo e-Logistics• Launch of the ZoodShip e-Fullfillment Center• Launch of ZoodPay lending for SMEs
• Partnership with the hypermarket "Korzinka"• Partnership with Mastercard• Launch of the ZoodPay broker

2023

34

• Launch of the ZoodPay virtual installment card

Source: Based on materials provided by ZOOD

It is an ecosystem that combines an ecommerce lending platform (ZoodPay),a marketplace (ZoodMall), delivery andlogistics services (ZoodShip), and adigital bank.

Key metrics

30,000active sellers are represented
on the marketplace

1.1 mlnmonthly active super app
users as of 2022

560,000

loans were granted©2023 Mastercard. Proprietary and Confidential

2019

About the company

RISING FINTECHSTARS

MARTA

2018

About the company• Creation of MayaSoft• Creating a SoftPoS solution with a card reader

2020• Round A funding - $750,000• The origin of the idea of creating a full-fledged SoftPoS

2021• Launch of SoftPoS - MARTA Terminal• 7 partner banks in Uzbekistan

2022
2023

35

• 2,000 merchants of Uzbekistan• 12 partner banks in Uzbekistan• 2,500 merchants of Uzbekistan• 15 partner banks in Uzbekistan• SoftPoS joint projects in Saudi Arabia, the Baltic States,
Africa, Tajikistan

Source: Based on materials provided by ZOOD

MARTA
A fintech startup that provides mobile
acquiring services for small businesses.
The company offers a mobile terminal
with which you can connect to asmartphone and accept payments fromcards of various payment systems.
Key metrics

1.5%

share in the total segment of
POS terminals

7x

Increase in the number ofusers and transaction
volumes over the past year

$750,000Funds raised in the pre-seed
round©2023 Mastercard. Proprietary and Confidential

HistoryRISING FINTECHSTARS

BILLZ
History of development and plans

2017• Foundation of the startup• Start of launching SME financing through the platform

2020• Raising $750,000 from British venture capital fund Sturgeon
Capital and Quest Ventures

2023• Planning to raise $2-$4 mln in investments

About the company

Provides all-in-one store management
automatization solutions for companies in retailbusiness. The company offers 3 types of monthly
and yearly subscriptions with a variety ofservices for retail companies, in addition it beganproviding financing and development of an online
store for its customers.

2023• Expansion into 8 countries (Kazakhstan, Kyrgyzstan,
Georgia, Saudi Arabia, Egypt, Morocco, Indonesia, Vietnam)

1,200+

stores use BILLZ

2024• Increasing the number of stores to 10,000

500,000transactions per month2025• Transformation into a Fintech company$25 mlntransaction volume per month36

Source: Based on materials provided by ZOOD

©2023 Mastercard. Proprietary and Confidential

Key metrics

RISING FINTECHSTARS

Iman

2020

2021

• Foundation of the startup• Demo Launch of IMAN PAY Buy-Now-Pay-Later Product in
Tashkent• "Entrepreneurship World Cup" (EWC) Winner - $1,000,000• $1M - Attracted From Angel Investors• Seedstars World Competition 2021" (EU) Winner

About the company

The company has two divisions, which are
IMAN Invest and IMAN Pay. IMAN Invest
provides Mudarabah investment account for
its users via a mobile application. IMAN Pay is
a Sharia-compliant financing solution thatprovides installment plans for purchasing
consumer goods (buy now - pay later).

Key metrics

30x
2024

37

• Company planning to expand in other Muslim majority
countries such as Pakistan, Bangladesh in addition thecompany is aiming to enter Kazakhstan

Source: Based on materials provided by ZOOD

growth in 2023

30,000monthly active users$10 mln

retail Investment Attracted©2023 Mastercard. Proprietary and Confidential

History of development and plans

RISING FINTECHSTARS

Sug'urta Bozor
History of development• A lead generator for insurance companies is being created2022• The project is being transformed into a B2C marketplace for
insurance services in Uzbekistan with a focus on auto
insurance2022• Sugurta Bozor has attracted 100,000 USD from “UzVC”

2023

38

• A startup with 120,000 users starts providing B2B SaaS,
which helps increase the profits of insurance companies byreducing the cost of issuing one car insurance policy

Source: Based on materials provided by ZOOD

The first insurance marketplace that consolidates
insurance packages from insurance companies in
Uzbekistan and provides the most relevant
insurance policy based on the inputs made by theuser. The startup has introduced a monthly car
insurance subscriptions. Car insurance policies canbe purchased without the inspection of the vehicle.

Key metrics

120,000

users on the platform

4,500

policies sold per month300%

growth rate for the last 9months©2023 Mastercard. Proprietary and Confidential

2021

About the company

05

Lessons learned
and Perspectives

LESSONS LEARNED AND PERSPECTIVES

Market opportunities

Increases inspending and
GDP growth•

In 2022, urbanization, lifestyle changes, increased purchasing power, and athriving economy drove growth in the fintech market. Further fintech
development expected due to rising prosperity and reduced inequality.

•

The government is actively addressing financial inclusion, while also fostering an
enabling fintech ecosystem.
Lack of regulation by the state until 2018, focus on the development of thepayments market.
Lack of regulation of non-bank payment systems.

State regulationand government
support••Features of thebanking system•••

Lack of quality financial services in the country in the early 2000s.
For a long time, the focus of banks has been focused only on the corporate sector.
Uneven access to banking services for different segments of the population and
SMEs.

Qualifiedpersonnel••

The influx of a large number of IT specialists from Russia in 2022-2023.
The attractiveness of the fintech sector as a place of work for these specialists.

“

There are great opportunities forthe development of fintech in theregions of Uzbekistan. Tashkent is ametropolis with a high level ofcompetition. But drive 100 km andthe penetration of banking services
and fintech will be small.

Kaiyrzhan Kozhaly
Fintech expert“

SMEs do not use banking services
much. Weak access to bankfinancing.

Rustam Khamdamov

CEO and Co-founder of BILLZ

Marketdevelopment
40•

Development of the e-commerce market, as well as the distribution of QR codes
among individual entrepreneurs.

Source: open sources, expert interviews©2023 Mastercard. Proprietary and Confidential

As of July 1, 2023, Uzbekistan's population stands at 36.4 mln, surpassing UN
DESA predictions of 35.16 mln, with a working-age population ranging from 55%
to 60%. The country's relatively young population, with a median age of 29,
presents opportunities for the fintech sector.

“

•

“

Young, fastgrowing, andurbanizing
population

LESSONS LEARNED AND PERSPECTIVES

Restraints•••

Coverage of the
population withbanking services•••

Limited coverage of the population with banking services.
Heavy financial burden on some segments of the population and on SMEs.
Limited access to finance and investment.

“

The state's initiatives are going in theright direction. But their implementation
is something that you need to pay
attention to and build a more effective
methodology. There is no close
collaboration that we would like.

Madiyar Sultanov
Ex-Head of ZoodPay Uzbekistan, CEO &founder of Plat“

There are challenges, such as low
internet penetration, lack of trust in
online transactions, high delivery costs
and delays, and regulatory barriers. For
example, customers need to provide
proof of income for transactions above
US$ 1,000, which can discourage online
purchases. Moreover, some e-commerce
platforms are not fully compliant withlocal tax laws and consumer protection
regulations, which can expose them tolegal risks.

“

Sam Boboev

Fintech expert, COO & Co-Founder ofbotcommerce.io

41

Source: open sources, expert interviews©2023 Mastercard. Proprietary and Confidential

Infrastructuredevelopment

Difficulties in developing a strong digital presence may have an impact on abusiness's capability to reach a larger consumer base and compete effectively inthe fintech sector. The country's digital infrastructure, including internet adoption
and broadband availability, may not be as developed as in other similar economies.
Limited availability of mobile phones among the population, high mobile data costand low speed of internet in some regions.
Low level of automation of business processes, especially for SME.
The presence of vulnerabilities in IT systems, which can lead to the emergence ofmore cyber threats.

“•

LESSONS LEARNED AND PERSPECTIVES

Perspectives and future trends“

Rustam Khamdamov

CEO and Co-founder of BILLZ“

Sam Boboev

Alim Khamitov

Nodir Badriddinov
CEO of Marta“

The other opportunity is for embedded
finance, especially for SMEs in the country.
Startup software providers have a uniquelevel of data and distribution that they canleverage in partnership with financial
institutions to provide access to working
capital for SMEs. Specialised microfinancecompanies such as Oasis Microcredit are
already working with startups like Billz to
distribute loans, and this will only increase.
Robin Butler

Partner of Sturgeon Capital

42

Source: expert interviews©2023 Mastercard. Proprietary and Confidential“

Rustam Rahmatov

CEO and Founder of Iman“

Marketplaces will definitely develop.
GovTech and HealthTech have certain
prospects, subject to the improvement of
the regulatory framework in the field of
medicine and insurance.

““

Managing Partner of MOST Ventures“

Fintech expert, COO & Co-Founder ofbotcommerce.io

Future trends suggest that there may beconsolidation around 1-2 major players in
the fintech industry, which could posechallenges for the market's overall healthand competitiveness.

Marketplaces are set to drive innovation in
the B2B fintech industry as they serve not
only consumers but also businesses. We canlook forward to more digital financial
services designed for businesses, especiallysmall and medium-sized enterprises. These
services will help them manage all theirfinancial needs conveniently in one place.

““

The point of growth is to provide thepopulation with the opportunity to invest in
the stock market, the creation of
appropriate applications.

““

As fintech progresses, it is time to consider
integrating with international players andenabling seamless internationaltransactions for both consumers andbusinesses. To achieve this, both companies
and governments need to work together, as
it involves not only technology but also
regulations.