Private FinTech as a tool for sustainable business development in Russia and FinTech Market Trends Deloitte CIS Research Center, 2018 FinTech Market Trends 2018 Contents

01 Foreword

02 Key findings

Overview of the FinTech 03 market Foreword 03 Overview of Kazakhstan’s FinTech market 81 Overview of Russia’s FinTech 01 05 04 The FinTech market in figures 82 market The current situation in Kazakhstan’s FinTech market 83 Overview of Kazakhstan’s 05 02 Key findings 06 FinTech market stakeholder map 87 FinTech market Supply in the FinTech market 95 Demand in the FinTech market 97 06 Appendix 03 Overview of the FinTech market 20 Barriers for development of Kazakhstan’s FinTech market 101 The FinTech market geography 21 Drivers for development of Kazakhstan’s FinTech market 102 07 Contacts Comparison of regional FinTech markets 22 Kazakhstan’s FinTech market outlook until 2020 103 FinTech’s contribution to sustainable development 27 FinTech’s contribution to achievement of the SDGs globally 29 FinTech market outlook until 2020 30 06 Appendix 107

04 Overview of Russia’s FinTech market 31 07 Contacts 120 The FinTech market in figures 32 The current situation in Russia’s FinTech market 33 FinTech market stakeholder map 42 Supply in the FinTech market 53 Demand in the FinTech market 62 Barriers for development of Russia’s FinTech market 68 Drivers for development of Russia’s FinTech market 71 Russian FinTech market outlook until 2020 74

02 FinTech Market Trends 2018 Foreword

01 Foreword

02 Key findings

Overview of the FinTech 03 market Finance technologies (FinTech) are among and e-transfers. However, presently it offers According to international experts, this market Overview of Russia’s FinTech the fastest growing markets. They beat other a number of new services, such as lending, emerged around ten years ago, with payments 04 industries by the pace of the development personal finance management (PFM), loyalty systems (non-bank transfers), mobile payments market both in terms of the financial performance (e.g. programs, insurance, management accounting, (via mobile phones) and online lending (e.g. Overview of Kazakhstan’s 05 investments, M&A activity, etc.) and the number etc. As a result, in a relatively short period P2P) being the first products launched in this FinTech market of end-consumers. of time (in less than five years) we saw dramatic segment. As soon as in two years this list International experts note that the number changes in the infrastructure of the adjacent increased significantly and became unique from 06 Appendix of FinTech users has been increasing by 15- markets, i.e., banking, insurance, broker services a geographic standpoint. 20 percent annually in the past five years. and other segments. 07 Contacts The FinTech products are offered in various Lora Nakoryakova consumer segments. Most FinTech users cannot However, FinTech-related solutions are Deloitte CIS Research Center Leader do without using those technologies on a daily implemented in the major companies much basis. For instance, one in three residents slower than the FinTech industry itself advances in million-plus cities use more than two FinTech and the consumer interest grows. services daily. Experts estimate the FinTech Hence, the fast growing consumer interest penetration in Russia at 50 percent. in the FinTech end products and the lack of sufficient flexibility of the business The key driver behind the FinTech market infrastructure (e.g. Financial institutions) at the development are the Internet and digitalization. point of launching and implementing new At the early stages, the FinTech market FinTech solutions paved way to the birth of the comprised nothing more than e-payments private FinTech market.

03 FinTech Market Trends 2018 Foreword

01 Foreword

02 Key findings

Overview of the FinTech 03 market Speaking about the FinTech market and FinTech Using the examples of Russia and Kazakhstan China (69 percent) and India (52 percent) Overview of Russia’s FinTech service proliferation one should not ignore such we are going to review the specific drivers overtake Russia by this scale. The results 04 development driver as trade relations between behind supply in the FinTech market, of Deloitte’s international research support market countries. Russia’s key trade partners are China consumer interest (the demand structure), and this assumption to some extent. According Overview of Kazakhstan’s 05 and Kazakhstan, which undoubtedly impacts examine the influence of the FinTech market to that research, Russia ranks among top FinTech market the Russian domestic, as well as the global on the sustainable development of business 5 digital banking leaders in . In practical FinTech market. Moreover, the representatives in the region. terms, it is exactly this measure which reflects 06 Appendix of Kazakhstan’s FinTech market are unanimous the potential effect of the FinTech market in assessing the performance of this market It is common knowledge that absolute leaders development (on the adjacent industries 07 Contacts post-2014. Thus, in 2016 the market grew in the FinTech industry are the US, some and the society as a whole). The emergence by 365 percent versus 2915 and twelvefold EU countries and Singapore. However, of new FinTech technology and their direct versus 2014, to 8.9 billion tenge. there is a another measure of the market application leads to changes in the structure development, i.e. service penetration index of consumption, lowers costs of some In this report we want to provide both on which the experts differ: some of them functionalities (loyalty programs, client base a snapshot of the global FinTech market, believe that this measure is higher in developing processing), higher business process efficiency outlining its development outlook, and focus markets, while the others think it is fully in line and quality (scoring, key audience targeting, on developing FinTech markets that are with FinTech development levels. The former loyalty programs, etc.), as well as significant essentially interrelated (for economic and social believe that Russia ranks third by this measure impact on the business sustainability in the reasons). among 20 major international markets. Only region, etc.

04 FinTech Market Trends 2018 Foreword

01 Foreword

02 Key findings

Overview of the FinTech 03 market Sustainable development is the concept based In order to prevent negative consequences, ensures secure and unbiased perception Overview of Russia’s FinTech on the economic, social and environmental 195 UN member countries approved the of conditions in which goods are produced, 04 efficiency and aimed at meeting current needs Sustainable Development Goals (SDGs) and as well as encourages producers to disclose market of the human society without a damage to the stated their adherence to collective effort of the information on the entire supply chain to its Overview of Kazakhstan’s 05 future of the mankind. It is one of the key topics governments, businesses and society aimed customers. Innovative products and services FinTech market of the modern time. The risks arising from at finding solutions to global problems. of FinTech companies may have a positive the lack of the sustainability practices lead impact on availability of natural resources and 06 Appendix to serious consequences for the business and Big strides in the (FinTech) their rational use. For example, this includes society and are as serious as the traditional make it an important tool of sustainable services enabling real-time transactions and 07 Contacts microeconomic and macroeconomic risks. development which can both increase the other online solutions which are currently Ivan Kukhnin efficiency of the finance industry, contribute replacing the use of paper documents in the Director Currently, the link between sustainability risks to achievement of the SDGs, and create value financial transactions. Risk Advisory and the financial sustainability becomes more for society. FinTech products enable full-scale Sustainability Group Leader obvious for businesses. In our previous report integration of various population groups in the Importantly, some initiatives aimed at attaining Deloitte CIS (How CFOs can manage sustainability risks and financial system by increasing the availability the SDGs through implementing FinTech attain log-term advantages for their companies) of . This is in line with the solutions exist only in the form of ideas, we corroborated this assumption by showing goals of the initiative aimed at increasing the so far. However, our analysis shows that the how the corporate social responsibility (CSR) financial integration in developing countries application of FinTech solutions for social and maturity level contributes to the financial which is directly linked to poverty reduction environmental purposes will only grow. stability of companies. campaigns led by the World Bank and other international institutions. FinTech is a powerful tool for achieving the SDGs Nowadays, the CSR is less often considered and improving the quality of life. as a purely social activity. Instead, it is viewed Although FinTech products appear more of a strategic investment in solution to be focused solely on higher efficiency of social, economic and environmental of financial systems, the financial systems problems which, if aggravated, may undermine are considered to be a tool for increasing the the business and economic sustainability. operating and environmental efficiency. FinTech

05 FinTech Market Trends 2018

01 Foreword

02 Key findings

Overview of the FinTech 03 Key findings market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

06 FinTech Market Trends 2018 | Key findings

01 Foreword

02 Key findings

Overview of the FinTech 03 market The FinTech market Driver 1. Driver 2. Driver 3. Overview of Russia’s FinTech has three fundamental evolution drivers: Growth in demand Proactive regulation Market agility 04 Top 3 reasons: Top 3 reasons: Top 3 reasons: market •• Growth in demand for online or mobile 01. A financial technology boost results 01. Financial technology is one of the key tools 01. Digitalisation is a trend with relevance across Overview of Kazakhstan’s financial services for households and 05 in broader availability of financial services used to strengthen transparency inbusiness various industries, including agriculture, FinTech market businesses for consumers and businesses* and the national economy. It also helps manufacturing and pharma. It has •• Proactive regulation by the government 02. Financial technology contributes to reduce cyber risks in the finance industry. a profound impact on what businesses need 06 Appendix driving an integrated national FinTech to more agile delivery of financial services 02. Financial technology can be used as a way and what clients expect from FinTechs environment and infrastructure to consumers and businesses* to enhance living standardsand implement 02. FinTech is a fast-paced and highly 07 Contacts 03. Financial technology helps to improve better financial support for businesses competitive market. As a result, FinTechs •• Market agility, FinTechs responding with high living standards and make businesses 03. Financial technology underpins the have to stay aligned to both demand agility to a growth in demand by launching more competitive, bringing development of a FinTech infrastructure. specificity and the behaviour of competitors new products/services on a regular basis in healthier profitability. It is already a prerequisite for maintaining 03. With an opportunity to draw on successful growth in the leading national international practices, the Russian FinTech *The agility and availability of economic sectors. market is far more dynamic, offering financial services tend to increase both a broader variety of products and services geographically and also in terms of to surpass other industries. making services available to social groups requiring a more focused Therefore, the FinTech market as such is one proposition. of the drivers enabling a stronger national social and economic climate.

07 FinTech Market Trends 2018 | Key findings

01 Foreword

02 Key findings

Overview of the FinTech 03 market The existing pronounced positive impact 01. Infrastructural or market risks 02. Economic risks 03. Social risks Overview of Russia’s FinTech from the evolving FinTech market also carries Volatility is a characteristic feature of the FinTech A potential growth in debt load on businesses As with many other tech companies, FinTechs 04 certain risks arising as potential negative market. In addition, the demand for FinTech and consumers is one of the major economic have a significant transformational impact on market consequences.Such risks can generally services is quite sensitive to market changes, risks as online loans are one of the key products the labour market. Firstly, the use of automation Overview of Kazakhstan’s 05 be divided into three groups: including regulatory developments. Relatively offered on the existing FinTech market. solutions and RPA technology to develop FinTech market weaker loyalty to FinTech services results new services lays off employees who have in consumers tending to shift from the existing Dropping real income would result been responsible for previously unautomated 06 Appendix products to new offerings as soon as new in an increased debt load, defaults, lower living processes. Secondly, FinTechs tend products or regulatory constraints emerge. standards and aweaker economy. to hire younger professionals, contributing 07 Contacts to a widening inequality in terms of employment This is what characterises the financial services However, this risk is directly dependent on the opportunities for more senior applicants aged industry as a whole. The scale of impact from quality of financial services, and high quality 50+. errors in automated processes is another hinges on the maturity of financial technology. dimension of infrastructural risk. The risk Macroeconomically, the FinTech market needs This could turn into a sensitive issue amid the of inconsistent processes can emerge from support from the government to develop ongoing pension reform in Russia. Even though both cyber risks (e.g. data leaks, which also technology and build a stronger infrastructure, these risks also apply to other industries, the involve the use of data for illegal activities) and which inevitably requires significant financial services industry is one of the largest technological failures in business processes. public spending. employers in Russia.Therefore, it should develop along with the transformation of the educational Another important finding from our survey At the current stage, many private FinTechs have system to prepare professionals who will is that FinTechs have not named their potential been on the market for less than three years, be sought after in a digital world. environmental footprint as a key barrier to the meaning that the market is still emerging and development of the FinTech market. This may has not reached maturity. lead to a heavier environmental footprint as power consumption and related greenhouse As a result, building a market infrastructure gas emissions grow. requires huge financial and labour input from the government and the business community, With FinTech products and data centres with potential investment returns having becoming more widespread, the lack a minimum horizon of three to five years. of commercially viable power-saving and alternative energy solutions increases exposure to these risks.

08 FinTech Market Trends 2018 | Key findings

01 Foreword

02 Key findings

Overview of the FinTech 03 market Economic, social and infrastructural risks Even though there is a large number of risk According to FinTech experts, key risk mitigation These mechanisms will be further strengthened Overview of Russia’s FinTech accompanying the development of the FinTech sources, the FinTech market is not the only mechanisms include: through fundamental drivers that are common 04 market are closely related, with the effect that industry exposed to these risks. Currently, across markets and that also support the market •• Better service delivery transparency across growing barriers trigger risks spanning social, FinTechs account for less than five percent development of FinTech services. This attests Overview of Kazakhstan’s FinTech services 05 economic and infrastructural areas. As noted of the financial services sector. Therefore, key to the fact that this process is organic and has FinTech market above, the FinTech market is characterised mechanisms for mitigating and monitoring •• Stronger security for personal data a mid-term potential over a period of three by volatility resulting from dynamic changes the risks identified should and can be used. to five years. Accordingly, our survey takes 06 Appendix •• Consumer financial and technology education in offerings, with new products and services In addition, FinTechs, as any other financial a closer look at the development trends in the regularly launched on the market. However, service providers, are interested in a healthier •• Affordable funding for Internet-focused and Russian FinTech market over a period until 2020. 07 Contacts when it comes to making a decision, consumers market climate with a lower number of negative FinTech companies In answering this question, we used in-depth do not always have sufficient information histories, reduced consumer debt burden, analytics to gain an understanding of the unique •• More efficient regulation, especially as regards on how FinTechs function, including product stronger market transparency, better data quality and quantity data. legal rules and regulations underpinning the terms and conditions and the volatility of digital quality, higher financial literacy, etc. in a situation development of the FinTech industry currencies. This leads to socio-infrastructural where regulation is tightening, providers fail and socio-economic risks where consumers to comply with business operation rules and •• Bringing private FinTechs under the may face potential issues, including losses. business efficiency is becoming weaker. regulatory umbrella of the Bank of Russia*, as well as making them part of innovation developments and providing them with remote authentication opportunities as part of the project by the Bank of Russia**

•• Better FinTech products (i.e. products should become more user-friendly and help businesses and consumers minimise their costs).

* http://www.cbr.ru/fintech/regulatory_platform ** http://www.cbr.ru/fintech/remote_authentication

09 FinTech Market Trends 2018 | Key findings A snapshot of Russia’s

FinTech market — 2018 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 FinTech market RUB billion Number of employed years Russia’s FinTech in Russia’s FinTech FinTech company 06 Appendix 48 market size, 2017 3,652 industry 3 average ‘age’ 07 Contacts

The average organizations USD million number of B2C The average number Total M&A value, 2017 289 102,000 clients 352 of B2B clients

The average number Consumer The number of employees in FinTech sentiment index* of transactions, 2017 0.43 15 companies 17

* on the scale from -1 to 1 10 FinTech Market Trends 2018 | Key findings Drivers and barriers for development of Russia’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 Top five development strategies for Top five barriers for the development 42 percent of FinTech companies assessed FinTech market Russia’s FinTech market: of Russia’s FinTech market: the efficiency of the regulator’s current efforts 01. Implementation of new technology 01. Low appeal for foreign investors at the average level. 06 Appendix 02. Launch of new products in the market 02. Low purchasing power of the population 03. Entry into new markets 03. Deficiencies of government regulation 38 percent of FinTech companies believe the 07 Contacts 04. Organic growth of the industry efficiency of the regulator’s efforts is low. 05. Higher promotion and marketing expenses 04. Geopolitical risks 05. Lack of flexibility in the tax system with 20 percent of FinTech companies believe the Various aspects of Russia’s FinTech respect to FinTech efficiency of the regulator is low. market development strategies are reviewed in more detail Various aspects of Russia’s FinTech market Regulator efficiency index with respect development are reviewed in more detail to FinTech support and development is at the average level (1.66 out of three possible levels).

Despite the average regulator efficiency scores 48 percent of FinTech companies see positive changes in the regulator’s efficiency.

Assessment of the Regulator’s involvement in Russia’s FinTech market development is reviewed in more detail

11 FinTech Market Trends 2018 | Key findings The Russian FinTech market development map until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market 76 percent of FinTech companies Overview of Russia’s FinTech 04 tend to positively market assess the situation The FinTech sentiment 88 percent of FinTech Overview of Kazakhstan’s The current in the FinTech market 24 percent index is positive companies assess the 05 FinTech market market size from a standpoint of FinTech companies have (0.31*), indicating uncertainty in the market 12 percent of FinTech TODAY (as at end-2017) — of the business a negative view on the quite positive at the average or above- companies believe the 2018 48 RUB bln financial wellbeing. market situation. financial climate. average levels. uncertainty is low. The uncertainty index 06 Appendix in the FinTech market is negative (-0.25*) indicating rather high 07 Contacts uncertainty in the Russian TOMORROW The expected 60 percent of FinTech 30 percent of FinTech The Index of Expectations Despite the high The remaining 10 percent FinTech market. market size is positive (0.33*) level of uncertainty, 2020 companies tend to have companies do not expect do not expect significant (as at end-2018) — a positive view on the conditions in the Russian which indicates that teh 90 percent of the changes. At the same time, 54 RUB bln future of the Russian FinTech market to the FinTech companies are respondents expect the nobody expects that their FinTech market. Russian FinTech market quite optimistic about company business business will deteriorate. to change drastically. the future. to improve by 2020.

10 percent of FinTech companies expect conditions in the Russian FinTech market to deteriorate.

The growth in the market will continue First, the market is far from reaching saturation, given the fast One should realize that in the past ten years Europe at the same pace within the next Internet penetration rates in Russia. and the US has seen the most continuous bull two years, and there are two drivers Second, the availability of highly qualified IT specialists in the market since mid-20th century which we totally at play: FinTechs are developing new market makes it possible to implement the most complex and missed. At all. We have had recession since 2010. products and services, as well as working nonstandard projects everywhere, in the capital and the regions. The private sector contracts while the role of the on products for related industries. Third, both the business and the Government (the Central Bank state increases. Andrey Petkov and the Finance Ministry) actively promote FinTech. (MFC «Chestnoe Slovo») Sergey Sedov Alexander Dunaev (Zaymer) (MoneyMan)

* on the scale from -1 to 1 12 FinTech Market Trends 2018 | Key findings The Russian FinTech market development map until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market Today, the situation in the FinTech market a ‘zombie’ startup) While major players try remain a subsidized branch of government- Overview of Russia’s FinTech is mixed while the forecast is negative. There it ‘on their own,’ startups are closing due to the owned companies (or a part of ‘innovation 04 are a plenty of reasons to it, as the roots are lack of first clients. Stagnation in the Russian cities’ subsidized from the federal budget). market of a systemic nature. The first and foremost, economy is the third reason. The contracting There are also two significant obstacles for Overview of Kazakhstan’s 05 Top five advanced technologies: startups and smaller companies in the Russian market, sanctions, rouble volatility, growing the Russian FinTech development. First, FinTech market 01. Artificial intelligence market have no chances to compete with tax burden, increasing role of the state in the state companies often buy and integrate 02. Machine learning larger players due to the lack of competition business, and ‘neo-feudalism’ force young FinTech startups instead of helping them 06 Appendix 03. Predictive analytics between the latter. Although the major players and ambitious innovators to leave the country to develop, buying their products and 04. Deep learning declare that there is competition, in fact, as it is easier for them launch the business services, and providing advice to boost 07 Contacts 05. Big data it does not happen in the market, which of their own in indisputably more stable their competitiveness. Second, it is difficult prevents smaller companies and startups conditions in the West where the resources to access global capital markets from Russia Advanced technologies are from offering innovations in the market. are cheaper and the market is larger and, more which otherwise is vital for modern business reviewed in more detail Hence, the first reason comes from the lack importantly, growing. In the West, given the models in order to monetize digital products of a real need in innovations from outside need of western institutions in innovations and and services. It would take years of work on the part of financial institutions. The closed tough competition, startups develop faster, to achieve this through improving the country nature of financial institutions is the second raise financing and attract clients easier, as well image which is objectively difficult to ensure reason. The participants of the recently held as can protect their intellectual property in the near future. To sum up, the FinTech FinTech power conference agreed that the first in a more secure way. In order to make the community does exists and tries to develop reaction of financial institutions to interesting robust development of FinTech companies in Russia but the external factors are likely Top five segments to expand in the future: ideas is contemplating the implementation happen in Russia, a lot of reforms need to have a negative impact on the market 01. Digital banks on their own. This poses another obstacle to be performed which is not expected in the preventing Russian companies from full-scale 02. Lending for startups as its life cycle at the seed stage short-term. In such conditions, the FinTech competition with western FinTech communities 03. Scoring rarely exceeds 2-3 years (provided it is not market in Russia is destined to contract and in the mid-term. 04. Marketplace Alexey Minin 05. Investments Executive Officer Data Analytics Institute The central areas of the FinTech market’s Deloitte CIS development are reviewed in more detail

13 FinTech Market Trends 2018 | Key findings The input of Russia’s FinTech in achieving the SDGs 01 Foreword

02 Key findings

Overview of the FinTech 03 market In 2015, 195 Member States of the United 1.4 By 2030, ensure that all 8.1 Sustain per capita economic 9.3 Increase the access of small Overview of Russia’s FinTech Nations adopted the Global Sustainable men and women, in particular growth in accordance with industrial and other enterprises 04 Development Goals, which underlie a transition the poor and the vulnerable, national circumstances and, (especially in developing market from the industrial era to environmentally clean have equal rights to economic in particular, at least seven countries) to financial services Overview of Kazakhstan’s 05 development within cleaner systems. Countries, resources, as well as access percent gross domestic including affordable loans, FinTech market industries and companies contribute towards to basic services, ownership and control over product growth per annum in the least as well as expand their integration in production these Sustainable Development Goals (SDGs) land and other forms of property, inheritance, developed countries. and supply chains and markets. 06 Appendix by the mere fact of operation. natural resources, appropriate new technology and financial services, including microfinance. 8.4 Improve progressively, through 2030, 07 Contacts In Russia, FinTech is the main contributor global resource efficiency in consumption to SDG 9 (Industry, Innovation and 1.5 By 2030, build the resilience of the poor and and production and endeavour to decouple Infrastructure). Significant steps are also being those in vulnerable situations and reduce their economic growth from environmental taken to contribute towards SDG 8 (Decent exposure and vulnerability to climate-related degradation, in accordance with the 10-year Work and Economic Growth) and SDG extreme events and other economic, social and framework of programs on sustainable 1 (No poverty). According to research by SDSN environmental shocks and disasters. consumption and production, with developed The list of top FinTech technology and Bertelsmann, SDGs 8 and 9 are among countries taking the lead. products which contribute the the Goals with the lowest probability 1.6 Ensure significant mobilization of resources most to implementation of SDGs of achievement. Due to the ongoing growth from a variety of sources, including through 8.10 Strengthen the capacity of domestic 1, 2, 8, and 9: in the Russian FinTech market it may enhanced development cooperation, in order financial institutions to encourage and expand •• Online lending; be concluded that there will be positive to provide adequate and predictable means access to banking, insurance and financial developments and progress towards for developing countries, in particular least services for all. •• P2P lending; SDG 8 and SDG 9. developed countries, to implement programmes •• Crowdfunding; and policies to end poverty in all its dimensions. •• E-wallets;

•• Online payment services;

•• Mobile points of sale.

The contribution of some FinTech products to the implementation of the SDGs is reviewed in more detail

14 FinTech Market Trends 2018 | Key findings A snapshot of Kazakhstan’s

FinTech market — 2018 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 FinTech market Tenge billion Number of employed years Kazakhstan’s FinTech in Kazakhstan’s FinTech FinTech company 06 Appendix 17 market size, 2017 1,675 industry 5 average ‘age’ 07 Contacts

The average number The average The average number of employees in FinTech number of B2C of B2B clients 42 companies 58,000 clients 370

Consumer 0.08 sentiment index

Deloitte’s calculations are based on SPARK-Interfax data with respect to companies which disclosed the revenue for 2016

15 FinTech Market Trends 2018 | Key findings Drivers and barriers for

Kazakhstan’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 Top five development strategies for Top five barriers for the development 50 percent of FinTech companies believe the FinTech market Kazakhstan’s FinTech market: of Kazakhstan’s FinTech market: efficiency of the regulator’s current efforts 01. Launch of new products in the market 01. Cyber threats is low. 06 Appendix 02. Cost cutting 02. Deficiencies of government 03. Short-term capital optimization and regulation of the industry 30 percent of FinTech companies believe the 07 Contacts operating model revision 03. Currency risks efficiency of the regulator’s efforts is at the 04. Entry into new markets 04. Weak protection of the personal data average level. 05. Implementation of new technology 05. Low appeal of Kazakhstan’s FinTech for foreign investors 20 percent of FinTech companies believe the Various aspects of Kazakhstan’s FinTech efficiency of the regulator is high. market development strategies are Various aspects of Kazakhstan’s reviewed in more detail FinTech market development are reviewed in more detail The regulator efficiency index with respect to FinTech support and development in Kazakhstan is at the average level (1.5 out of three possible levels).

Despite the average regulator efficiency scores, 40 percent of FinTech companies see positive changes in regulatgor’s efficiency.

Assessment of the Regulator’s involvement in Kazakhstan ’s FinTech market development is reviewed in more detail

16 FinTech Market Trends 2018 | Key findings Kazakhstan’s FinTech market development map until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market

percent of FinTech Overview of Russia’s FinTech 80 04 companies tend market to positively assess the 90 percent of FinTech Overview of Kazakhstan’s The current situation in the FinTech 20 percent The FinTech sentiment companies believe the 05 FinTech market market size market from a standpoint of FinTech companies have index is positive uncertainty in the market 10 percent of FinTech TODAY (as at end-2017) — of the business a negative view on the (0.55*), indicating is at the average or above- companies believe the 2018 Tenge 17 billion financial wellbeing. market situation. positive financial climate. average levels. 06 Appendix uncertainty is low. The index of uncertainty in the FinTech market is negative (-0.3*)indicating rather 07 Contacts high uncertainty in the Kazakhstan’s FinTech market. TOMORROW The expected 80 percent of FinTech 20 percent of FinTech The Index of Expectations Despite the high The remaining 10 percent market size is positive (0.4*) level of uncertainty, 2020 companies tend to have companies expect do not expect significant (as at end-2018) — a positive view on the conditions in the FinTech which indicates that the 90 percent of the changes. At the same time, Tenge 20 billion future of Kazakhstan’s market to deteriorate. FinTech companies are respondents expect the nobody expects that their FinTech market. quite optimistic about company business business will deteriorate. the future. to improve by 2020.

In the first turn, we mean online lending and payments when we speak about Kazakhstan’s FinTech market. The share of pessimistic responses is attributed to tighter regulation of microfinance organizations (a new rate has been introduced). Regretfully, there is no dialog between the regulator and business, while the regulator acts mostly in an imperative and punitive manner. Asem Nurgalieva (First Credit Bureau)

* on the scale from -1 to 1 17 FinTech Market Trends 2018 | Key findings Kazakhstan’s FinTech market development map until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 Top five advanced technologies: Top five segments to expand in the future: FinTech market 01. Big data 01. Digital banks 02. Predictive analytics 02. Scoring 06 Appendix 03. Artificial intelligence 03. Lending 04. Cluster analysis 04. Loyalty programs 07 Contacts 05. Internet of Things 05. Marketplace

Advanced technologies are The central areas of the FinTech market’s reviewed in more detail development are reviewed in more detail

18 FinTech Market Trends 2018 | Key findings The input of Kazakhstan’s FinTech in achieving the SDGs 01 Foreword

02 Key findings

Overview of the FinTech 03 market In Kazakhstan, FinTech is the main 1.4 By 2030, ensure that all 8.1 Sustain per capita economic 9.3 Increase the access of small Overview of Russia’s FinTech contributor to SDG 9 (Industry, Innovation men and women, in particular growth in accordance with industrial and other enterprises 04 and Infrastructure). Significant steps are the poor and the vulnerable, national circumstances and, (especially in developing market also being taken to contribute towards have equal rights to economic in particular, at least 7 percent countries) to financial services Overview of Kazakhstan’s 05 SDG 8 (Decent Work and Economic resources, as well as access gross domestic product growth including affordable loans, FinTech market Growth) and SDG 1 (No poverty). According to basic services, ownership and control over per annum in the least developed countries. as well as expand their integration in production to research by SDSN and Bertelsmann, land and other forms of property, inheritance, and supply chains and markets. 06 Appendix SDG 8 and SDG 9 are among the goals that natural resources, appropriate new technology 8.4 Improve progressively, through 2030, have the lowest probability of achievement and financial services, including microfinance. global resource efficiency in consumption 07 Contacts or remain unachieved. Amid the and production and endeavour to decouple growth in Kazakhstan’s FinTech market, 1.6 Ensure significant mobilisation of resources economic growth from environmental it can be expected that these SDGs will see from a variety of sources, including through degradation, in accordance with the 10-year future progress. enhanced development cooperation, in order framework of programmes on sustainable to provide adequate and predictable means consumption and production, with developed for developing countries, in particular least countries taking the lead. developed countries, in order to implement programmes and policies to end poverty in all 8.10 Strengthen the capacity of domestic its dimensions. financial institutions to encourage and expand access to banking, insurance and financial services for all. The list of top FinTech technology products which contribute the most to implementation of SDGs 2 and 9:

•• Online lending;

•• Crowdfunding;

•• P2P lending.

The contribution of some FinTech products to the implementation of the SDGs is reviewed in more detail

19 FinTech Market Trends 2018

01 Foreword

Overview of the 02 Key findings Overview of the FinTech 03 FinTech market market The FinTech market geography

Comparison of regional FinTech markets FinTech market outlook until 2020 Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

20 FinTech Market Trends | Overview of the FinTech market The FinTech market geography

01 Foreword

02 Key findings The consensus rating of the global FinTech market growth What is the market of financial technology (FinTech)? Overview of the FinTech The FinTech is among fastest-growing markets banks, if taken separately, outperform 03 USA 422.2 market UK 223.5 globally. FinTech companies develop innovative most European banks (based on the Germany 127.5 technology decisions for financial companies results of Deloitte Digital’s internal research Australia 126.7 The FinTech market geography Canada 118 to improve efficiency, client services, and report). Kazakhstan’s banks have specific Singapore 110.5 Switzerland 109.8 usability (in other words, to simplify, accelerate features of their own. Many banking FinTech Comparison of regional Japan 88 and make financial processes more convenient). solutions are grouped as ‘neo-banks’: FinTech markets France 81.5 Sweden 81.2 Financial technologies commonly comprise all Altyn-i, B1NK, BankofAstana, Homebank. The Netherlands 73.9 FinTech segments ranging from lending kz, Kaspi.kz, Sberbank Online. FinTech market outlook until China 72 2020 The Republic of Ireland 66.4 to high-frequency trading, big data and robotics. South Korea 64.2 Hence, the consensus rating reflects the global Overview of Russia’s FinTech Spain 54.8 04 Luxembourg 51.4 Financial organizations, in particular, banks are FinTech landscape only in geographic terms. market Denmark 50.7 first and key consumers of FinTech products. Each geographic unit (country or a group The United Arab Emirates 50 Overview of Kazakhstan’s New Zealand 49.9 However, it should not go without mention of countries) has its own specific features. 05 Norway 44 FinTech market Malaysia 38 that FinTech products are applied more For example, various FinTech segments Italy 38 often in other segments, such as insurance in most countries are at different stages Austria 37 06 Appendix 37 automation, risk management, as well of develolpment, as the economic growth Poland 37 as in retail, telecoms, entertainments, etc. in each country is uneven and is influenced Belgium 36 07 Contacts Russia 31.8 Interestingly, Russia and Kazakhstan were by domestic factors (such as demand) and Czech Republic 31 positioned among developing markets external ones (e.g. regulatory rules). Thailand 31 Portugal 31 in the consensus rating. However, Russian Estonia 31 South 31 Iceland 29 Overall, Russian banks outperform most EMEA Mexico 28 India 28 banks with respect to regular services such Bahrain 27 as payment management, bank transfers Turkey 27 Morocco 26 and bank cards. However, account opening Hungary 25 procedures, client onboarding and cross-sales Greece 24 Kazakhstan 23.6 still lag those of the foreign competitors.” Argentina 23 Indonesia 21 Philippines 20 Ilya Etko Partner, Deloitte CIS The final consensus rating indices are based on the weighted data of Global Innovation Index, the Global Financial Centers Index, Doing Business (WorldBank), the ICT Development Index, GCI index (Huawei), as well as Crunch Base data and Deloitte’s experience.

21 FinTech Market Trends | Overview of the FinTech market Comparison of regional FinTech markets

01 Foreword

02 Key findings

Overview of the FinTech 03 market Here we group some countries by region North America Europe Average rating: 59 in order to analyze the FinTech trends Average rating: 190 The FinTech market geography on a global level. For example, North America Investments in 2017: Investments in 2017: includes the US, Canada and Mexico; USD 7.9 billion USD 2.6 billion Comparison of regional the average FinTech development index FinTech markets is at 190 points (the maximum value of 1,000 is calculated arithmetically based on the FinTech market outlook until maximum progress for each indicator). 2020 Overview of Russia’s FinTech 04 Similarly, assessments for Europe, ASEAN and market South America were obtained. The sorted Overview of Kazakhstan’s 05 country data is drawn in the Appendix. FinTech market

Hence, North America is the most developed 06 Appendix FinTech region as of today (190 points), Europe ranks second (59 points) scoring three times 07 Contacts less than the leader. ASEAN (53 points) ranks third and South America (21 points) ranks fourth.

ASEAN Average rating: 52 Investments in 2017: South America USD 5.7 billion Average rating: 21 Source: CB Insights Investments in 2017: Country ratings by FinTech development scores are based USD 0.2 billion on the consensus ratings (GII, WorldBank, International Telecommunication Union, Global Connectivity Index, CrunchBase data, and expert assessments of Deloitte Global and Deloitte CIS.

22 FinTech Market Trends | Overview of the FinTech market Comparison of regional FinTech markets

(North America) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Let’s review leading regional FinTech markets North America Objectives Opportunities Ecosystem in detail. North America stands out for its Average rating: 190 The FinTech market geography developed FinTech market. As of today, Investments in 2017: USD 7.9 billion 0% 77% 3.1 the total investments amount to USD State regulation Comparison of regional 7.9 billion. According to experts, investment Developed market 24% 62% FinTech markets will continue to grow at 15-20 percent. The 1.7 Banking infrastructure FinTech market outlook until high level of FinTech development is based Number of FinTech unicorns**: 16 10% 82% 2020 on the well-established ecosystem (i.e., the 2.6 Labor market number of market participants, transparency The largest market participants***: Overview of Russia’s FinTech 8% 76% 04 of market relations, the scale and amount (US): USD 9.28 billion 2.3 market of investments, etc.), efficient state regulation, SoFi (US): USD 4.5 billion Market capacity 2% 96% Overview of Kazakhstan’s 05 attractive banking infrastructure (in terms Credit Carma (US): USD 4 billion 4.0 FinTech market of attractiveness for FinTech companies Competition whose products are in demand among bank Sustainable development rating*: 67 14% 80% 2.4 06 Appendix clients), and the sufficient number of qualified personnel (human capital). However, despite 07 Contacts the maximum rating for FinTech advancement, Trends Deloitte CIS Research Center data (survey of FinTech market participants): the North American market faces a number Technology the share of those who believe that this factor is positive for FinTech growth in North America of difficulties which constrain the development Development of regulatory and insurance the share of those who believe that this factor slows down FinTech growth in North America of this market. These difficulties include tough technology balance value — the total influence of the factor on the FinTech market development in North America competition (high supply, high entry barriers for new participants, etc.) and high penetration Investments (the saturation has already peaked, so the task In 2018, corporations expect to maintain of attracting new clients with new technologies the current investment levels as the number and products looks more challenging than of M&A transactions is set to increase. in the developing markets).

* 2018 SDG Index and Dashboards ** Unicorn is a company with a market capitalization of USD 1 billion and higher *** at the company’s valuation price Source: CBInsights

23 FinTech Market Trends | Overview of the FinTech market Comparison of regional FinTech markets

(ASEAN) 01 Foreword

02 Key findings

Overview of the FinTech 03 market The FinTech market in Asia and Australia was ASEAN Objectives Opportunities Ecosystem put in the category of developing markets. Average rating: 52 The FinTech market geography However, it outperformed the North American Investments in 2017: USD 5.7 billion 0% 82% 2.9 FinTech market in terms of investments in 2016. State regulation Comparison of regional The undeveloped market infrastructure was Developing market 7% 79% FinTech markets the main driver behind the market explosive 2.2 Banking infrastructure FinTech market outlook until growth. The products that are currently Number of FinTech unicorns**: 5 7% 89% 2020 in demand in Asia were sought after in the 2.7 Labor market developed markets several years ago. However, The largest market participants***: Overview of Russia’s FinTech 6% 79% 04 such lag is an advantage, as the ‘laggards’ Lufax (China): USD 18.5 billion 2.1 market can use the latest technological solutions One 97 (India): USD 7 billion Market capacity Overview of Kazakhstan’s 2% 94% 05 implemented in the products they need. Tuandaiwang (China): USD 1.46 billion 4.1 FinTech market In 2017, the total amount of investments Competition in FinTech reached USD5.7 billion, 25 percent Sustainable development rating*: 65,1 15% 78% 2.2 06 Appendix below that in North America. Given the strong performance in 1Q 2018, significant growth 07 Contacts (over 20-30 percent) is expected in 2018. Trends Deloitte CIS Research Center data (survey of FinTech market participants): In 2019, China is likely to regain leadership Technology the share of those who believe that this factor is positive for FinTech growth in ASEAN among countries investing in FinTech. The key In 2018: payment systems, lending; in the the share of those who believe that this factor slows down FinTech growth in ASEAN development drivers include market capacity medium term: insurance technology balance value — the total influence of the factor on the FinTech market development in ASEAN and low penetration of banking products among population, as well as beneficial competitive Investments environment which allows companies to access In 2018, large IPOs are expected in Asia, e.g. markets with ease, without a fear of significant In China; the investment activity in the region competition. Positive development drivers is set to grow. are unlikely to be outweighed by such obstacles as undeveloped ecosystem and specific features of state regulation. As for low qualification of the labor force, it is offset by its * 2018 SDG Index and Dashboards high availability. ** Unicorn is a company with a market capitalization of USD 1 billion and higher *** at the company’s valuation price Source: CBInsights

24 FinTech Market Trends | Overview of the FinTech market Comparison of regional FinTech markets

(Europe) 01 Foreword

02 Key findings

Overview of the FinTech 03 market The European market belongs to the group Europe Objectives Opportunities Ecosystem of developed FinTech markets, with its main Average rating: 59 The FinTech market geography hub located in London, developed banking Investments in 2017: USD 2.6 billion 2% 76% 2.4 infrastructure, and the strong regulator (ECB). State regulation Comparison of regional Europe ranks second after North America Developed market 14% 71% FinTech markets in terms of the FinTech market development. 2.2 Banking infrastructure FinTech market outlook until Around 8,000 FinTech companies operate Number of FinTech unicorns**: 5 8% 84% 2020 in Europe. In 2017 they raised USD 2.6 billion 2.5 Labor market which twice as less compared to the US. The largest market participants: Overview of Russia’s FinTech 6% 78% 04 However, given the small capacity of this (Sweden): USD 2.5 billion 2.0 market market, this amount of investments looks (Netherlands): USD 2.3 billion Market capacity Overview of Kazakhstan’s 0% 92% 05 quite decent. In 2018, the key growth drivers TransferWise (UK): USD 1.6 billion 2.9 FinTech market are likely to include changes in the FinTech Competition market regulation in Europe which are likely Sustainable development rating*: 74.2 6% 85% 2.3 06 Appendix to increase the European FinTech’s appeal for investors. Investments are expected to grow 07 Contacts by 20 percent. Trends Deloitte CIS Research Center data (survey of FinTech market participants): Technology the share of those who believe that this factor is positive for FinTech growth in Europe Advancement of regulation, compliance and the share of those who believe that this factor slows down FinTech growth in Europe insurance technologies balance value — the total influence of the factor on the FinTech market development in Europe

Investments In 2018, investments are expected to grow, as regulatory changes are likely to provide an additional impetus (BRIxit, PSD2, etc.)

* 2018 SDG Index and Dashboards ** Unicorn is a company with a market capitalization of USD 1 billion and higher *** at the company’s valuation price Source: CBInsights

25 FinTech Market Trends | Overview of the FinTech market Comparison of regional FinTech markets

(South America) 01 Foreword

02 Key findings

Overview of the FinTech 03 market In Latin America, the FinTech market only starts South America Objectives Opportunities Ecosystem to evolve. However, despite the uncertainty Average rating: 21 The FinTech market geography around LatAm economies, it has already Investments in 2017: USD 0.6 billion 19% 49% 1.1 attracted the attention of major investors. State regulation Comparison of regional Brazil is the key country which plays the role Developing market 12% 63% FinTech markets of a driver. South America ranks fourth (with 1.4 Banking infrastructure FinTech market outlook until an average rating of 21) among other regions. Number of FinTech unicorns**: 1 17% 61% 2020 The weak ecosystem of high technology 1.2 Labor market projects is the most critical obstacle on the way The largest market participants***: Overview of Russia’s FinTech 17% 62% 04 of the region’s robust development, particularly NU Bank (Brazil): USD 1-2 billion 1.1 market as far as FinTech is concerned. Investments Market capacity Overview of Kazakhstan’s 4% 81% 05 in FinTech in 2017 reached approximately USD Sustainable development rating*: 67,9 2.3 FinTech market 200 million which is to little. However, fivefold Competition growth is expected in the mid-term. 15% 76% 1.4 06 Appendix Trends Technology 07 Contacts Payments, money transfers, lending Deloitte CIS Research Center data (survey of FinTech market participants): the share of those who believe that this factor is positive for FinTech growth in South America Investments the share of those who believe that this factor slows down FinTech growth in South America Investments are set to increase, especially balance value — the total influence of the factor on the FinTech market development in South America external investments from developed markets.

* 2018 SDG Index and Dashboards ** Unicorn is a company with a market capitalization of USD 1 billion and higher *** at the company’s valuation price Source: CBInsights

26 FinTech Market Trends | Overview of the FinTech market FinTech’s contribution to sustainable development (1/2) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Sustainable development is defined as the development that meets the needs of the The FinTech market geography present without compromising the ability of future generations to meet their own needs. Comparison of regional This concept is viewed as a prerequisite for FinTech markets long-term progress of mankind leading to the accumulation of capital and improvement FinTech market outlook until 2020 of environmental conditions. Overview of Russia’s FinTech 04 The contemporary interpretations highlight market three key aspects of the sustainable Overview of Kazakhstan’s 05 development: economic, environmental and FinTech market social. In recent years, business is considered to be a key driver of changes and is expected 06 Appendix to play the main role in achieving sustainable development goals. 07 Contacts

“The Financial system plays a key role in transitioning to sustainable development. Today, billions of people and millions of enterprises in developing countries have no access to saving accounts and loan opportunities. The digital financing may make financial services more equally accessible to all representatives of the entire society.” Ivan Kukhnin Sustainability Group Leader Deloitte CIS

27 FinTech Market Trends | Overview of the FinTech market FinTech’s contribution to sustainable development (2/2) 01 Foreword

02 Key findings

Overview of the FinTech 03 market

The FinTech market geography

Russian Federation Comparison of regional FinTech markets Kazakhstan FinTech market outlook until 2020 Overview of Russia’s FinTech 04 In 2015, 193 Member States of the United According to research performed jointly FinTech contributes the most to achieving SDGs market Nations adopted global Sustainable by SDSN and Bertelsmann, in 1H 2018, the 2, 3, 5, 6, 7, 8, 9, 11, 12, 13, and 17. The new Overview of Kazakhstan’s 05 Development Global which underlie transition SDG Index scores for Russia and Kazakhstan technology paves way for faster achievement FinTech market from the industrial era to the environmentally were 68.9/100 and 68.1/100, respectively. Over of the SDGs, as it accelerates integration clean development within cleaner systems. This a half of the SDGs have not been reached yet. of poorer countries in the global financial 06 Appendix necessitates reforms in the current financing Sweden (85.0) tops the rating. Both countries system. Key segments where FinTech may framework — the so called ‘reset’ of the global lag the most on SDGs 3, 10, 14, and 16, while impact achievement of the SDGs: 07 Contacts financial system is needed. International performing the best on SDG 1 (No poverty). 01. Financial inclusion: availability of financial institutions (e.g. G20, the World Bank) led the The poverty indicator and the forecast services, provision of real-time services initiative for expanding the financial integration poverty ratio (by 2030) used for measurement to clients in remote regions; in the developing countries. In particular, the purposes in this goal were based on the 02. Sustainable supply chains: reducing Global Partnership for Financial Inclusion share of population with incomes below the number of intermediaries between Not reached (GPFI) set up by G20 works to facilitate money USD 1.9 per day. producers and end-consumers, Effectively not reached transfers including measures and actions as well as providing transparent data Partially not reached which could reduce remittance transfer costs, on transactions within the supply chain Fully reached increase the quality of the service delivery and to the customers; Data not available positive impact on the national economy. 03. Preservation of resources: moving business The SDGs dependent on FinTech to the operations online, remote monitoring of the highest extent* resource use; 04. Investments in sustainability: transparency Source: Index S. D. G. Dashboards //A global report of investments and ties between donors (full version), р. - 2018. and recipients. * Inquiry, U. N. E. P. «FinTech and sustainable development.» Assessing the implications. 28 FinTech Market Trends | Overview of the FinTech market FinTech’s contribution to achievement of the SDGs globally 01 Foreword

02 Key findings

Overview of the FinTech 03 market M-KOPA is a pioneer company which implements a pay-as-you-go model (PAYG ) by selling solar Pezesha is a microcredit marketplace which issues microloans to low-income borrowers in Kenia. power systems to low-income households in Kenia. The company aims to provide access to energy Pezesha provides access to the financial system for those who previously could not access it. This The FinTech market geography solutions to low-income individuals and drive kerosene (which is harmful for human health) from marketplace redistributes investments raised from other citizens in Kenia if they agree to issue the in-house lighting market. Such installment plan allows low-income families to access the loans at acceptable rates. Pezesha performed over 10 million transactions. Comparison of regional electrification systems which are not otherwise affordable. Pezesha’s operations contribute to achievement of three SDGs: FinTech markets FinTech market outlook until 2020 Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 FinTech market The customer pays a minimum system which enables bank Pezesha helps 40 percent Less than 55 percent The contribution of small, connection fee and then transactions via electronic of the Kenian population of women and over 70 percent medium and microcompanies 06 Appendix continues to pay 40-50 cents devices without opening with lowest incomes to build of men use financial services to employment and on a daily basis until the an account. It is a crucial their credit histories. The lack in Kenia. Pezesha narrows this economic growth in Africa 07 Contacts system cost is reimbursed. condition for users, as the of the credit history is linked gap by purposefully attracting amounts to approximately Afterwards, the system can penetration of bank services to the fact that the lending more women via the financial 80 percent. The lack be used for free. As at January in the country is low, and many penetration in this category education program and access of affordable loans negatively 2018, the company provided citizens to not have saving of the population is less to affordable loans. Women weighs on the lending solar energy to more than accounts, credit cards, access than 10 percent. 90 percent account for over 85 percent growth. Loans issued via the 600,000 households. In order to loans or non-cash bank of Pezesha’s borrowers have of Pezesha’s clients. Pezesha platform may result to perform payments, the settlements. got a credit history after using in a 30 percent increase in the company uses the M-PESA the company’s services. lending growth and creation of more than 10,000 jobs for youth on an annual basis, improving the quality of life in the long term.

29 FinTech Market Trends | Overview of the FinTech market FinTech market outlook until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market In developing markets, FinTech companies use As for developed markets, the companies Please, evaluate the importance of the proposed FinTech segments advantages of the popular nut more or less new will focus on the development of existing in the medium term (one-three years). The FinTech market geography products which are more or less in demand technologies and government reforms: in developed markets: China, India, Brazil, both in the legislative and tax spheres. The Digital banks Comparison of regional Mexico and Turkey take into account mistakes government support will play a role of a major Management / financial 3.30 FinTech markets made by pioneers, as well as low penetration development driver. Insurance technology accounting Lending of banking products and receive strong financial will remain a key investment segment and FinTech market outlook until support from local and international investors. regulation technologies. 2.84 2020 In 2017, the total value of FinTech unicorns Overview of Russia’s FinTech 1.94 04 amounted to USD 77 billion, with developing According to surveyed experts, digital banks market Insurance Scoring countries accounting for 40 percent of this are considered to be the most future-oriented 2.32 2.76 Overview of Kazakhstan’s 05 amount. In 2018, the share of FinTech unicorns FinTech segment. FinTech market is expected to reach 50 percent and is likely to grow further, as more economies will benefit 06 Appendix 2.34 from FinTech development. In the medium term, 2.76 investments will be made in the following key Personal finance Marketplace management 07 Contacts technologies and products: payment systems, e-commerce, as well as online lending services. 2.50 2.72 2.56 Infrastructure solutions Investments

Loyalty

30 FinTech Market Trends 2018 Overview 01 Foreword of Russia’s FinTech 02 Key findings Overview of the FinTech 03 market market Overview of Russia’s FinTech 04 market

The FinTech market in figures

The current situation in Russia’s FinTech market FinTech market stakeholder map

Supply in the FinTech market

Demand in the FinTech market

Barriers for development of Russia’s FinTech market Drivers for development of Russia’s FinTech market Russian FinTech market outlook until 2020 Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

31 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The FinTech market in figures

01 Foreword

02 Key findings

Overview of the FinTech RUB billion The average The Optimism Index for 03 Russia’s FinTech number FinTech in Russia market Overview of Russia’s FinTech 48 market size, 2017 102,000 of B2C clients 0,31 (evaluation range: [-1;1]) 04 market

The FinTech market in figures

The Optimism Index for The current situation in Expected market The average number the reviewed company Russia’s FinTech market 14 % growth, 2018 352 of B2B clients 0,60 (evaluation range: [-1;1]) FinTech market stakeholder map

Supply in the FinTech market

years Uncertainty among Demand in the FinTech market USD million FinTech company companies Total M&A value, 2017 Barriers for development 3 average ‘age’ 289 -0,25 (evaluation range: [-1;1]) of Russia’s FinTech market Drivers for development of Russia’s FinTech market Number of employed Russian FinTech market Outlook for Russian FinTech outlook until 2020 in Russia’s FinTech Number of M&As, 2017 (evaluation range: [-1;1]) Overview of Kazakhstan’s 3,652 industry 17 0,33 05 FinTech market

06 Appendix

The average number Outlook for company 07 Contacts Consumer of employees in FinTech perspective sentiment 15 companies 0,43 0,64 (evaluation range: [-1;1])

Source: survey data, SPARK-Interfax, Rusbase 32 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current situation in Russia’s FinTech market (1/3) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Russian Federation General trends Key specific features Overview of Russia’s FinTech Average rating: 31.8 The Russian FinTech market showed significant The key specific feature of the Russian market 04 Investments in 2017: USD 0.3 billion growth in the past two years. This is reflected is the fact that Russia is considered as a key market in the number of concluded transactions supplier of IT specialists for the FinTech industry Developing market and the size of raised investments. FinTech which has a mixed impact on the FinTech The FinTech market in figures penetrates the banking sphere, insurance growth. On the one hand, Russian specialists The current situation in Number of FinTech unicorns**: 5 automation, risk management and trade. emigrate as it is more profitable for them Russia’s FinTech market However, according to most experts, it is exactly to work abroad. The largest market participants: ***: financial institutions that led in application FinTech market MoneyMan, Еzaem, CarMoney of financial technology last year. Another specific feature of the Russian market stakeholder map (oppositely to Europe and the US) is the lack Sustainable development rating*: 68,9 Obviously, the FinTech market growth goes of regulation in some segments of FinTech. Supply in the FinTech market hand in hand with high Internet penetration For example, the law does not regulate and robust promotion of high-tech financial P2P lending, collective investments, use Demand in the FinTech market services by banks. However, as at today the of cryptocurrencies (no direct prohibition), Barriers for development FinTech advance in Russia is not encompassing. etc. Similarly to the human capital, the lack of Russia’s FinTech market Breakthrough FinTech projects are carried of regulation can be both a driver and a barrier only in the largest million-plus cities or clusters for market development. Drivers for development where the respective technical infrastructure of Russia’s FinTech market is developed and people are accustomed Given that the specific features of the Russian Russian FinTech market to using it (e.g. a ‘city of non-cash payments’ FinTech market directly depend on various outlook until 2020 in Tatarstan, Innopolis, etc.). market issues, we will review the stimulating and constraining factors in the next part Overview of Kazakhstan’s 05 The most wide-spread financial technologies of our report. FinTech market comprise the following:payments, cash transfers, scoring, financing (lending). 06 Appendix

* 2018 SDG Index and Dashboards 07 Contacts ** Unicorn is a company with a market capitalization of USD 1 billion and higher *** at the company’s valuation price Source: CBInsights 33 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current situation in Russia’s FinTech market (2/3) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Over the last ten years, Europe was a painful experience, but we survived. Life Objectives Opportunities Ecosystem Overview of Russia’s FinTech and the United States have went on; everybody was OK, continuing their 04 been witnessing the longest work without any fuss. In terms of capabilities, 7% 76% market 1.8 continuous bull market the market is defined by cyclical economic State regulation since the mid-20th century, movements, a strong degree of uncertainty and 31% 60% The FinTech market in figures which has never been the case in Russia. The volatility, as well as by the absence of a capital 1.2 Banking infrastructure The current situation in country has been experiencing a pronounced market. Growth can only come through profit. 7% 87% Russia’s FinTech market economic downturn since 2010, with a strong It is absolutely hinged on whether the market 2.5 Labor market economic imbalance. Amid the growing global is interested or not because capital comes FinTech market 6% 81% economy, Russia remains stagnant, with flat at a high cost. With a high cost of capital, 2.2 stakeholder map consumer demand and weaker investor activity. it is difficult for a company to show its clients, Market capacity 21% 70% Supply in the FinTech market This is quite apparent and disconcerting. even arithmetically, that it can deliver some 1.4 However, if you take a look at our company, you billion-dollar profit over a span of 10-15 years. Competition may see that any difficulty can be dealt with. The DCF method is about discounting back. This 10% 77% Demand in the FinTech market 1.8 Our company started out in 2012. Oil prices scenario is quite feasible in the US and Europe Barriers for development crashed in Q4 2014 as we looked to raise funds. with their low cost of capital. Unlike Russia, they of Russia’s FinTech market We were getting ready to sign a memorandum assume low risk costs, which is why there is a lot Deloitte CIS Research Center data (survey of FinTech market participants): of understanding within the last ten days of interest from investors. This is an orderly the share of those who believe that this factor is positive for FinTech growth in Russia Drivers for development of December when the rouble collapsed. market process. The market is still emerging. the share of those who believe that this factor slows down FinTech growth in Russia of Russia’s FinTech market At first, the rouble/dollar exchange rate was And this process will take some time. the balance value — the total influence of the factor on the FinTech market development in Russia Russian FinTech market 40 roubles, going then from 60 to 80. That Alexander Dunaev outlook until 2020 (MoneyMan) Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

34 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current situation in Russia’s FinTech market (3/3) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Today, the situation in the FinTech market tax burden, increasing role of the state in the markets from Russia which otherwise is vital for Overview of Russia’s FinTech is mixed, while the outlook is negative. There business, and ‘neo-feudalism’ force young modern business models in order to monetize 04 are a plenty of reasons to it, as the roots are and ambitious innovators to leave the country digital products and services. It would take market of a systemic nature. The first and foremost, as it is easier for them launch the business years of work to achieve this through improving startups and smaller companies in the Russian of their own in indisputably more stable the country image which is objectively difficult The FinTech market in figures market have no chances to compete with conditions in the West where the resources to ensure in the near future. To sum up, the The current situation in larger players due to the lack of competition are cheaper and the market is larger and, more FinTech community does exists and tries Russia’s FinTech market between the latter. Although the major players importantly, growing. In the West, given the to develop in Russia but the external factors are declare that there is competition, in fact, need of western institutions in innovations likely to have a negative impact on the market FinTech market it does not happen in the market, which and tough competition, startups develop preventing Russian companies from full-scale stakeholder map prevents smaller companies and startups faster, raise financing and attract clients easier, competition with western FinTech communities from offering innovations in the market. as well as can protect their intellectual property in the mid-term. Supply in the FinTech market Hence, the first reason comes from the lack in a more secure way. In order to make the Alexey Minin of a real need in innovations from outside robust development of FinTech companies Executive Officer Demand in the FinTech market on the part of financial institutions. The closed happen in Russia, a lot of reforms need Data Analytics Institute Barriers for development nature of financial institutions is the second to be performed which is not expected in the Deloitte CIS of Russia’s FinTech market reason. The participants of the recently held short-term. In such conditions, the FinTech FinTech power conference agreed that the first market in Russia is destined to contract and Drivers for development reaction of financial institutions to interesting remain a subsidized branch of government- of Russia’s FinTech market ideas is contemplating the implementation owned companies (or a part of ‘innovation cities’ Russian FinTech market on their own. This poses another obstacle subsidized from the federal budget). There are outlook until 2020 for startups as its life cycle at the seed stage also two significant obstacles for the Russian rarely exceeds 2-3 years (provided it is not FinTech development. First, state-owned Overview of Kazakhstan’s 05 a ‘zombie’ startup) While major players try companies often buy and integrate FinTech FinTech market it ‘on their own,’ startups are closing due to the startups instead of helping them to develop, lack of first clients. Stagnation in the Russian buying their products and services, and 06 Appendix economy is the third reason. The contracting providing advice to boost their competitiveness. market, sanctions, rouble volatility, growing Second, it is difficult to access global capital 07 Contacts

35 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current situation in Russia’s FinTech market as viewed by its participants 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your opinion of the situation in Russia’s FinTech market from a standpoint Trend Overview of Russia’s FinTech of business financial wealth? Most experts (76 percent) are positive about 04 the current situation in Russia’s FinTech market. market

The optimism index is at 0.31. The FinTech market in figures Lending 1–3 years 0.31 The current situation in 0.38 0.19 Specific features Russia’s FinTech market Representatives of lending institutions are more FinTech market 24% Scoring Investment optimistic about the situation in the industry 0.36 0.25 (the balance indicator is 7 points above the stakeholder map average). Supply in the FinTech market

> 5 years 3–5 years Personal finance Marketplace Interestingly, the companies with the revenue 0.38 0.36 0.19 0.27 of less than RUB 10 million are more optimistic Demand in the FinTech market (9-14 points above the average). They are Barriers for development followed by the the companies which have 0.29 of Russia’s FinTech market 76% Infrastructure solutions been on the market for longer than five years (7 points above the average). Drivers for development of Russia’s FinTech market The representatives of the companies engaged Russian FinTech market < RUB 2 million < 10 employees in the investment and personal finance 0.40 0.40 outlook until 2020 management (PFM) are less optimistic, with the balance indicator being 6 and 12 points below Overview of Kazakhstan’s 05 the average, respectively. FinTech market Positive view > 50 employees 10–25 employees Negative view > RUB 50 million RUB 2–10 billion 0.27 0.45 0.36 0.23 Companies with the revenue of RUB 10- 06 Appendix The Optimism Index for FinTech in Russia (evaluation range: [-1;1]) 50 million and young companies (1-3 years old) are less optimistic, too (10 and 12 points below 07 Contacts the average, respectively). 0.21 0.36 RUB 10–50 billion 25–50 employees

36 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current situation in Russia’s FinTech market as viewed by its participants: expert commentary 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech Sergey Sedov (Zaymer) in this field would allow the country developing investment and personal in restructuring their approaches. Every 04 to become part of the most developed finance management services were less body should realize the need of such market The expert community is positive about FinTech economies. optimistic. Oppositely, the representatives efforts and expect that the applicable the current conditions in the Russian of the FinTech lending segment are solutions will be easily understood, The FinTech market in figures The latest FinTech-related positive legal FinTech market, as it entered the active more optimistic in their assessments available and efficient. The current situation in growth stage. First, the FinTech market developments include introduction due to the developed lending market. Russia’s FinTech market is still far from saturation, while the of online taxation of trade transactions Young companies are less optimistic due In addition, the lack of regulation in some Internet penetration in Russia continues (Law FZ-260 “On online cash offices” has to strong competition at the current stage, fields and fear of abrupt regulatory FinTech market to grow fast (72.8 percent last year been approved), remote identification as well as the difficulties of capital raising. changes that may constrain development stakeholder map which higher than in some EU countries). of bank clients (Law FZ-482), plans Venture investment is not well developed add to the pessimistic sentiment. Second, the availability of highly to introduce single financial online in Russia. Supply in the FinTech market qualified IT specialists makes it possible marketplace, instant payment system, and to implement the most challenging and approve a crowd funding law. Surprisingly as it may seem, advancement Demand in the FinTech market non-standard projects in the capital of FinTech may slow due to the low Barriers for development and the regions. Third, business and The mixed assessment of the FinTech pace of its development. It will require of Russia’s FinTech market the government (represented by the market by representatives of various knowledge, effort and time in order to get Central Bank and the Finance Ministry) industries derives from differences accustomed to innovations and implement Drivers for development actively promote the FinTech, as the latter in development of traditional finance new methods of work. So far, Russians are of Russia’s FinTech market believe that implementation of non-cash segments mirrored by FinTech. For acquainted only theoretically with many Russian FinTech market payments would help anti-corruption example, investment and personal FinTech opportunities. One may say, the outlook until 2020 effort and reduce tax evasion. finance management segments (whose technologies which have been tested yet representatives sounded rather enjoy ‘the benefit of doubt.’ Overview of Kazakhstan’s 05 The optimism is based on the inevitability, pessimistic) look relatively ‘weak’ compared FinTech market given that FinTech shapes the future to the rest of the market. In the US, around For many Russians, especially the elder of the digital financial market. Developed half of the population hold securities, generation (above 40 years), the use 06 Appendix economies may lag the rest of the world while in Russia security holders account of FinTech solutions in their daily lives for ever, if they ignore modern approaches for less than 1 percent. Correspondingly, is quite problematic. Both, the government 07 Contacts and technology. Russia’s robust effort the representatives of FinTech companies and business experience difficulties

37 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current situation in Russia’s FinTech market as viewed by its participants: expert commentary 01 Foreword

02 Key findings

Overview of the FinTech 03 market Anrey Petkov Overview of Russia’s FinTech Yuri Provkin (Eqvanta) is a source of tension, too. Our company (MFC «Chestnoe Slovo») 04 even made a decision to transfer the entire market I am very pleased that FinTech market corporate structure to Russia and regulate We feel optimistic because participants are mostly positive about the shareholder relations based on the of implementation of new technology The FinTech market in figures future, as we (as a company) are optimistic, Russian law. This is an important decision in the business practice: branchless The current situation in too (understandably why). First, I will try which is linked to the current international banking, payment services, cloud Russia’s FinTech market to explain why there is negative sentiment developments. In my opinion, this is the technology, biometric data, mobile (to make my answer balanced). We live core negative driver. As for positive drivers, payments. A man will be able to make FinTech market in Russia, and it is not only domestic I think, they are related to opportunities necessary payments if has a phone. stakeholder map factors that influence the optimism. There and technological advancement. Given Companies issue loans within minutes — is also a geopolitical factor which is the the fast development of new technology, isn’t it a proof that FinTech exists in real life Supply in the FinTech market main source of the negative sentiment. especially in the past ten years, a lot and not on paper? [They understand that] the country of changes are taking place in the industry However, there are reasons for pessimism: Demand in the FinTech market becomes isolated to some extent due and lead to new opportunities. Businesses there are projects which did not work, Barriers for development to sanctions and the general feeling that saw these opportunities and used them regulatory issues, gaps in the legislation of Russia’s FinTech market the situation would last for a long time. to offer services for new segments. This on FinTec, as well as new types of fraud In my opinion, this is the main source process still continues: there is more which periodically appear on this market, Drivers for development of worries. Growing isolation of Russia, collectible client data, more resources particularly, in the blockchain segment. of Russia’s FinTech market increasing unavailability of Western for processing the data, more technical Russian FinTech market markets for purely Russian companies. solutions. I believe it is very positive. The outlook until 2020 Russians begin to suffer inconveniences positive factors, the taste of opportunities, with bank account service in Cyprus significantly outweigh the barriers and Overview of Kazakhstan’s 05 or elsewhere in Europe. We experience obstacles which we face as businessmen FinTech market it more often. The compliance procedures and companies. become more complicated which 06 Appendix

07 Contacts

38 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The current financial position of the company 01 Foreword

02 Key findings

Overview of the FinTech 03 market How do you view the current financial position of your company? Trend Overview of Russia’s FinTech The Optimism Index with respect to the 04 current financial position of the company is 0.6. market This indicates optimistic sentiment in most companies of this industry. The FinTech market in figures 0.6 Lending 1–3 years The current situation in 0.62 0.66 86 percent of the experts provided positive Russia’s FinTech market 14% responses regarding situation in the company. Scoring Investment FinTech market 0.57 0.54 Specific features stakeholder map The most optimistic responses regarding situation in the company came from Supply in the FinTech market > 5 years 3–5 years Personal finance Marketplace representatives of large companies with more 0.62 0.55 0.38 0.59 than 50 employees (26 points above the Demand in the FinTech market average). Barriers for development 86% 0.62 of Russia’s FinTech market Infrastructure solutions Overall, young companies are more optimistic, too (6 points above the average) and companies Drivers for development with annual revenue of RUB 2-10 million of Russia’s FinTech market (10 points above the average). < RUB 2 million < 10 employees Russian FinTech market 0.50 0.40 outlook until 2020 The representatives of the personal finance management companies (22 points below the Overview of Kazakhstan’s 05 average) and companies with annual revenue FinTech market Positive view > 50 employees 10–25 employees of less than RUB 2 million (10 points below the Negative view > RUB 50 million RUB 2–10 billion 0.86 0.50 0.27 0.45 average) are the least optimistic. 06 Appendix The Optimism Index for the reviewed company (evaluation range: [-1;1]) 07 Contacts

0.73 0.21 RUB 10–50 billion 25–50 employees

39 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Measuring uncertainty in strategic decision making 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your assessment of political and economic uncertainties affecting the strategic Trend Overview of Russia’s FinTech decision-making in your company? The net level of uncertainty in the FinTech 04 market is -0.25. market

Most FinTech companies point to a high The FinTech market in figures Lending 1–3 years level of uncertainty and only 12 percent The current situation in -0.23 -0.31 of respondents believe it is low. Russia’s FinTech market

Scoring Investment Specific features FinTech market -0.14 -0.25 Companies with annual revenue of RUB 10- stakeholder map 50% 50 million and companies operating for over five years note a high level of uncertainty in the Supply in the FinTech market > 5 years 3–5 years Personal finance Marketplace market (13 and 21 points above the average, -0.46 -0.07 -0.13 -0.23 respectively). Demand in the FinTech market Barriers for development Respondents from personal finance -0.29 of Russia’s FinTech market Infrastructure solutions management companies and institutions using 38% scoring technology more often tend to note Drivers for development the low level of uncertainty (the net balance of Russia’s FinTech market indicators for these categories are 12 and 0.25 Russian FinTech market < RUB 2 million < 10 employees 11 below the average, respectively) . -0.25 -0.05 outlook until 2020 12% Overview of Kazakhstan’s 05 FinTech market High uncertainty > 50 employees 10–25 employees Medium uncertainty > RUB 50 million RUB 2–10 billion -0.12 -0.20 -0.29 -0.34 06 Appendix Low uncertainty Net uncertainty (on a scale from –1 to +1) 07 Contacts

-0.38 -0.23 RUB 10–50 billion 25–50 employees

40 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Measuring uncertainty in strategic decision making: expert commentaries 01 Foreword

02 Key findings

Overview of the FinTech 03 market Anrey Petkov Sergey Sedov (Zaymer) about speed. Technology allows high speed, Overview of Russia’s FinTech Yuri Provkin (Eqvanta) (MFC «Chestnoe Slovo») 04 so the choice of data will become richer. market Fast development of FinTech trends makes Overall, I believe that the uncertainty You probably know that the data are drawn Any political and economic changes in our The FinTech market in figures it difficult to visualize specific perspectives. has always been and will be there. All from social media, mobile operators, credit country affect PFM companies to a lesser extent. It is not important, in which currency It is problematic to see the future in detail. entrepreneurs and companies work history bureaus, beaviour scoring, etc. The current situation in In some cases (e.g. In the microlending in conditions of relatively high uncertainty, These data is enriched and grow. So, the people earn money. They are going to count Russia’s FinTech market market), the situation gets more especially at the initial stage (albeit not future is in processing this data. I agree. Our them anyways. complicated as a result of large-scale legal only at the initial stage). Hence, it is clear Scortech scoring company has well defined FinTech market reforms which affect the structure and why the figure is at -0.25. Henry Ford must perspectives and we have no worries about As for uncertainty, I would not agree with stakeholder map role of market players. The lack of stability have experienced rather high uncertainty the future. We know that the ongoing the colleagues. Amendments to the law in international politics impacts market when he started making his vehicles. development of the company increases on personal data may undermine the scoring Supply in the FinTech market conditions, too. The economic situation I understand why the scoring processes its potential. As for the uncertainty business; likewise, economic changes affect in the country and the world strongly are so well defined. The reason is that in the FinTech market, I think uncertainty lending volumes and, consequently, the Demand in the FinTech market depends on political decisions on which there is a significant advance in data is a normal phenomenon. At any time, demand for scoring services. Barriers for development the economists cannot exert any influence. processing and analysis technology. The any company in any industry experiences of Russia’s FinTech market The economy enters the late stage of the current stage is in line with the Pareto uncertainty. In our case it is closer to zero business cycle as trade wars get worse and principle: much has been done, as scoring or even below it than growing. There are Drivers for development business activity slows down. As a result, technologies advanced significantly when very few business models and companies of Russia’s FinTech market there is a dramatic increase in uncertainty it comes to spectrum of processable data where founders or CEOs may say that Russian FinTech market in the FinTech industry and other and the speed of processing. The future everything is certain and cool, and that they outlook until 2020 business segments. of the scoring is quite clear as of now, know for sure what happens in five years. given that scoring companies become able Overview of Kazakhstan’s 05 However, scoring and personal finance to work with various data bases. From this FinTech market management (PFM) will undoubtedly standpoint, the development level and play a prominent role in the new financial technological sophistication of companies 06 Appendix environment. The outlook for FinTech will increase. The more data there is, the industry is undoubtedly positive! more precise is the assessment. It is also 07 Contacts

41 FinTech Market Trends 2018 | Overview of Russia’s FinTech market FinTech market stakeholder map

01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market

The FinTech market in figures Regulatory leve The Central Bank of Russia l The current situation in Russia’s FinTech market FinTech market stakeholder map

e r Technology corporations, banks u t c Supply in the FinTech market u r t s a r Demand in the FinTech market Venture funds f

n i B2B

o

t clients Barriers for development s

s

Private investors e of Russia’s FinTech market

c

c

a

,

s Drivers for development

t B2C

Government funds n e of Russia’s FinTech market

clients

m

t

s

e Russian FinTech market

v FinTech company n

Accelerators and incubators I outlook until 2020 Overview of Kazakhstan’s 05 FinTech market

Development institutions, associations 06 Appendix Tr ain tal ing api , com an c Higher education institutions, munication, hum 07 Contacts research institutes

42 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder map: regulator

01 Foreword

22 May 02 Key findings 2018 Overview of the FinTech 03 market CBR is the key regulator of the Russian On 22 May 2018, the State Duma 03. “On alternative raising approved three draft laws in the investments (crowdfunding)” Overview of Russia’s FinTech 04 FinTech market. first reading, defining the financial The law establishes market technology development in Russia: requirements for the investment 01. “On digital financial assets” platform, its operator and The FinTech market in figures Key data The law will regulate relations participants, information February arising in the process of creation, disclosure and provision, 2018 issuance, storage and purchase/ as well as specifies the process The current situation in sale of digital financial assets, of investing via such platform. Russia’s FinTech market as well as implementation Investment platform operators On 25 February 2016 the On 10 January 2018, the In 2018 the Russian Central Bank of rights and obligations with may include companies listed FinTech market Financial Technology and Financial Technology approved the Key Directions for respect to smart contracts. The in the CBR’s register of operators stakeholder map Process Organization Department was spun off, Financial Technology Development law introduces the concepts with a minimum capital Department was set up in the and Alisa Melnikova was in 2018-2020. of a digital transaction, of RUB 5 million. The operator bank of Russia. appointed the director. Supply in the FinTech market digital signature, digital will have the right to use a single data platform for identification 28 February 25 February 29 March 10 January In order to develop the financial transaction registry, digital and authentication of investment Demand in the FinTech market 2016 2016 2017 2018 technology, the Central Bank set the signature validation, mining, following goals: cryptocurrency, token, smart platform participants. The contract, etc. types of investments which Barriers for development •• Fostering competition in the 02. “On digital rights” can be performed via this of Russia’s FinTech market The Bank of Russia announced Based on the amendments to Federal financial market; The law introduces the concept platform include the following: creation of the Working Group for Law No. 151 On Microfinance Business, issuance of loans, acquisition •• Increasing availability, quality, and of digital rights. The owner Drivers for development Future Technology and Innovation it is only large microfinance institutions with of investment grade securities the mix of financial services; of a digital right is a person who of Russia’s FinTech market Analysis in the Financial Market. a minimum share capital of RUB 70 million that has a unique access to the digital at the placements stage, acquisition of property titles Priority matters included the study may provide a full range of online services. •• Lowering risks and costs in the code or identification enabling Russian FinTech market of the distributed ledger tecnology As a result, the regulators have been able financial industry; disposal of digital rights. via acquisition of investment (e.g. Blockchain), as well as newly to consolidate the microfinance segment product tokens which certify outlook until 2020 developed projects in mobile in the FinTech market, building stronger •• Increasing the competitiveness such rights. It is allowed to use of the Russian technology; Overview of Kazakhstan’s communications, payments, etc. accountability and transparency. smart contracts can be used 05 in order to execute and perform FinTech market •• The set goals will be implemented contracts between the investors in accordance with the Roadmap and the crowdfunding operators. for the Key Directions for Financial 06 Appendix Technology Development in 2018- 2020. 07 Contacts

Source: CBR, State Duma’s press releases, TASS 43 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder roadmap: CBR’s projects

01 Foreword

02 Key findings

Overview of the FinTech 03 market Regulatory level This mechanism is used to launch new financial authorities and the Expert Council of Market Financial Assets for Banks, Funds and Major Overview of Russia’s FinTech services and technologies which require Participants which comprises representatives Capital Companies: the regulator’s position and 04 (CBR’s «sandbox») regulatory changes. This tool will be used of subject matter financial associations and solutions for investors.” market to simulate application of innovative financial development institutions. services, products and technology for testing On 17 August 2018, PJSC Sberbank successfully The FinTech market in figures the positive outcome assumptions and the The Inter-Agency Expert Council is led launched a pilot project service in the The current situation in use of a special regulatory regime for their by Anatoly Aksakov, Chairman of the State CBR’s regulatory sandbox which enables Russia’s FinTech market implementation allowing companies to test Duma Financial Market Committee. His deputy remote management of corporate client innovative products without violating the is Nikolay Zhuravlev, First Deputy of Federation transaction authorizations. The commercial FinTech market current legislation. Any bank or organization Council Budget and Financial Market implementation of this product would reduce stakeholder map may apply for participation in the pilot project Committee. client service costs. in the ‘sandbox’ if it plans to implement a new The pilot project was implemented jointly with Supply in the FinTech market technology which requires changes in the The Expert Council is led by Tatyana Zharkova, professional financial market associations and regulation. Services and technology tested Managing Director of FinTech Association. Her government stakeholders. The CBR and expert Demand in the FinTech market in the regulatory ‘sandbox’ can be either deputy is Konstantin Parshin, Executive Director councils set up within the sandbox provided Barriers for development approved for implementation or found of Skolkovo Information technology Claster. their recommendations and admitted the of Russia’s FinTech market unsuitable for implementation. market relevance of the service. The regulatory ‘sandbox’ was launched The first major project to be implemented Drivers for development on 19 April 2018. in the sandbox will enable the testing of private of Russia’s FinTech market banking products based on cryptocurrencies Russian FinTech market The ‘sandbox’ framework consists of two by the leaders of the banking industry (PJSC outlook until 2020 councils: the Inter-Agency Expert Council Sberbank and Alfa Bank). The project was consisting of representatives of government approved at the round table on “Digital Overview of Kazakhstan’s “The launch of the instant payment system 05 FinTech market is a key project for developing the retail payment framework in the Russian market. 06 Appendix Once implemented, this project will increase the availability of financial services, enhance 07 Contacts security of financial operations and reduce costs both for consumers and banks,” Olga Skorobogatova, CBR First Deputy Chairman, stated. Source: CBR, State Duma’s press releases 44 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder roadmap: CBR’s projects

01 Foreword

02 Key findings

Overview of the FinTech 03 market Instant Payment System Marketplace Prototype architecture Overview of Russia’s FinTech The CBR will become an operator of the instant The CBR launched the Marketplace project 04 Payment System and provide settlement center jointly with market participants in December Personal online account Consumers market services. The National Payment Card System 2017. The goal of the project is to establish was selected as the operating payment clearing remote retail distribution framework for The FinTech market in figures center for the system. The FinTech Association financial products (services)and registration The current situation in coordinates the implementation of the project, of financial transactions with the aim of creating Russia’s FinTech market provides a floor for market participants a secure and trusted environment for financial Registrar Platform Aggregators to discuss the client experience, technical transactions and increasing the availability FinTech market issues, as well as develops implementation of financial services. The first presentation stakeholder map models. of the project concept took place at Finopolis, innovative financial technology forum, Supply in the FinTech market The instant payment system (IPS) will enable in October 2017. individuals to transfer money using their cell Financial service providers Demand in the FinTech market phone numbers, also in instances where the Bank deposits will become a pilot product for Barriers for development sender’s and the recipient’s accounts are held the Marketplace project. At later stages, the of Russia’s FinTech market with different banks. The system payments will project will comprise other financial products be made on a real-time basis round-the-clock including loans. Drivers for development including weekends and holidays. of Russia’s FinTech market Presently, the system prototype is being Russian FinTech market As at June 2018, the prototype testing was developed. The first trial is expected to take outlook until 2020 almost complete which allowed to establish the place in autumn 2018. The commercial version Source: CBR, State Duma’s press releases commercialization requirements. The system is expected to be launched in late 2018. Overview of Kazakhstan’s 05 launch is scheduled for early 2019. The instant Project participants: Ak-Bars Bank, Center- FinTech market payment services will be accessible to legal Invest Bank, Zenit Bank, Sovcombank, Rosbank, entities as a convenient and secure payment Fins, Moex, National Settlement Depository, 06 Appendix solution, including QR codes. The users will also Banki.ru. be able to make payments using messengers, 07 Contacts social media, etc.

45 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder map: corporations

01 Foreword

02 Key findings

Overview of the FinTech 03 market Key corporate customers Banks are the most interested in FinTech Venture Tinkoff Bank Overview of Russia’s FinTech companies, as the implementation of new 04 interested in FinTech Round: seed, first round Round: seed, first round market and convenient technology for clients makes Amounts: USD 200,000 – 500,000 Amounts: up to USD 1 mln products comprise banks and it possible to attract and retain the target Portfolio: 50-100 projects Portfolio: up to 50 projects The FinTech market in figures technology companies. audience. The largest consumer companies Sample projects: Sample projects: including mobile operators and Internet Panda money USD 100,000 20 percent Segmento N/a 100 percent The current situation in providers showed avid interest in FinTech Russia’s FinTech market products in the past two years. They influence Krawlly USD 150,000 N/a large customer audiences which attracts EasyWallet N/a N/a FinTech market FinTech startups. However, the cooperation stakeholder map Zaimix N/a N/a between corporations and FinTech companies cannot succeed without partners experiences Pin Bonus N/a N/a Supply in the FinTech market in working with financial products. Hence, there is space for traditional banks which Gazprombank Digital Demand in the FinTech market may become floors for implementing FinTech Round: seed, first round Round: grants, pre-seed, seed, first round Barriers for development solutions or full-scale partners if they invest Amounts: USD 200,000 - USD 1 million Amounts: up to USD 10 million of Russia’s FinTech market their own capital or attract their customers. Portfolio: up to 50 projects Portfolio: up to 50 projects A joint venture between PJSC Sberbank and Sample projects: Sample projects: Drivers for development Yande.Market is to become the most high- PriceLabs USD 1 million 100 percent Aximetria USD 120,000 N/a of Russia’s FinTech market profile transaction in this field in 2018. Sberbank Russian FinTech market plans to invest at least RUB 30 billion in this Chatfuel N/a 100 percent API Bank N/a N/a outlook until 2020 transaction. SberBank Venture Capital Lanit Overview of Kazakhstan’s 05 “Banks are wary of FinTech companies, this FinTech market Round: seed, second, subsequent rounds Round: grants, pre-seed, seed, first round is why the former are so quickly buying Amounts: USD 1 million and above Amounts: up to USD 2,500,000 million the latter. Every bank has enough FinTech Portfolio: up to 50 projects Portfolio: up to 50 projects 06 Appendix companies in its portfolio. What are we going Sample projects: Sample projects: to do with them? So far, making collections.” Segmento 1 млн долл. США 50% CardsMobile USD 120,000 N/a 07 Contacts Herman Gref, Sberbank CEO, said. Platius N/a 50%

Source: Forbes, RBC, Rusbase, Firrma, company websites

46 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder map: venture funds

01 Foreword

02 Key findings

Overview of the FinTech 03 market Venture funds are funds Almaz Capital Partners Buran Venture Capital Emery Capital Overview of Russia’s FinTech 04 oriented at working with Round: first and subsequent rounds Round: seed and subsequent rounds Round: Round 1 and subsequent rounds market Amounts: n/a Amounts: USD 101,000 – 500,000 Amount: initial project investment: innovative companies and Partners: Alexander Galitsky (Managing Partner), Pavel Partners: Alexander Konoplyasty, Mikhail Salontai up to USD $1 m; subsequent investment: up to USD $5 m Bogdanov, Charles Ryan, Geoffrey Baehr Sample projects: Partners: Ivan Saveliyev, Alexey Shakhmatov, The FinTech market in figures projects (startups). Sample projects: Ivan Podmasko, Mikhail Zakharov Sample projects: The current situation in 2can Kopikot Russia’s FinTech market MoneyMan FinTech market Baring Vostok Capital Partners Buran Venture Capital stakeholder map

Round: seed, first round Round: seed, first round Supply in the FinTech market Amounts: over USD 1 million Amounts: n/a Partners: Michael Kavi Partners: Aleksey Aksanov, Shukhrat Ibragimov, Sample projects: Vladimir Cherepov Demand in the FinTech market Sample projects: Barriers for development Revo tecnologies Collectly of Russia’s FinTech market Drivers for development Finstar Financial Group of Russia’s FinTech market

Round: Round 1 and subsequent rounds Russian FinTech market Amount: n/a outlook until 2020 Partners: Oleg Boyko Sample projects: Overview of Kazakhstan’s 05 FinTech market SMS Finance 06 Appendix Source: Rusbase, fund websites 07 Contacts

47 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder roadmap: business angels

01 Foreword

02 Key findings

Overview of the FinTech 03 A business angel market Overview of Russia’s FinTech is an individual or a legal entity 04 Yuri Milner Oleg Boyko Vadim Dymov market which invests part of its funds The entrepreneur, manager, owner of DST Entrepreneur, international investor, chairman Vadim owns Dymov Sausage Production and The FinTech market in figures in the innovative companies Global, former co-owner and BoD chairman of finstar Financial Group. the Respublika book shop chain. in Mail.Ru. The current situation in at the earliest stages (seed The main business line is financial services in the In 2013, Vadim invested in MoneyMan, Russian Russia’s FinTech market stage and start-up stage). Jointly with a group of investors, DST Global, digital space. Oleg Boyko is actively investing microfinance company. In May 2015 he invested Yuri’s venture fund invested USD 250 million in digital credit businesses that provide high- additional USD 6 million, jointly with Emery FinTech market in Revolut, British FinTech startup founded quality financial products and services to clients Capital fund. In exchange, investors will receive stakeholder map by former Russian citizens. During the round, on a global level through the use of digital approximately a 20 percent stake. the startup was evaluated at USD 1.7 billion. technologies. In 2017, Oleg Boyko announced Supply in the FinTech market plans to invest $ 150 million. in transactions, startups in the field of new FINTECH technologies Demand in the FinTech market and in the development of R&D areas of holding Barriers for development companies for 5 years. of Russia’s FinTech market Sergey Solonin Co-founder and co-owner of QIWI, LP, and Drivers for development A business angel investment in one company several venture funds of Russia’s FinTech market may amount from ten thousand euro to one Russian FinTech market million euro. Jointly with Target Global Fintech Opportunities outlook until 2020 Fund (TGFOF) venture fund and other investors, Business angels use venture investing where Sergey Solonin invested around USD 1 million Overview of Kazakhstan’s financing is provided for a long period (3-7 years), 05 in Tezis.io, FinTech startup. Investors received FinTech market without collateral and guarantees, in exchange for a minority stake, while the company founders a stake in a company. held the controlling stake. 06 Appendix

07 Contacts

48 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder roadmap: business angels

01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 Sergey Kozlovsky Sergey Dashkov Nikita Mikhin Alexander Ruchyev market President and co-founder Sergey is a graduate of Institute Nikita is a business angel. In June 2018, The ex-owner of Morton, construction of Incom developer company of Physics and Technology and a co-founder he participated in Tezis.io FinTech startup and development company, the president The FinTech market in figures In 2016, he invested RUB 300 million in PayQR, of SDS-Foods, participant of Venture Club. investment round. of GK Osnova company The current situation in Russian contactless payment system The range of investment interests is very wide: Russia’s FinTech market developer startup. big data, FinTech, new eergy, VR. IoT, biotech, In August 2017, Alexander became a strategic etc. Sergey entered in ten deals and two partner of ICO Lab Ecosystem company. FinTech market In June 2017, Sergey invested RUB 60 million of them have been confirmed. Sergey invests He joined the board of founders. In September stakeholder map in Bonus Club, Russian IT project which in IoT projects, virtual reality, FinTech, etc. The Alexander Borodich 2017, he invested his own money in ICO develops and implements technical solutions average check is USD 150,000, and the amount A private investor Lab Ecosystem. Supply in the FinTech market for loyalty programs. of annual investment is USD 1 million. In December 2013, Alexander invested his funds in two Russian projects, Futubank In October 2017, it was reported that Alexander Demand in the FinTech market Both startups are part of the Financial and and Minibuh.ru Ruchyev and Alexey Voronin would create Smart Barriers for development Information Technology company (FIT), fully Valley company — the first platform for ICO of Russia’s FinTech market owned by Cyprus-based Payqr International. automation globally. Their own investments in the project amounted to USD 10 million. Drivers for development In May 2018, the company launched the of Russia’s FinTech market Boris Zhilin first ICO. Russian FinTech market Pavel Kovsharov A private investor, the managing partner outlook until 2020 Pavel is a founder of Zamania family adventure of Armor Capital investment fund park chain. In December 2013, he participated In 2016, Boris invested RUB Overview of Kazakhstan’s 05 in the А Futubank round. As a result, the startup 35 million in Boomstarter, crowdfunding start- FinTech market succeeded in raising USD 300,000. up company. 06 Appendix

07 Contacts

49 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder map: government funds

01 Foreword

02 Key findings

Overview of the FinTech 03 market Government funds are funds Moskow seed fund The Fund for Developing Venture Investments The Ministry of Finance of the Russian in Small R&D Enterprises was established the Federation Overview of Russia’s FinTech oriented at working with Round: seed, first round 04 Department of Science, Industrial Policy and market Amounts: USD 101,000 – 500,000 Round: seed round and investing in innovative Sample projects: Entrepreneurship of Moscow with support from Sample projects: OAO RVK. The FinTech market in figures companies and projects Tiwo Easyfinance.ru The current situation in (startups) on a co- Russia’s FinTech market financing basis. Sverdlovsk Venture Fund Sverdlovsky Venture Fund (SVF) was established on the basis of the Fund for Developing Yakutia Venture Company FinTech market Round: seed, first round Venture Investments in Small R&D Enterprises stakeholder map Amounts: up to USD 0.5 million Round: seed and subsequent rounds Sample projects: in Sverdlovsk Region which was established Amounts: n/a in 2006 in the form of public and private Sample projects: Supply in the FinTech market Sverdlovsk Venture Fund partnership, with participation of the Sakha-plat regional government. Demand in the FinTech market FRII Barriers for development The priorities of the Fund for Development Round: seed, first round of Russia’s FinTech market Amounts: USD 200,000 - USD 4 million of Internet Initiatives (FRII) include financial Sample projects: and expert support for early stages of project Drivers for development implementation. The Fund also plans to launch of Russia’s FinTech market Scorista First online accounting StartTrack various educational programs and propose Russian FinTech market a number of legislative initiatives. outlook until 2020

Samara Region Venture Fund Overview of Kazakhstan’s 05 The Fund was supported by the Economic FinTech market Round: seed round Sample projects: Development and Trade Ministry of Samara Region. The managing partner of the Fund 06 Appendix FinTech Core is OOO Technology Transfer Center owned by Sergey Bogdanov. 07 Contacts

50 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder map: accelerators

01 Foreword

02 Key findings

Overview of the FinTech 03 market An accelerator is a company HSE {PRO} FINTECH GenerationS Corporate accelerators Overview of Russia’s FinTech 04 tasked with assisting other Stake: n/a Stake: n/a Stake: 0-100 percent market Investments: USD 4.4 million (investments by Program Investments: n/a Investments: infrastructure companies (accelerator alumni including ICO and pre-ICO Fee: n/a Experts: company shareholders and top managers The Program fee is RUB 20,000 per month Experts: company and bank managers The FinTech market in figures residents). Experts: Andrey Kuskov (Sberbank-Innovations), Sergey Sample projects: Maximchuk (Alfa-start), Alexander Yakovlev (Non-proit The current situation in Accelerators offer structured organization AO RND) Mandarinbank Suretly Cardberry Unilever accelerator Alfa-potok VTB accelerator Russia’s FinTech market Sample projects: programs to residents FinTech market thus allowing companies Block4chain Cardberry Confideal stakeholder map to optimize business models, Supply in the FinTech market win contracts and increase QIWI Universe iDealMachine startup accelerator fintechlab Demand in the FinTech market sales. The program continues Share 8 percent Stake: 15-20 percent Stake: n/a Investments: USD 20,000, infrastructure Investments: USD 20,000, infrastructure Investments: n/a Barriers for development for 3-6 months. As usual, Experts: QIWI shareholders and top managers Fee: n/a Fee: n/a Sample projects: Experts: Experts: Nadiya Cherkasova (Bank Otkritie), Yulia of Russia’s FinTech market accelerators provide co- Sample projects: Alekseeva (Credit Europe Bank), representatives Ru-Beacon EORA of the CBR, Russian Communications Ministry, FinTech Drivers for development working space to resident SmartMuseum RoboEd xTurion association and related higher education institutions of Russia’s FinTech market Sample projects: companies to use during the Russian FinTech market acceleration process. Pandamoney Relation Rate Rubbles outlook until 2020 Skolkovo startup academy FRII accelerator Overview of Kazakhstan’s 05 FinTech market Stake: n/a Stake: above 3 percent Investments: n/a Investments: RUB 1.4-14 million; the projects which Fee: RUB 420,000 ‒ 630,000 reached the round A stage may receive RUB 275 million. 06 Appendix Experts: Dmitry Pluschevsky, Andrey Rappoport, Fee: n/a Ruben Vardanyan (social investor and entrepreneur), Experts: renown investors, entrepreneurs, brand Oskat Hartmann (founder of KupiVIP.ru), Dave (Shahar) managers, marketing experts, interface designers and 07 Contacts Waiser (Gett’s founder and CEO) PR-specialists Sample projects: Sample projects:

n/a Pay-Z

51 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Stakeholder map: development institutions and associations 01 Foreword

02 Key findings

Overview of the FinTech 03 market Development institutions and FinTech Association Operational areas: Overview of Russia’s FinTech associations are represented The Association’s goals: 01. Identification and management 04 01. Develop and implement new of digital identity; market by organizations which technology solutions to support 02. Development of the distributed The FinTech market in figures contribute to development Russia’s FinTech market; ledger technology; 02. Create conditions for digitalization of the 03. Development of the retail The current situation in of the FinTech industry Russian economy. payment framework; Russia’s FinTech market including financial support 04. Development of open API. The Association’s objectives: FinTech market in implementing projects 01. conduct research, analyze trends, Management: stakeholder map (in the form of grants, summarize international experience; Olga Skorobogatova, 01. draw a list of priority focus zones; Supervisory Council Chairman Supply in the FinTech market participation in the charter 01. implement own projects and Sergey Solonin, CEO Demand in the FinTech market capital of portfolio companies, participate in the projects launched by other organizations; Barriers for development 01. coordinate development of software, and issuance of loans). of Russia’s FinTech market standards, platforms, and protocols; 01. prepare the proposal on developing and Drivers for development amending the legislation; of Russia’s FinTech market 01. hold conferences, implement educational Russian FinTech market and awareness-raising projects; outlook until 2020 01. act in the interests of the Association members and provide assistance to them. Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

52 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Supply in the FinTech market (1/3)

01 Foreword

02 Key findings

Overview of the FinTech 03 market FinTech industry segmentation During the survey we asked our experts Overview of Russia’s FinTech to evaluate the potential of the above- 04 mentioned FinTech segments in the medium market term (1-3 years) in Russia. Lending Payments Digital banks The FinTech market in figures Online lending E-wallet Based on the results of our analysis Bank product The current situation in Blockchain, big data, machine Machine learning, artificial we calculated a relative rating of various Russia’s FinTech market learning, artificial intelligence An online payment service intelligence FinTech segments (on the scale from Blockchain, cloud technology, IoT, big 0 to 4, where 0 corresponds to zero relevance FinTech market POS-lending in the data, API, contactless payments, SaaS and 4 corresponds to very high potential). stakeholder map real-time mode Biometric analysis Mobile points of sale (mPOS) Digital banks are the leaders (3.08) They are Supply in the FinTech market API followed by lending, scoring and marketplace The importance of the segment The importance of the segment 2.80 3.08 (2.80 points each). The outlook for various Demand in the FinTech market Exchange office FinTech fields is reviewed in Section «The rating Barriers for development of FinTech segments with the highest market of Russia’s FinTech market PFM Internet acquiring potential until 2020.» Drivers for development Personal finance management Payment aggregator of Russia’s FinTech market platform API, SaaS Cloud technology Russian FinTech market outlook until 2020 The importance of the segment Overview of Kazakhstan’s n/a 05 FinTech market 2.02 The importance of the segment 06 Appendix

07 Contacts

Product Applied technology

53 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Supply in the FinTech market (2/3)

01 Foreword

02 Key findings

Overview of the FinTech 03 market FinTech industry segmentation Overview of Russia’s FinTech 04 market

Loyalty programs Insurance Management Accounting Scoring The FinTech market in figures Insurance telematics Client data analysis Card aggregator Online accounting The current situation in Cloud technology, API, artificial Cloud technology Cloud technology, API Cloud technology, SaaS, API, predictive Russia’s FinTech market intelligence analytics, artificial intelligence, big Crowdsurance Online accounting data, data mining, machine learning, FinTech market Cashback service Blockchain, API, biometric SaaS semantic analysis, deep learning stakeholder map Big data analysis BFM — business financial Supply in the FinTech market Market analytics management Big data, predictive analytics, claster Demand in the FinTech market analysis, machine learning, neural Comprehensive solutions Barriers for development networks, cloud technology, biometric Cloud technology, API of Russia’s FinTech market analysis Drivers for development Advertising platform of Russia’s FinTech market The importance of the segment The importance of the segment The importance of the segment Big data, machine learning, predictive 2.06 1.86 2.80 Russian FinTech market analytics, API outlook until 2020 Overview of Kazakhstan’s 05 FinTech market 2.50 The importance of the segment 06 Appendix

07 Contacts

Product Applied technology

54 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Supply in the FinTech market (3/3)

01 Foreword

02 Key findings

Overview of the FinTech 03 market FinTech industry segmentation Overview of Russia’s FinTech 04 market Marketplace Investments Infrastructure solutions The FinTech market in figures The platform for buying securities Bank marketplace Identification solutions Back office (business process) The current situation in and training for exchange trading API Blockchain, biometric analysis, semantic automation Russia’s FinTech market Data mining, artificial intelligence, analysis, artificial intelligence, API, big Big data, SaaS big data, predictive analytics, API, Insurance marketplace data, SaaS, machine learning, VR, AR FinTech market blockchain SaaS ICO platform stakeholder map Solutions for application programming Blockchain, SaaS, API, artificial B2B technology solutions Financial supermarket interfaces (APIs) and banks intelligence, neural networks Supply in the FinTech market Cloud technology, SaaS, neural SaaS, API, cloud technology networks, machine learning Information security Demand in the FinTech market Regtech Machine learning, artificial intelligence, The importance of the segment Barriers for development Crowdfunding 2.74 predictive analytics of Russia’s FinTech market Distributed ledger and smart contracts Crowdinvesting Artificial intelligence, IoT, blockchain, API E-factoring Drivers for development SaaS of Russia’s FinTech market P2P-lending Bank chat bots and robo-advising Russian FinTech market API Deep learning, neural networks, Data analysis and processing outlook until 2020 predictive analytics, blockchain, Big data machine learning Overview of Kazakhstan’s 05 FinTech market 2.74 The importance of the segment 2.48 The importance of the segment 06 Appendix

07 Contacts

Product Applied technology

55 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Contribution of FinTech products to achievement of the SDGs in Russia (1/3) 01 Foreword

02 Key findings

Overview of the FinTech 03 market The table below contains FinTech solutions which contributes the most to achievement of the SDGs in Russia. Overview of Russia’s FinTech 04 market Segment Product The FinTech market in figures

Lending 1) Online lending The current situation in 2) POS-lending in the real-time mode Russia’s FinTech market

Payments 1) E-wallet FinTech market stakeholder map 2) An online payment service

3) Mobile points of sale (mPOS) Supply in the FinTech market

4) Exchange office Demand in the FinTech market 5) Internet acquiring Barriers for development 6) Payment aggregator of Russia’s FinTech market Management accounting 1) Online accounting Drivers for development 2) Online accounting of Russia’s FinTech market 3) Comprehensive solutions Russian FinTech market Investments 1) Crowdfunding outlook until 2020

2) Crowdinvesting Overview of Kazakhstan’s 05 FinTech market 3) P2P-lending

Infrastructure solutions 1) Identification solutions 06 Appendix

2) Distributed ledger and smart contracts 07 Contacts 3) Information security

4) Bank chat bots and robo-advising

56 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Contribution of FinTech products to achievement of the SDGs in Russia (2/3) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Valuation results SDG 1 15.4 Overview of Russia’s FinTech The assessment of the Russian The most vigorous work is done to achieve 04 SDG 2 11.6 FinTech’s potential contribution to the SDG 8 (Decent Work and Economic Growth), market SDG 3 8.0 achievement of the SDGs in Russia shows that SDG 1 (No Poverty) and SDG 2 (Zero Hunger). SDG 9 (Industry, innovation and infrastructure) The FinTech market in figures SDG 5 9.8 is the easiest achievable goal. This can The evaluation methodology used to analyze The current situation in SDG 6 6.8 be achieved through wide-spread financial the contribution, as well as detailed results for Russia’s FinTech market SDG 7 1.6 online services. each SDG are listed in the Appendix. FinTech market SDG 8 17.8 Thus, new FinTech lending and investment stakeholder map SDG 9 24.0 solutions enable the achievement of the Supply in the FinTech market SDG 11 6.0 following targets: •• 9.3 Increase access of small industrial and SDG 12 1.5 other enterprises (especially in developing Demand in the FinTech market SDG 13 0.8 countries) to financial services including Barriers for development affordable loans, as well as expand their SDG 17 6.2 of Russia’s FinTech market integration in production and supply chains and markets. Drivers for development of Russia’s FinTech market Russian FinTech market outlook until 2020 SDG 1. End poverty in all its forms everywhere 1.6 Ensure significant mobilization of resources from 7 percent gross domestic product growth per annum in SGD 9. Build resilient infrastructure, promote inclusive 1.4 By 2030, ensure that all men and women, in a variety of sources, including through enhanced the least developed countries. and sustainable industrialization and foster innovation. Overview of Kazakhstan’s development cooperation, in order to provide 05 particular the poor and the vulnerable, have equal 8.4 Improve progressively, through 2030, global 9.3 Increase the access of small industrial and other FinTech market rights to economic resources, as well as access to basic adequate and predictable means for developing resource efficiency in consumption and production enterprises (especially in developing countries) to countries, in particular least developed countries, in services, ownership and control over land and other and endeavour to decouple economic growth from financial services including affordable loans, as well 06 Appendix forms of property, inheritance, natural resources, order to implement programmes and policies to end environmental degradation, in accordance with the as expand their integration in production and supply appropriate new technology and financial services, poverty in all its dimensions. 10-year framework of programmes on sustainable chains and markets. including microfinance. SDG 8. Promote sustained, inclusive, and sustainable consumption and production, with developed countries 07 Contacts 1.5 By 2030, build the resilience of the poor and those economic growth, full and productive employment and taking the lead. in vulnerable situations and reduce their exposure and decent work for all. 8.10 Strengthen the capacity of domestic financial vulnerability to climate-related extreme events and 8.1 Sustain per capita economic growth in accordance institutions to encourage and expand access to other economic, social and environmental shocks and with national circumstances and, in particular, at least banking, insurance and financial services for all. disasters.

57 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Contribution of FinTech products to achievement of the SDGs in Russia: expert commentaries 01 Foreword

What kind of contribution can FinTech companies make 02 Key findings to help develop sustainable financial ecosystems? Overview of the FinTech 03 market Overview of Russia’s FinTech Alexander Dunaev 04 profit oin the long term. I mean, I do not place in two key segments — payment accessibility, convenience, and the speed market (MoneyMan) believe that a company may have a basis systems which will provide alternative of decision-making aiming to help clients The FinTech market in figures Business must be sustainable not for for its operation other than making to the existing bank payment systems who participate in this process. profit. So, I think that the sustainable the sake of getting the respective label and user communities. It will go beyond The current situation in on its website or to show that it is socially development is an integral part of profit retaining loyal clients and will be aimed Russia’s FinTech market responsible but first and foremost the making. at reaching of a higher, more positive business needs it. Let’s look at the emotional interaction level. The high Yuri Provkin (Eqvanta) FinTech market reasons one by one. Sooner or later, the level of such dialog will help define stakeholder map company’s performance will be affected the policy of a FinTech company I would add two points here. This or a regulatory/political response will follow Sergey Sedov (Zaymer) in specific circumstances. is convenience, i.e., the technology helps Supply in the FinTech market if your company is linked to the resource to deliver money faster to clients including industry, or if it damages the environment In addition to availability of financial The sustainable development of the remote channels, mobile applications, Demand in the FinTech market in which it operates. The reason is that services, FinTech may have a positive society implies higher life quality for etc. Today, it works via delivery: you Barriers for development impact on the service rendering speed, may order a financial product and have environmental fairness or pollution (the a given person. The FinTech lending market of Russia’s FinTech market fairness aspect is inevitably raised in this convenience and profitability. These in which we operate is quite prepared it delivered to your office. You may resolve context) are always linked to politics. If you are areas where FinTech is capable to provide efficient tools for responding a lot of financial tasks, e.g. open an account Drivers for development want you business to flourish you should of competing with traditional financial to the current client queries. Provided (if you are an individual entrepreneur), of Russia’s FinTech market invest in the environmental protection. companies on a full scale. In its turn, that these tools are applied correctly receive money if you are an individual, Russian FinTech market it helps to provide a stable foundation for obtain a loan or get advice by phone. Hence, So, it is crucial for the business, not only (while we observe a significant increase outlook until 2020 for the environment. This a function sustainable development of the society. in the financial literacy of our clients), I think the financial services become more of it. I am still convinced that the main The near term goal is to secure the they can help client achieve a quality new convenient from a standpoint of various Overview of Kazakhstan’s 05 objective of any company is to make achievements made and promote level. Given the government initiatives, programs which are developed to record FinTech market profit. The company needs to develop FinTech’s potential to a maximum extent the society is undoubtedly set to shift financial costs and ensure planning. The in a sustainable manner in order to make possible. The development will take in this direction. We will focus on the technology makes it somewhat more 06 Appendix

07 Contacts

58 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Contribution of FinTech products to achievement of the

SDGs in Russia: expert commentaries 01 Foreword

What kind of contribution can FinTech companies make 02 Key findings to help develop sustainable financial ecosystems? Overview of the FinTech 03 market Overview of Russia’s FinTech 04 convenient. The last point is accessibility, potential. As at today, financial instruments increase the target audience and improve Ivan Merinov (SMS Finance) market convenience and efficiency. As for efficiency, are not fully available to companies and the financial literacy of the population. companies using new technology may small businesses. On the one hand, it a kind First of all, there are opportunities for Let’s think for a moment what is meant The FinTech market in figures reduce costs including transaction costs of a ‘perception’ problem. On the other developing an efficient dialog with the by alternative access to financial products. The current situation in through automating various business hand, there is no infrastructure for it. state. We expect that some of the barriers This is obviously about creating value for Russia’s FinTech market processes via FinTech. In the end, clients I think, more and more companies notice can be lifted based on this dialog. New all types of clients who would not be able can and will receive services at lower rates it. I see that many startups and companies opportunity emerge for discussing to access these products without FinTech. FinTech market owing to lower costs, higher margins, and are created exactly in this area. P2P improvement plans roles of the This value is what has been enabled stakeholder map competition all of which lead to lower floors and balance sheet lenders emerge participants crystallize when all negotiating by advanced analytics and alternative service fees for clients. Hence, I single out as a response to a need in new business parties strive for development. financial products. It means, in practice, Supply in the FinTech market accessibility, convenience and efficiency. evaluation methodologies, entrepreneur that FinTech is here to make the financial valuation, scoring, etc. Hence, I think, Some foreign players (for example, https:// ecosystem more stable. Some foreign Demand in the FinTech market Some foreign players (for example, th epotential is very high and there a lot www.finca.org) focus on social issues players (for example, https://www.finca. Barriers for development https://www.finca.org) focus on social of market players who see opportunities making it a core objective of their business. org) focus on social issues, making it a core of Russia’s FinTech market issues making it a core objective of their there. I think, the segment is very large and Do you think that the assessment of the objective of their business. Do you think business. Do you think that the assessment it will significantly transform in the next societal and economic impact may help that the assessment of the societal and Drivers for development of the societal and economic impact may 50 years. companies to attract new market players economic impact may help companies of Russia’s FinTech market help companies to attract new market which are capable of contributing to attract new market players which are Russian FinTech market players which are capable of contributing to resolution of social issues? capable of contributing to the resolution outlook until 2020 to resolution of social issues? of social issues? We need to keep in mind Anrey Petkov Looking at the entire FinTech segment, I think that the correct assessment of the that financial technology for microfinance Overview of Kazakhstan’s (MFC «Chestnoe Slovo») 05 those who specialize on SME and resolve societal and economic impact would help is, among other things, aimed at solving FinTech market social issues one may say that it is a vast FinTech makes it easier for all population business to understand social problems social issues and improving living market with high demand and untapped strata to access financial products, which should be tackled. standards across the social board, with 06 Appendix

07 Contacts

59 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Contribution of FinTech products to achievement of the

SDGs in Russia: expert commentaries 01 Foreword

What kind of contribution can FinTech companies make 02 Key findings to help develop sustainable financial ecosystems? Overview of the FinTech 03 market Overview of Russia’s FinTech 04 the FinTech industry actually functioning market as a social project. The question is whether it is worthwhile to combine business The FinTech market in figures with non-profit social projects. Business The current situation in equals making money. Otherwise, it would Russia’s FinTech market be charity. But it is quite a different thing when a social initiative is smartly FinTech market integrated into your business processes stakeholder map and acts primarily to deliver benefits to your business while contributing to the Supply in the FinTech market social agenda. For example, our company is interested in having professionals who Demand in the FinTech market are a best fit for the real world of high- Barriers for development tech business. To make this task simpler, of Russia’s FinTech market we have become part of a bachelor programme at one of the leading Drivers for development universities. Do we benefit from that? of Russia’s FinTech market No doubt. Do we contribute to the social Russian FinTech market dimension? Yes, we do. outlook until 2020 Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

60 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Contribution of FinTech products to achievement of the SDGs in Russia (3/3) 01 Foreword

02 Key findings

Contribution to achievement of the Overview of the FinTech 03 SDGs: market Financial inclusion: contribution •• Dealing with MFOs increases the probability Overview of Russia’s FinTech of microfinance organizations* of obtaining positive loan decisions from SDG 1 (No Poverty) 04 Context banks. Bank customers who came there 1.4 By 2030, ensure that all men market According to various estimates, over 20 percent from MFOs account for six percent of total and women, in particular the poor of the Russian population do not have access borrowers who received bank loans. The and the vulnerable, have equal The FinTech market in figures to bank financial products. The limited access reason for rehabilitation and obtaining access rights to economic resources, The current situation in often results from denials issued by banks due to bank loans is higher financial discipline as well as access to basic services, Russia’s FinTech market to weak credit histories or the lack of it in the among those who dealt with MFOs. ownership and control over land and case of loan applicants. other forms of property, inheritance, FinTech market •• The MFO online services make it possible natural resources, appropriate new stakeholder map to smooth the accessibility of financial The contribution of online services technology and financial services, services in large cities and remote regions. of microfinance organizations (MFO): including microfinance. Supply in the FinTech market The share of borrowers from small towns Access to finances: increased by over 7 percent. SDG 8 (Decent Work and Demand in the FinTech market •• Growing Internet penetration in remote Financial literacy: Economic Growth) regions and slower infrastructure and 8.10 Strengthen the capacity Barriers for development •• The MFO online services appear the most income growth rates transforms the MFO of domestic financial institutions of Russia’s FinTech market convenient and attractive for low income online services into a tool which can be used to encourage and expand access households. They significantly increase the Drivers for development by households with no access to bank loans to banking, insurance and financial financial literacy of the population due to the of Russia’s FinTech market to obtain financing in emergency cases, services for all. simplicity of interfaces. e.g. delays in salary payments. MFO offer Russian FinTech market SDG 9: Industry, Innovation and short-term loans which are not perceived outlook until 2020 Infrastructure as significant credit burden. 9.3 Increase the access of small Overview of Kazakhstan’s 05 industrial and other enterprises FinTech market (especially in developing countries) to financial services including affordable 06 Appendix loans, as well as expand their integration in production and supply 07 Contacts chains and markets.

* According to the research of the Joint Credit Bureau and Self-Regulatory Organization based on 314 million credit histories of 82 million borrowers stored in the Joint Credit Bureau.

61 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Demand in the FinTech market

01 Foreword

02 Key findings

Overview of the FinTech 03 market Banks Retail Catering facilities Insurance companies Overview of Russia’s FinTech 04 •• Online accounting •• Card aggregator •• mPOS •• Online reporting market •• Online reporting •• Online payment service •• Card aggregator •• Crowdsurance The FinTech market in figures • Business process automation • Cashback service • Market analytics • Insurance telematics • • • • The current situation in •• Client data analysis •• Advertising platform •• Online payment service •• Insurance marketplace Russia’s FinTech market

•• Bank chat bots and robo-advising •• POS-lending •• Cashback service FinTech market stakeholder map •• Bank marketplace •• Market analytics •• Advertising platform

•• IT security •• mPOS •• Real-time POS-lending Supply in the FinTech market

•• Market analytics Demand in the FinTech market •• Real-time POS lending Barriers for development of Russia’s FinTech market Drivers for development of Russia’s FinTech market Governmental and municipal Microfinance organizations Telecoms Investment companies organizations Russian FinTech market outlook until 2020 •• Business process automation •• P2P lending •• Data analytics and processing •• Bank chat bots and robo-advising Overview of Kazakhstan’s •• Business process automation •• Market analytics 05 FinTech market •• Client data analysis 06 Appendix •• Market analytics P2P-lending

•• Real-time POS-lending 07 Contacts

Products

62 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Demand in the FinTech market: the sentiment analysis of digital footprints 01 Foreword

02 Key findings

Overview of the FinTech 03 market Online lending is one of the fastest The methodology for studying the sentiment Glossary Overview of Russia’s FinTech growing segments in the FinTech of the social media users to online loan segment Digital footprint — an record made by a social 04 of FinTech. media user (a comment, post, repost). market market. According to experts, 2017 The subject of the research: the online loan The semantic analysis — a stage of the The FinTech market in figures saw this segment grow by 67 percent segment of FinTech. automated text recognition algorithm at which The current situation in The objective of the research: identify the on 2016. The majority of FinTech players semantic relationships are defined and the Russia’s FinTech market attitude of respondents towards the research semantic representation of the text is formed. expect that this positive trend will subject (online loans as a whole, specific FinTech market continue within the next two years, companies and their services) The sentiment analysis is a class of the content stakeholder map analysis methods in computer linguistics pointing out to online lending as one Sample: 30,000 digital footprints in the Russian designed for automated identification Supply in the FinTech market social media and 3,000 digital footprints of the key drivers behind the evolution of emotionally tinged speech and assessments in Kazakhstan’s social media. Demand in the FinTech market of FinTech. However, the negative (opinions) with respect to the subject This part of the research involved data mining of the research. including semantic analysis algorithms, Barriers for development consumer attitudes have slowed the of Russia’s FinTech market development in this segment lately. sentiment analysis and psychometric analysis. The psychometric analysis reviews sets of open data in the social media profiles with Drivers for development The sentiment analysis of the digital respect to the author’s attitude to a specific of Russia’s FinTech market personality type. In our research, we use two footprint in social media allows tfor Russian FinTech market key methodologies adopted by the professional outlook until 2020 the o identifyidentification of the social community, i.e., MBTI и BIG5. Overview of Kazakhstan’s 05 media users’ sentiments towards the FinTech market online lending segment of FinTech. 06 Appendix

07 Contacts

63 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Demand in the FinTech market: the sentiment analysis of digital footprints 01 Foreword

02 Key findings

0.62 0.63 0.11 0.11 0.43 0.43 Overview of the FinTech Positive 03 market Online lending: sentiment balance value (on a scale from –1 to +1) attitude 12 256 Overview of Russia’s FinTech 04 market Northwestern Federal District: 8 817 The FinTech market in figures 0.29 7 622 The current situation in St. Petersburg 0.32* Russia’s FinTech market 0.23 4 032 Central Federal FinTech market District: 0.28 1 724 stakeholder map Moscow 586 Nizhny Novgorod Volga Federal 0.24 Neutral 0.25 Supply in the FinTech market District: 0.34 Perm attitude Kazan 0.43 Voronezh 2013 2014 2015 2016 2017 2018 0.18 Yekaterinburg 0.40 Demand in the FinTech market Samara 0.25 Rostov-on-Don 0.40 Barriers for development 0.14 Chelyabinsk 0.30 Krasnoyarsk 0.42 Ufa 0.16 Number of digital footprints of Russia’s FinTech market Omsk Volgograd 0.30 0.35 Novosibirsk Sentiment balance value Drivers for development 0.38 *The average level of sentiment of Russia’s FinTech market toward online lending products Southern North Caucasian Siberian Far-Eastern Ural Federal Federal Federal District: Federal Federal Russian FinTech market District: 0.31 District: 0.30 0.26 District: 0.39 District: 0.49 Negative outlook until 2020 attitude Overview of Kazakhstan’s 05 FinTech market The average balance value of positive and footprint) relative to the average value in 2013- negative sentiment among Russian users 2018: Perm (0.43) and Volgograd (0.42) led 06 Appendix of social media towards online loans was among million-plus cities, while the Far-Eastern 0.32 in 2013-2018. Federal District (0.49) and Siberian Federal 07 Contacts District (0.39) led among other regions. The The by-region analysis provided data on cities top three cities by positive sentiment in 2018 and regions with the highest share of users were Krasnoyarsk (0.74), Novosibirsk (0.56) and with positive sentiment (based on their digital Kazan (0.56).

64 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Demand in the FinTech market: the sentiment analysis of digital footprints 01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech The structure of the sentiment towards Top ten segments by sentiment balance value Based on the results of the sentiment value, 04 online loans by age and gender female users of social media were significantly market more loyal compared to male users in 2013- Woman 32% 68% 0.64 The FinTech market in figures 0.36 2018 (0.36 versus 0.29, respectively) Man 35% 65% The current situation in 0.29 In 2018, 76 percent of female users commented, 0.43 Russia’s FinTech market 18–25 years 31% 69% posted or reposted the positive content 0.38 0.63 on online loans (left digital footprint), while FinTech market 26–45 years 34% 66% 0.43 stakeholder map 0.31 the share of male users with similar behavior 46–65 years 42% 58% is 8 p.p. lower (68 percent). 0.16 Supply in the FinTech market 65 years and older 31% 69% As for the age structure, 18-25 year-old users 0.38 and those older than 65 years tend to leave Demand in the FinTech market 0.43 0.50 positive digital footprint regarding online loans Barriers for development Positive attitude more frequently (the average level of sentiment of Russia’s FinTech market Negative attitude value for both groups is 0.38). The balance value Drivers for development The users who left positive digital footprint of Russia’s FinTech market on online loans had the following core interests: 0.46 0.50 Russian FinTech market sports (0.64) and family (0.63). It should outlook until 2020 be noted that the ‘portrait’ of users changed 0.46 0.49 in 2018. As of today, key interests include music Overview of Kazakhstan’s 05 (0.87) and esoterics (0.84). FinTech market

06 Appendix Sports Travel Family TV 07 Contacts Entertainment Esoterica Cars Music Mobile phones Dating

65 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Demand in the FinTech market: the sentiment analysis of digital footprints 01 Foreword

02 Key findings

Overview of the FinTech 03 market MBTI psychometrics Big Five psychometrics Personality types with the highest sentiment Personality types with the highest Overview of Russia’s FinTech ISTP ENFJ balance values for the entire period sentiment balance values in 2018 04 0.18 0.25 Supervisor ESTJ Conservator ESTJ market ISTJ ENFP Logical Sensory Extrovert 0.53 Ethical Sensory Introvert 0.53 0.33 0.43 Assertive and hard working. Overachiever, The FinTech market in figures ISFP ENTJ always on the go. Cannot stand chaos and Vigilant ISFJ

0.28 0.593 0.594 0.590 The current situation in 0.26 disorder wherever he is. Has a strong sense Intuitive-Ethical Extrovert 0.48 Russia’s FinTech market

0.511 0.508 of responsibility. Prefers deeds to words Hates Prone to opportunism, unthoughtful and 0.501

ISFJ 0.464 0.455 deception and foul play, expresses opinions impromptu actions. Only intuitive-ethical FinTech market

ENTP 0.450 0.48 0.43 straightforwardly extroverts can yield to temptation of taking stakeholder map 0.366 0.362 0.352 0.347 0.355 0.349 a train and leaving for an undisclosed location Supply in the FinTech market INTP ESFJ with the only goal of winding down. Likes 0.34 0.38 Conservator ISFJ to spend some amounts of money on his/her Ethical Sensory Introvert 0.48 whims. Often believes that their destination Demand in the FinTech market INTJ Has firm principles and is self-possessed. is good living not burdened with dull ESFP Barriers for development 0.23 Quickly identifies toxic persons, draws sharp line daily concerns. 0.43 of Russia’s FinTech market between ‘insiders’ and ‘outsiders.’ Tends to give INFP ESTJ a moral assessment to people when talking Drivers for development 0.41 INFJ ESTP 0.53 to insiders. Ensures order and cleanness within of Russia’s FinTech market 0.28 0.32 his/her territory. Does not believe in friendship Russian FinTech market and love without reciprocity. Openness outlook until 2020 Neuroticism Extroversion Agreeableness Overview of Kazakhstan’s

Conscientiousness 05 MBTI psychometrics identified two key personality types among social media users with positive FinTech market sentiment revealed in their digital footprints relating to the online lending segment of FinTech in 2013- 2018: supervisor and conservator. 06 Appendix Overall balance In 2018, conservator (0.66) and vigilant (0.63) were the key personality types. Positive sentiment 07 Contacts Negative sentiment The Big Five psychometrics did not reveal significant differences between the digital footprints showing positive and negative sentiment of various personality types.

66 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Demand in the FinTech market: the sentiment analysis of digital footprints 01 Foreword

02 Key findings

Overview of the FinTech 03 market Top five companies based on the sentiment revealed in the digital footprint Five companies (eКаpusta, Vivus, Platiza, Overview of Russia’s FinTech eКаpusta, 0.79 Moneyman and MILI) exceeded the 04 average level (0.32) based on the results market of the sentiment analysis in 2013-2017. MoneyMan,0.45 The FinTech market in figures Vivus, 0.53 In 2018, only two companies (eКаpusta and MILI, 0.44 Bystrodengi, 0.21 MFC «Chestnoe Slovo») exceeded the the Zaymer, 0.25 The current situation in Platiza,0.50 0.32 average level (0.43). Russia’s FinTech market

The analysis of involvement by the number FinTech market webbankir, 0.23 Carmoney, –0.35 of digital footprints showed that Bystrodengi stakeholder map was the indisputable leader. In 2018, the Supply in the FinTech market MFC «Chestnoe Slovo», –0.29 situation has not changed and the structure of the top five list remain the same. Demand in the FinTech market The analysis of involvement by the number Barriers for development Top five companies by involvement* of users in the digital footprints about them of digital footprints showed that the share of Russia’s FinTech market Repost 9.38 of negative digital footprints anong reposts Bystrodengi 29 270 significantly increased in 2017-2018 (2.2 times Drivers for development 6.28 6.16 eКаpusta 6 810 2.86 versus the average for the entire period). of Russia’s FinTech market 2.52 4.97 2.85 2.35 Zaymer 6 750 2.79 2.51 3.34 2.39 2.50 2.22 Russian FinTech market MoneyMan 4 994 3.55 2.66 outlook until 2020 Carmoney 3 437 1.54 2.05 2013 2014 2015 2016 2017 2018 Overview of Kazakhstan’s The involvement ratio 05 Note FinTech market by sentiment revealed Bystrodengi 11 595 1.38 1.38 1.25 1.08 in the digital footprint MoneyMan 407 1.10 0.95 0.93 06 Appendix 0.78 0.93 0.78 Negative sentiment 0.52 0.70 Zaymer 406 0.91 Overall balance 0.38 0.35 0.65 eКаpusta 327 0.29 Positive sentiment 07 Contacts Carmoney 304 0.17 *Involvement is the number of users who liked the post and commented the digital 2013 2014 2015 2016 2017 2018 footprint

67 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Barriers for development of Russia’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market All stakeholders notice the positive performance Top five barriers for market development The rating of the problems faced by FinTech companies in Russia Overview of Russia’s FinTech of the Russian FinTech market, nut the majority (according to representatives of FinTech 04 Low appeal for foreign investors market of them believes that the market develops slower companies): 2.96 than it was forecast five years ago. •• Low appeal of the Russian FinTech industry for Low purchasing power of the population 2.86 The FinTech market in figures foreign investors (2.82); Shortcomings of government regulation in the industry (administrative, trade, The analysis of a number of publicly available economic and other barriers) 2.82 The current situation in interviews with market experts in the past two •• Low purchasing power of the population Russia’s FinTech market years allowed us to single out top five factors (2.86); Geopolitical risks 2.62 which constrain the development of the Russian FinTech market •• Shortcomings of government regulation of the Lack of flexibility in the tax system with respect to FinTech FinTech market. stakeholder map industry (2.82) 2.36 Cyber threats Top five barriers for market development •• Geopolitical risks (2.62); 2.26 Supply in the FinTech market which are most frequently discussed Growing cost of debt •• Lack of flexibility in the tax system with in mass media: 2.20 Demand in the FinTech market respect to FinTech (2.36). Negative perception of the infrastructure (e.g. penetration of the Internet) •• Uneven infrastructure development levels 2.16 Barriers for development in Russian regions (high concentration Most problems faced by Russian FinTech Currency risks (depreciating the national currency) of Russia’s FinTech market of FinTech companies in million-plus cities; the companies result from the current 2.16 Drivers for development inaccessibility of some regions for promoting macroeconomic situation. Weak protection of personal data 1.92 of Russia’s FinTech market FinTech and related tools); No access to foreign equipment and services The young and robust FinTech market needs Russian FinTech market •• Inequality in living standards of the Russian 1.66 investments including those from abroad, outlook until 2020 population (concentration of demand for Higher unemployment due to automation and RPA as well as the legislative and political stability FinTech om million-plus cities with higher living 1.00 Overview of Kazakhstan’s which will be instrumental in fostering business Significantly increased environmental footprint due to heavier use 05 standards); of energy resources FinTech market growth. 0.46 •• Emigration of skilled personnel; 06 Appendix Based on this we can identify top five obstacles •• Lack of regulation in some FinTech segments; for market development. Overall, this rating •• Lack of a unified strategy for FinTech-Bank matches the problems faced by the FinTech 07 Contacts relationships (FinTech companies are perceived market and frequently discussed in mass media. by banks as competitors and a source of profit erosion).

68 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Barriers for development of Russia’s FinTech market: expert commentary 01 Foreword

02 Key findings

Overview of the FinTech 03 market Alexander Dunaev Ivan Merinov Sergey Sedov (Zaymer) investors, purchasing power, geopolitical Overview of Russia’s FinTech (MoneyMan) (SMS Finance) 04 risks are the same and apply to all Russian market The problems are about different things. The above-mentioned problems do exist. No breakthrough for the industry companies. However, some companies The FinTech market in figures FinTech’s problems are like tetter. The However, the reason for optimism is that is possible while these barriers remain. can succeed and some of them cannot There will be a smooth, incremental succeed. I think, these barriers are just problems are actually larger and related the FinTech industry operations will The current situation in to different things. Maybe, once they are result in creation of the economy where evolution. Insufficient consumer part of the environment in which we have Russia’s FinTech market resolved FinTech would catch up. The key the above-mentioned problems would purchasing power places a road block to learn to operate. I would not say that point is that quite different problems have not matter. in the path to solving social issues such there is a particular barrier which needs FinTech market to be resolved first. The source of those as the need for scoring and better credit special attention. Let me draw an example. stakeholder map problems lies in a totally different area. The availability of cross-border payments histories. Let it be low attractiveness of the Russian The lack of capital markets is a huge and interaction with foreign banks FinTech industry for foreign investors. Supply in the FinTech market problem which The lack of technology (as a result of minimization of geopolitical Suppose, it is a significant barrier for exchange with Western countries, and risks) is an important pre-condition for a company which decided to pursue the Demand in the FinTech market the issues arising from the economic implementation of an optimistic scenario. Yuri Provkin (Eqvanta) path of international expansion. Here Barriers for development self-isolation pose a huge problem which The isolationist scenario for FinTech would is an example of our company. We became of Russia’s FinTech market will result in lagging for dozens of years. not allow for full-scale evolutino of the I think, all these barriers can be overcome a relative large Russian company with Hence, FinTech problems just fade industry. In other areas we have already and none of them is a real obstacle which revenue around RUB 4 billion. When Drivers for development in comparison with the overall situation. seen positive shifts. The real incomes could prevent our business from becoming we discussed our strategy with various of Russia’s FinTech market There is no sense in analyzing FinTech of households are slowly increasing, a major and successful company, even investment bankers we realized that the Russian FinTech market problems alone. They are very indirect while the regulation becomes both on an international scale. I believe, all international story is not the path to follow. outlook until 2020 and secondary in this context. There comprehensive and flexible. For example, this is manageable and depends mostly We even tried to merge with a major is no private sector which is another huge many oversight functions in microfinance on an organization’s goals. I know Russian international player but understood Overview of Kazakhstan’s 05 problem. The private sector is dying. market (in particular, online lending) FinTech companies which expanded that it is impossible because they were FinTech market There is a number of fundamental things have been transferred to self-regulatory internationally. I also know quite large advised not to do this. The reason was behind the presence of FinTech in the organizations. Russian companies which grew but chose that became so large a business that our 06 Appendix market. Should those fundamentals work, not to access international market for stake in the merged company would reach FinTech will survive. Oppositely, it will not their own reasons. Hence, I think the 40 percent. In fact, the new company 07 Contacts survive if other problems are not resolved. main point here is that all these barriers would look as a Russian company which Hence, it is about resolving general apply to all players. All those factors, i.e. would be a risk, given the geopolitical macroeconomic and structural problems. Russia’s attractiveness for international situation and the investor attitude toward This is what is applicable to Russia. Russia. However, should we pursue the

69 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Barriers for development of Russia’s FinTech market: expert commentary 01 Foreword

02 Key findings

Overview of the FinTech 03 market Anrey Petkov goal of becoming an international player Overview of Russia’s FinTech (MFC «Chestnoe Slovo») 04 we would follow a different strategy like market IDF. They did not focus on developing The optimistic scenario is quite feasible: large business in Russia and went despite the barriers, FinTech companies The FinTech market in figures to international markets right away at the seem to be quite established in their The current situation in initial stage. This was the strategy they segment. For example, many customers Russia’s FinTech market chose. As a result, Russia accounts for will suffer if mobile bank applications are a smaller part of their strategy and the blocked. FinTech market company remains quite attractive for stakeholder map foreign investors. They attracted large I would initiate change in the industry investments in the West, so I think these starting from the state regulation of the Supply in the FinTech market barriers are notional to some extent and segment. The attractiveness of the Russian one has to work [in order to bypass them]. FinTech industry directly depends on the Demand in the FinTech market state regulation. The flexibility of the Barriers for development tax system with respect to the specific of Russia’s FinTech market features of FinTech should be increased, too. Drivers for development of Russia’s FinTech market Barriers 1 (low attractiveness of Fintech for Russian FinTech market foreign investors) and 5 (lack of flexibility outlook until 2020 in the tax system) would not disappear if barrier 3 (shortcomings of government Overview of Kazakhstan’s 05 regulation) remains in place. FinTech market

06 Appendix

07 Contacts

70 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Drivers for development of Russia’s FinTech market (1/2) 01 Foreword

02 Key findings

Overview of the FinTech 03 market As we noted before, some specific features Previously, we discussed shortcomings of the due diligence, risk management and control Overview of Russia’s FinTech of the Russian FinTech market are both state regulation as a major barrier for FinTech processes for each operation performed 04 barriers and drivers from a standpoint of the market development in Russia. However, by a third party on an outsourcing basis. Audit market market development. we may look at a different angle and find contracts should specify obligations of each advantages as well. For example, the regulation party, service levels, and audit rights. The high The FinTech market in figures One of such, most ‘dual’ factors is labor force of the P2P lending may have a positive effect. culture of relationships between FinTech market The current situation in in this market segment (availability of highly It is well known that a key problem in that participants is an indisputable driver of the Russia’s FinTech market skilled specialists). Russian higher education segment is linked to identification of users ecosystem development. institutions prepare the strong professionals (borrowers). Upon obtaining an official status FinTech market who are in high demand in the global FinTech P2P hubs may receive access to the databases Another example is the reforming of the stakeholder map market. Strictly speaking, not all of them of the Pension Fund and the Federal Tax microfinance organization market launched can leave the country in order to launch Service in order to verify the data provided by the CBR in 2017. The CBR did a lot of work Supply in the FinTech market their startup projects, while the number by the borrowers. This would allow them to increase market transparency, improve the of invitations from corporations is limited. to significantly increase the efficiency of the quality of services and protect the interests Demand in the FinTech market Hence, there is a sufficient number of highly scoring mechanism, as well as improve the of consumers. Barriers for development skilled specialists in the Russian labor market situation in the lending segment. of Russia’s FinTech market whose requirements are quite suitable for businesses, given the current economic The CBR’s involvement in the FinTech Drivers for development situation. In addition, high-school graduates market grows every year. This applies both of Russia’s FinTech market give more preference to IT-departments to regulation and development of strategic Russian FinTech market of the universities, hence the number of fresh decisions with respect to market development. outlook until 2020 personnel for FinTech may only grow in the The significance of teh CBR’s role increases next three to five years. We note high interest both due to the fact that banks tend to more Overview of Kazakhstan’s 05 in young specialists on the part of major frequently cooperate with Fintech companies FinTech market corporations (purely FinTech corporations and allow the latter to develop lots of processes or those oncluding FinTech business on an outsourcing basis. The Basel Committee 06 Appendix branch). For example, Yandex regularly holds on Banking Supervision (BCBS) notes that lectures for students in leading universities such cooperation between banks and FinTech 07 Contacts which significantly increases the quality companies increases third-party risks, with of education with respect to application banks remaining ultimately liable. According of obtained knowledge. to BCBS, banks need to develop appropriate

71 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Drivers for development of Russia’s FinTech market (2/2) 01 Foreword

02 Key findings

Overview of the FinTech 03 market Top three drivers for market development The rating of FinTech company strategies in 2018-2019 which are most frequently discussed Overview of Russia’s FinTech Implementation of new technology 0.88 04 in mass media: market Launch of new products/services to on the market 0.87 •• The FinTech segment regulation (legal The FinTech market in figures support); Expansion into new markets 0.86 Organic growth 0.82 The current situation in •• The availability of highly skilled specialists Russia’s FinTech market in Russia; Higher promotional spending; marketing 0.77 FinTech market Raising capital from external sources 0.73 •• The opportunity to use the experience of the stakeholder map developed markets. Talent investment 0.67 Supply in the FinTech market Higher spending on R&D and business development 0.59 The rating shows that the key strategies Cost cutting 0.57 of FinTech companies are aimed at increasing Demand in the FinTech market the efficiency of internal business processes, Short-term capital optimization and operating model revision 0.46 Barriers for development namely, implementing new technology, Merger or/andand/or acquisition strategy 0.44 of Russia’s FinTech market launching new goods and products in the Social impact (lower poverty) 0.37 market, accessing new markets. Drivers for development Economic impact (impact on GDP) 0.32 of Russia’s FinTech market Currency risk hedging 0.32 Russian FinTech market outlook until 2020 Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

72 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Drivers for development of Russia’s FinTech market: expert commentary 01 Foreword

FinTechs on geographic expansion 02 Key findings Overview of the FinTech 03 Alexander Dunaev Anrey Petkov market are companies which successfully operate Sergey Sedov (Zaymer) (MFC «Chestnoe Slovo») (MoneyMan) Overview of Russia’s FinTech in the developed markets while there are 04 Our operations span from Brazil and First of all, ex-USSR countries. Many people those preferring developing markets. Much Upon looking at the online lending market Mexico to Europe and Central Asia. We have there use Russian payment systems, depends on whether the company operates segment, MFC «Chestnoe Slovo» various markets in our portfolio geography, social media and telecom services. in the consumer finance segment. For microfinance organization would choose The FinTech market in figures big and small, we work in and a consumer finance company, it is crucial Asia and Latin America markets. They have common history and similar The current situation in Brazil. I mean that the markets are very mentalities. Our next step would probably to watch what happens to regulation Russia’s FinTech market different. You can operate anywhere be Latin America. and competition. This is how we made if you are competitive. One just needs a decision on which markets we are going FinTech market to be competitive “You can sell in any One should not think that developed to enter. We studied these two aspects stakeholder map market. Probably, it is difficult to sell from markets (in particular, in Western Europe and looked for available opportunities. Ivan Merinov (SMS Finance) Russia because Russian, so to say, are countries) are closed for Russian FinTech These are the premises on which our Supply in the FinTech market perceived with caution in the West. There companies. We are capable of offering decisions are based. There are also other With FinTechs, the strongest interest is no problem about it. You open a back quite competitive solutions. We can companies which want to go public or make is on markets with a large consumer Demand in the FinTech market office in London and start working. Nobody also use our strategic advantages acting a name in the West — they open offices population and deeper penetration Barriers for development will care that everything is produced as an intermediary between relatively in San-Francisco or elsewhere in the US. of mobile technology. This includes the of Russia’s FinTech market in Russia, nobody would care about it. rich West and developing markets which They do it in order to work with investors Asian Pacific Region. are in need of financial injections. This there and show that the business can exist Drivers for development In the event that your product is confirmed by the use of P2P services there by raising significant investments. of Russia’s FinTech market is not competitive, your business will die. which are part of Robo.cash financial group Therefore, it is difficult for me to answer the Russian FinTech market It is normal and it does not mean that (we raise investments from EU citizens question regarding FinTech. Overall, I think outlook until 2020 your product is good or bad. There can to provide loans in other countries). that most markets are attractive for us. be lengthy discussions on whether a state One need to look at the segment in which Overview of Kazakhstan’s 05 of affairs in Russian market is bad or good, the company operates and develop the FinTech market but here we have all ingredients in order strategy on an individual basis. Probably, to launch a great international business. The Yuri Provkin (Eqvanta) regulation and competition are key areas 06 Appendix situation in Russia is not perfect but it does on which one should focus. Especially if you not matter, as the specialists you can hire Everything is too individual, in my opinion. are a consumer finance company. 07 Contacts here are great, leasing costs are not so high, I see companies which access the market. many people speak English, and the speed Russia can be notionally categorized of Internet connection is high. as a developing market. I see that there

73 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Russian FinTech market outlook until 2020

01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your view of the Russian FinTech market outlook until 2020? Trend Overview of Russia’s FinTech Over one half of the respondents (60 percent) 04 are optimistic about the outlook for the Russian market FinTech market. 0.33 The FinTech market in figures The balance value of positive and negative Lending 1–3 years The current situation in 0.31 0.41 estimates is 0.33. Russia’s FinTech market

Scoring Investment Specific features FinTech market 0.21 0.38 FinTech companies offering infrastructural stakeholder map solutions more often expect that the situation 60% would improve (14 points above the average). Supply in the FinTech market > 5 years 3–5 years Personal finance Marketplace 0.27 0.31 0.25 0.23 Overall, companies with revenue of less than Demand in the FinTech market RUB 2 million and companies with revenue of RUB 2-10 million appear more optimistic Barriers for development 0.47 of Russia’s FinTech market Infrastructure solutions (27 points above the average). Drivers for development 30% Small companies with less than 10 employees of Russia’s FinTech market and young companies operating for 1-3 years < RUB 2 million < 10 employees expect the situation in the FinTech market Russian FinTech market 0.45 0.45 outlook until 2020 to improve (12 points and 8 points above the 10% average, respectively). Overview of Kazakhstan’s 05 FinTech market Situation to improve > 50 employees 10–25 employees FinTech companies operating in the marketplace No significant changes > RUB 50 million RUB 2–10 billion 0.15 0.60 0.29 0.34 format and using the scoring methodologies are 06 Appendix Situation to deteriorate not so optimistic as the rest of the respondents Optimism index for the Russian (10 points and 12 points below the average, FinTech market (on a scale from 07 Contacts -1 to +1) respectively). Companies with revenue of more 0.24 0.23 than RUB 50 million tend to be less optimistic, RUB 10–50 billion 25–50 employees too (18 points below the average).

74 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Outlook for FinTech companies until 2020

01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your view of your company’s outlook for 2020? Trend Overview of Russia’s FinTech Overall, the outlook for separate companies 04 was more optimistic than the outlook for the market industry. The balance value indicator is 0.64. The FinTech market in figures 0.64 Lending 1–3 years The absolute majority of the respondents The current situation in 0.58 0.75 (90 percent) believe that the situation Russia’s FinTech market in their companies will improve. Not a single Scoring Investment respondent expects that the situation FinTech market 0.64 0.58 will deteriorate. stakeholder map

Specific features Supply in the FinTech market > 5 years 3–5 years Personal finance Marketplace The respondents from companies offering 0.54 0.62 Demand in the FinTech market 90% 0.69 0.64 infrastructure solutions were more optimistic compared to the rest (the balance value Barriers for development 0.76 indicator is 0.76). of Russia’s FinTech market Infrastructure solutions However, the respondents from companies Drivers for development with revenue of RUB 2-10 million are the most of Russia’s FinTech market optimistic (the balance value indicator is 0.85). < RUB 2 million < 10 employees Russian FinTech market 0.60 0.55 outlook until 2020 It should be noted that the younger a FinTech 10% company is, the more optimistic it is about its Overview of Kazakhstan’s 05 own outlook. FinTech market Situation to improve > 50 employees 10–25 employees No significant changes > RUB 50 million RUB 2–10 billion 0.54 0.85 0.57 0.75 Online lending and investment companies are 06 Appendix Optimism index for the Russian FinTech market (on a scale from less optimistic (6 points below the average) -1 to +1) which may be related to changing legislation 07 Contacts and uncertainty around the industry regulation. 0.62 0.55 Companies with revenue of more than RUB 10–50 billion 25–50 employees RUB 50 million tend to be less optimistic, too (10 points below the average). 75 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Outlook for FinTech companies until 2020

01 Foreword

02 Key findings

Overview of the FinTech 03 market The preferences of individuals remained of effective ecosystems and availability Overview of Russia’s FinTech the same and are focused on availability, of big data on the ecosystem status will allow 04 convenience, efficiency, etc. It will be the companies to mitigate portfolio risks through market technology that will allow people to satisfy their implementing risk forward looking systems. needs in liquidity or offer liquidity in the most Central banks will continue to ‘misunderstand’ The FinTech market in figures convenient form that will have future. Probably, blockchain globally, as it requires market The current situation in we will see implementation of gamification democratization and refusal to regulate markets, Russia’s FinTech market systems. Development of joint programs within given that the system implies self regulation Retail-TMT-FSI will continue. The launch of the through distributed networks and storage. FinTech market CBR’s financial marketplace will be an important Cyberthreats and technology allowing for stakeholder map landmark and lead to stronger competition prevention of such threats will play a central between banks trying to attract new clients, role. Client identification methods will become Supply in the FinTech market as the number of branches and the size of the a systemic driver for FinTech development bank would not matter in the case of the and, hence, will develop further. Hence, the Demand in the FinTech market marketplace any longer. From a company key conclusion is that the current trends Barriers for development standpoint, the business will grow around will continue to evolve in 2020, with market of Russia’s FinTech market liquidity management platforms. This will participants focusing more on decentralization require that banks develop new data collection and availability of market instruments for Drivers for development frameworks, so called business sensors at the individuals and business. of Russia’s FinTech market level of the client ecosystems. The creation Alexey Minin Russian FinTech market Executive Officer outlook until 2020 Data Analytics Institute Deloitte CIS Overview of Kazakhstan’s 05 FinTech market

06 Appendix

07 Contacts

76 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Evaluation of the regulator’s efficiency (1/2) 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is the change in the regulator’s efficiency with respect to support and Trend Overview of Russia’s FinTech development of the Russian FinTech industry? The balance indicator (between thos who see 04 positive changes in the regulator’s efficiency market with respect to support and development of the Russian FinTech industry and between those The FinTech market in figures 40% Lending 1–3 years who see no positive changes) is 40 percent. The current situation in 38% 31% Overall, it shows that the regulator’s efforts are Russia’s FinTech market perceived positively. Scoring Investment FinTech market 29% 50% However, almost a half of the respondents stakeholder map 48% (44 percent) said that they saw neither positive not negative changes in the past two years. Supply in the FinTech market > 5 years 3–5 years Personal finance Marketplace 62% 33% 38% 27% Specific features Demand in the FinTech market The regulator’s effort in the past two years Barriers for development is seen more positively by investment 35% of Russia’s FinTech market Infrastructure solutions companies (10 p.p. above the average), the

44% companies operating for longer than five years Drivers for development (12 p.p. above the average), and the companies of Russia’s FinTech market with more than 50 employees (17 p.p. above the Russian FinTech market < RUB 2 million < 10 employees average). 40% 50% outlook until 2020 8% Companies with revenue of more than Overview of Kazakhstan’s 05 RUB 50 million tend to be the least positive FinTech market Positive changes > 50 employees 10–25 employees (17 points below the average). No changes > RUB 50 million RUB 2–10 billion 23% 40% 57% 36% 06 Appendix Negative changes Balance 07 Contacts

53% 27% RUB 10–50 billion 25–50 employees

77 FinTech Market Trends 2018 | Overview of Russia’s FinTech market Evaluation of the regulator’s efficiency (2/2) 01 Foreword

Trend 02 Key findings The satisfaction of FinTech companies with the Overview of the FinTech Regulator’s current effort is at 1.66 points which 03 market Please evaluate the efficiency of the regulator’s current effort aimed corresponds to the average level. Overview of Russia’s FinTech at supporting and developing the Russian FinTech industry 04 One in five respondents believe that the market Regulator’s effort is highly efficient, while The FinTech market in figures 1.66 38 percent of the respondents believe that the regulator’s efficiency is low. Lending 1–3 years The current situation in 1.85 1.31 Russia’s FinTech market Specific features 20% Scoring Investment The regulator’s current effort is seen as the FinTech market 1.57 1.75 most efficient by the companies with more than stakeholder map 50 employees (17 p.p. above the average). Supply in the FinTech market

> 5 years 3–5 years Personal finance Marketplace Respondents from companies with revenue 42% 1.54 2.00 1.50 1.27 of less than RUB 2 million (54 points above Demand in the FinTech market the average), the companies operating for Barriers for development 3-5 years (34 points above the average), as well 1.76 of Russia’s FinTech market Infrastructure solutions as the lending companies (19 points above the average) tend to be quite positive about the Drivers for development regulator’s efficiency, too. of Russia’s FinTech market 38% Russian FinTech market < RUB 2 million < 10 employees FinTech companies operating in the marketplace 2.20 2.00 outlook until 2020 format for 1-3 years with revenue of RUB 2 - 10 million more often tend to believe that Overview of Kazakhstan’s 05 the regulator’s effort is not efficient enough FinTech market High efficiency > 50 employees 10–25 employees (39, 46, and 35 points below the average). Medium efficiency > RUB 50 million RUB 2–10 billion 1.92 1.20 2.29 1.41 06 Appendix Low efficiency The regulators are not quite sure yet Regulator efficiency index how to deal with this industry. They may (on a scale from 0 to 5) 07 Contacts well go for the Chinese model with its 1.41 1.45 stringent restrictions. RUB 10–50 billion 25–50 employees Ivan Merinov The weighted balance indicator for the respondents on a (SMS Finance) scale of 0 to 5 where 1 percentage point equals 0.01 78 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The rating of FinTech segments with the highest market potential until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market Please, evaluate the importance of the proposed FinTech segments in the Trend Overview of Russia’s FinTech medium term (one-three years). The experts were asked to evaluate FinTech 04 segments with the highest market potential market World Russia globally and in Russia until 2020. We see that Digital banks 3.30 Digital banks 3.08 the ratings coincide. The FinTech market in figures Lending 2.84 Lending 2.80 The current situation in Digital banks lead by a significant margin. Scoring 2.76 Scoring 2.80 Russia’s FinTech market

Marketplace 2.76 Marketplace 2.80 They are followed by lending, scoring and FinTech market Investment 2.72 Investment 2.74 marketplace segments. However, all three stakeholder map segments received the same ratings in Russia Loyalty programs 2.56 Loyalty programs 2.50 while lending is believed to be the most Supply in the FinTech market Infrastructure solutions 2.50 Infrastructure solutions 2.48 promising segment on a global scale. Demand in the FinTech market Personal finance management 2.34 Insurance 2.06 This may be due to the lack of lending services Barriers for development Insurance 2.32 Personal finance management 2.02 in Asia and Africa where fast development of Russia’s FinTech market Management/financial 1.94 Management/financial 1.86 of FinTech is driven by deficiencies of the accounting accounting banking system. Drivers for development of Russia’s FinTech market Specific features Russian FinTech market In Russia, companies with revenue of more outlook until 2020 than RUB 50 million believe that digital banks and lending have the highest potential (3.31), Overview of Kazakhstan’s 05 while companies with revenue of less than FinTech market RUB 2 million expect marketplace to play more important role (3.00) than lending (3.20). 06 Appendix

Young companies operating in the Russian 07 Contacts market for 1-3 years believe that investments are the segment with the highest potential in Russia (2.75).

On the scale from 0 to 4 79 FinTech Market Trends 2018 | Overview of Russia’s FinTech market The rating of technologies with the highest market potential until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your opinion about the listed technologies from a standpoint of their Trend Specific features Overview of Russia’s FinTech market potential until 2020? (In which technology would you invest?) FinTech experts believe that the artificial API is of most interest for companies operating 04 intelligence has the highest market potential. in the PFM segment (19 points above the market Artificial intelligence 0.88 The AI potential is evaluated at 0.88. average). The FinTech market in figures Machine learning1 0.84 It is followed by technologies closely related The semantic analysis attracts companies Predictive analytics 0.82 The current situation in to AI: machine learning (0.84), predictive with 25-50 employees, companies with Deep learning2 0.79 Russia’s FinTech market analytics (0.82), deep learning (0.79) and big revenue of more than RUB 50 million, as well Big data analytics 0.78 data (0.78). as companies using scoring methodology FinTech market Data mining3 0.77 (12, 11, and 7 points above the average). stakeholder map Biometric analysis 0.74 The experts see block chain’s potential as the Supply in the FinTech market Neural networks 0.72 lowest (0.54). At the bottom of the rating are Companies developing infrastructure solutions, augmented reality (0.58) and virtual reality as well as companies with revenue of RUB Internet of things (IoT) 0.71 (0.55). 2 - 10 million tend to believe that BI has high Demand in the FinTech market BI – Business Intellegence4 0.70 market potential (12 and 13 points above the 5 Barriers for development Semantic analysis 0.70 average, respectively). Contactless payments 0.69 of Russia’s FinTech market Cluster analysis 0.68 Companies operating in the market for longer Drivers for development Cloud technology 0.64 than five years are more interested in IoT of Russia’s FinTech market

6 technology (14 points above the average). API 0.62 Russian FinTech market Augmented reality (AR) 0.58 outlook until 2020 Blockchain 0.55 Overview of Kazakhstan’s 05 Virtual reality (VR) 0.54 FinTech market

06 Appendix 1 Deep learning is a combination of machine learning methods 2 Data mining means discovery and analysis of “hidden” data patterns 3 Machine learning is based on the use of AI methods 07 Contacts 4 Application programming interface 5 Semantic analysis involves recognising and “understanding” texts 6 Business Intelligence is about software solutions for managers to analyse information on their company and its environment

80 FinTech Market Trends 2018 Overview 01 Foreword of Kazakhstan’s 02 Key findings Overview of the FinTech 03 FinTech market market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 FinTech market

The FinTech market in figures

The current situation in Kazakhstan’s FinTech market FinTech market stakeholder map

Supply in the FinTech market

Demand in the FinTech market

Barriers for development of Kazakhstan’s FinTech market Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

81 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market The FinTech market in figures

01 Foreword

02 Key findings

Overview of the FinTech tenge billion The average The Optimism Index for 03 Kazakhstan’s FinTech number Kazakhstan’s FinTech market Overview of Russia’s FinTech 17 market size, 2017 58,000 of B2C clients 0.55 industry 04 market Overview of Kazakhstan’s 05 FinTech market The Optimism Index percent The average number The FinTech market in figures for the reviewed Expected market growth, 2018 of B2B clients The current situation in 16 370 0.70 company Kazakhstan’s FinTech market FinTech market stakeholder map

Evaluation Supply in the FinTech market years Consumer of Kazakhstan’s FinTech FinTech company average «age» sentiment index 5 0.08 0.40 industry market potential Demand in the FinTech market Barriers for development of Kazakhstan’s FinTech market

Number of employed Uncertainty Drivers for development of Outlook for company Kazakhstan’s FinTech market in Kazakhstan’s FinTech among perspective Kazakhstan’s FinTech market 1,675 industry 0.65 -0.30 companies outlook until 2020

06 Appendix

The average number 07 Contacts of employees in FinTech 42 companies

* Deloitte’s calculations are based on SPARK-Interfax data on companies which disclosed the revenue for 2016

82 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market The current situation in Kazakhstan’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market Kazakhstan Kazakhstan’s FinTech market is at the earliest Objectives Opportunities Ecosystem Overview of Russia’s FinTech Average rating: 23.6 stage of its development. The interest 04 Amount of investments in 2017: n/a of Kazakhstan’s government in attracting 13% 25% market 1.1 foreign investment is supported by laws State regulation Overview of Kazakhstan’s 05 Developing market regulating the venture and online lending 22% 78% FinTech market 1.3 market, as well as by the opening of the Banking infrastructure Number of FinTech unicorns**: 0 international financial center in Astana providing 33% 56% The FinTech market in figures favorable conditions for FinTech companies. 0.9 Labor market The largest market participants***: The current situation in 44% 22% Kazakhstan’s FinTech market Credit24 0.0 Market capacity 14% 86% FinTech market stakeholder Sustainable development rating*: 68.1 0.7 map Competition 33% 56% Supply in the FinTech market 1.5 Trends Technology Demand in the FinTech market Payments, online lending Deloitte CIS Research Center data (survey of FinTech market participants): the share of those who believe that this factor is positive for FinTech growth in Kazakhstan Barriers for development of Investments the share of those who believe that this factor slows down FinTech market growth in Kazakhstan Kazakhstan’s FinTech market Payments, online lending Balance value — the total influence of the factor on the FinTech market development in Kazakhstan Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts * 2018 SDG Index and Dashboards ** Unicorn is a company with a market capitalization of USD 1 billion and higher *** at the company’s valuation price Source: CBInsights

83 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market The current situation in Kazakhstan’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market The markets of Russia and Kazakhstan are local market. However, Kazakhstan’s major Overview of Russia’s FinTech quite similar, as they have common history financial institutions are not transparent 04 and development paths. Nevertheless, similarly to the Russian peers which poses market there are differences. As opposed to Russia, barriers for new market entrants. Startups have Overview of Kazakhstan’s 05 Kazakhstan’s economy is not exposed no easy access to the expertise accumulated FinTech market to sanctions although is closely connected by large players which prevents the former to the Russian economy, as Russia from achieving business success. The venture The FinTech market in figures is Kazakhstan’s key trade partner. As a result finance market is not sufficiently developed. the two countries have similar structure These circumstances pose risks capable The current situation in of the economy dominated by large of slowing down the FinTech development. Kazakhstan’s FinTech market government-owned companies. Tenge, Another slowdown factor affecting FinTech FinTech market stakeholder Kazakhstan’s currency, is highly volatile is small number of graduates from higher map as it is linked to the Russian ruble. Companies technical education institutions which which will evolve in Kazakhstan will need sufficient knowledge in the area of exponential Supply in the FinTech market to launch their products internationally, which technology and their application for business is quite possible, given the openness of the purposes. Demand in the FinTech market Alexey Minin Executive Officer Barriers for development of Data Analytics Institute Kazakhstan’s FinTech market Deloitte CIS Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

84 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market The current situation in Kazakhstan’s FinTech market as viewed by its participants 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your opinion of the situation in Kazakhstan’s FinTech How do you view the current financial Overview of Russia’s FinTech market from a standpoint of business financial wealth? position of your company? 04 market Overview of Kazakhstan’s 05 Trend Trend FinTech market The majority of surveyed experts (80 percent) The Optimism Index for the financial position positively evaluate the current situation of the company is 0.7 The FinTech market in figures in Kazakhstan’s FinTech market. 10% 20% The absolute majority of the respondents The current situation in The optimism index is at 0.55. (90 percent) positively evaluate the current Kazakhstan’s FinTech market situation in their companies. FinTech market stakeholder map 0.7 In the first turn, we mean online lending Supply in the FinTech market and payments when we speak about 0.55 Kazakhstan’s FinTech market. The share 90% Demand in the FinTech market 80% of pessimistic responses is attributed to tighter regulation of microfinance organizations Barriers for development of (a new rate has been introduced). Regretfully, Kazakhstan’s FinTech market there is no dialog between the regulator and Drivers for development of business, while the regulator acts mostly Kazakhstan’s FinTech market in an imperative and punitive manner. Assem Nurgalieva Kazakhstan’s FinTech market (First Credit Bureau) outlook until 2020 Negative view Negative view Positive view Positive view 06 Appendix Optimism index for Optimism index for the Kazakhstan’s FinTech industry company’s financial position (on a scale from –1 to +1) (on a scale from –1 to +1) 07 Contacts

The weighted balance indicator for the respondents on a scale of -1 to 1 where 1 percentage point equals 0.01 85 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Measuring uncertainty in strategic decision making 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your assessment of political and economic uncertainties affecting Overview of Russia’s FinTech the strategic decision-making in your company? 04 market Overview of Kazakhstan’s 05 Trend The impact of the political factor is very high FinTech market Despite optimistic assessments of the current and strongly affects the retail sector. situation in the FinTech industry, almost The FinTech market in figures a half of experts surveyed in Kazakhstan Any changes in government institutions (new point out to high uncertainty in the current appointments, changes in programs and The current situation in situation from a standpoint of making strategies) affect business. Kazakhstan’s FinTech market 50% strategic decisions. Around 40 percent FinTech market stakeholder of the respondents refer to the average level As for economic factors, the devaluation of the map of uncertainty. national currency is the major uncertainty factor for Kazakhstan’s FinTech. Supply in the FinTech market Hence, the net uncertainty level is -0.30 which Assem Nurgalieva slightly exceeds the same indicator for Russia (First Credit Bureau) Demand in the FinTech market (by 5 points). Barriers for development of 40% Kazakhstan’s FinTech market Drivers for development of –0.30 Kazakhstan’s FinTech market 10% Kazakhstan’s FinTech market outlook until 2020 High uncertaint Medium uncertainty 06 Appendix Low uncertainty Net uncertainty (on a scale 07 Contacts from –1 to +1)

86 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market FinTech market stakeholder map

01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market

The National Bank of the Overview of Kazakhstan’s Regulatory level 05 Republic of Kazakhstan FinTech market The FinTech market in figures Astana Financial Services Authority The current situation in Kazakhstan’s FinTech market

e r Government funds u FinTech market stakeholder t c u map r t s a r Technology corporations, banks f Supply in the FinTech market n i B2B

o

t clients

s Венчурные фонды s Demand in the FinTech market

e

c

c

a

, Barriers for development of s

t B2C

Private investors n Kazakhstan’s FinTech market

e clients

m

t

s

e Drivers for development of

v FinTech company

n Accelerators and incubators I Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix Development institutions, associations T al rai pit nin ca g, co an Higher education institutions, mmunication, hum 07 Contacts research institutes

87 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder map: regulator

01 Foreword

02 Key findings

Overview of the FinTech 03 market In Kazakhstan, operations In late 2017-early 2018, there were discussions The law may negatively affect investments Overview of Russia’s FinTech of FinTech companies in Kazakhstan regarding regulation of online in Kazakhstan. The interest rate limitation may 04 lending. According to legislators, the lack result in investor flight from the region, projects market are regulated by the Civil of maximum limits for annual interest shifting to the gray zone, as well as higher risk Overview of Kazakhstan’s 05 Code (articles on freedom rates resulted in overpayment under loan of non-performing investments. FinTech market agreements and stimulated households to take of contract, loan agreement, new .* In March 2018, the National Bank of Kazakhstan The FinTech market in figures repayment of loans and In late June 2018, the plenary meeting of the launched the Invest Online real-time service lower chamber of Kazakhstan Parliament for investing in the notes issued by the Bank The current situation in written forms of transactions). approved the law “On the currency regulation and trading in securities of major Kazakhstan Kazakhstan’s FinTech market and currency control” and the respective companies. The Invest Online service uses FinTech market stakeholder amendments to the current legislation. such innovative solutions as blockchain and map In order to protect households in the online electronic money issued by the National Bank lending segment, the government introduced as a payment means for securities transactions. Supply in the FinTech market a mandatory requirement for specifying the Users can track the income accrual via the effective interest rate in loan agreements personal account in the system. This can Demand in the FinTech market and limiting it at 100 percent p.a. From now be done after downloading the special mobile on, every citizen of Kazakhstan will be able application Invest Online. Barriers for development of to check the effective loan interest rate in the Kazakhstan’s FinTech market real time mode using a credit calculator. The National Bank has also designed an instant Drivers for development of The methodology for such calculator mobile payment system. The system allows for Kazakhstan’s FinTech market will be approved by the National Bank money payments and transfers based on the of Kazakhstan. The calculator will be available mobile phone number. It also ensures instant Kazakhstan’s FinTech market at the website of the financial regulator. The payments and quick placement of money with outlook until 2020 data obtained with the help of the calculator the recipient. The pilot testing of the system * the majority of large legal microfinance 06 Appendix organizations independently regulate the maximum will be permitted for use in court. Courts will will be held in 3Q 2018. The system is expected effective interest rate (through KazFinTech invalidate loan agreements with effective to increase the share of non-cash payments association). According to item 3.3 of the Online interest rates exceeding 100 percent. in Kazakhstan. 07 Contacts Lending Industry Standard, “the amount of the interest, penalties, fines, etc. should not exceed two principal amounts of the core outstanding debt, i.e., Principal x 2 (Principal + Principal), or Principal+100 percent. Pricinpal — core debt.”

88 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder map: regulatory sandbox

01 Foreword

02 Key findings

Overview of the FinTech 03 market Astana International Financial AIFC was launched on 5 July 2018 at EXPO-2017. Principal activities: citizens. Participants of the IFAC and their Overview of Russia’s FinTech Centre (AIFC) is a financial AIFC is subject to special legal regime based 01. Capital markets; family members are granted a special visa 04 on the Common law. This regime regulates 02. Asset Management; regime which can be extended to 5 years. market hub for Central Asia, the relationships between AIFC members and 03. Islamic finance; •• Direct air routes to international Overview of Kazakhstan’s interested parties with the aim of developing 04. Financial technology; 05 Caucasus, EAEU, the Middle financial centers. FinTech market the financial market. 05. Wealth management; East, West China, Mongolia 06. Green finance. •• Simplified ‘one-stop’ registration. The FinTech market in figures Management: and Europe. •• Use of English as an official language for Kairat Kelimbetov is the Governor of Astana AIFC advantages: The current situation in document exchange and registration. International Financial Centre. Kazakhstan’s FinTech market •• Transparent and independent legal system. AIFC law is based on principles, norms and FinTech market stakeholder AIFC objectives: precedents of the law of England and Wales, map 01. Develop draft resolutions for the Council as well as the standards of major financial relating to regulation of financial services Supply in the FinTech market centers. The AIFC court abides by the English and respective AIFC activities, initiate public Law and operates independently from discussions of such draft resolutions and Demand in the FinTech market Kazakhstan’s judicial system. International submit them to the Council for approval; judges are expected to participate in the AIFC 02. Approve legal documents on issues relating Barriers for development of court. The International Arbitration Center will to regulation of financial services and Kazakhstan’s FinTech market review disputes arising between the parties respective AIFC activities; of the Arbitration Agreement; Drivers for development of 03. Establish the order for issuance, placement, Kazakhstan’s FinTech market repurchase and redemption of securities •• The AIFC bodies and participants are exempt in the AIFC jurisdiction; from taxes (incluing corporate income tax, Kazakhstan’s FinTech market 04. Register, provide accreditation and licensing individual income tax, land tax and property outlook until 2020 for AIFC members; tax) for a period of 50 years. 06 Appendix 05. Maintain the Register of AIFC members; •• Free capital flows. 06. Monitor and oversee AIFC member operations, take necessary actions •• Modern infrastructure and free office lease 07 Contacts and measures; for two years. 07. Use other powers provided by resolutions •• A visa-free regime for up to 30 days for OECD, of the Council. UAE, Malaysian, Singaporean and Monaco

89 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder map: corporations

01 Foreword

02 Key findings

Overview of the FinTech 03 market As a result of the analysis Chocofamily Holding Silkway Ventures Group Overview of Russia’s FinTech 04 we found two companies Chocofamily Holding is a major e-commerce company Silkway ventures is a major Internet project market in Kazakhstan. The holding company consists of seven in Kazakhstan. Currently, this FinTech holding company which actively develop entities: Chocolife.me (a collective purchase platform), consists of six entities: Prodengi.kz (marketplace Overview of Kazakhstan’s 05 BeSmart (a collective purchase platform), Chocotravel. of best offers from banks, microfinance organizations FinTech market financial technology com (railway and air ticket real time booking platform), and online lenders in Kazakhstan), Credit24 (online Chocomart.kz and Lensmark.kz (online shops), lending platform), Klikobilie (digital agency), Micro in Kazakhstan: Chocofood.kz (online food delivery service), iDoctor. (microfinance retail lending company), Vietnam-based The FinTech market in figures kz (online doctor search service). MoneyBank (P2P online lending company), and Lendex Chocofamily Holding and (blockchain-based marketplace for microloans). The current situation in Kazakhstan’s FinTech market Silkway Ventures Group. •• The holding company was created in 2011 when cash- The CEO of the company is Alexey Sidorov. back service Chocolife.me was set up. FinTech market stakeholder •• In 2013, the company raised capital from DEMUS •• Prodengi.kz was founded in 2009. map Capital and launched two projects: Сhocofood.kz and •• Klikobilie digital agency was founded in 2013. Chocotravel.kz. Supply in the FinTech market •• Credit24 was founded in 2014. •• In 2016, Murat Abdrakhmanov (Astel, KazTransCom, Dent-Lux) invested his funds in the company. •• In 2015, Forbes listed Klikobilie and Credit24 among Demand in the FinTech market top-50 e-commerce projects in Kazakhstan. •• In 2017, the third round of investments took place, with Timur Turlov (IC Freedom Finance) •• In 2016, the company raised USD 2 million from Barriers for development of and Adil Nurgozhin (partner of I2BF Global) acting UK-based Finnams Management fund. Kazakhstan’s FinTech market as investors. •• In 2017, MoneyBank was launched in Vietnam. •• In May 2017, Chocofamily management reported Drivers for development of about acquisition of a 100 percent stake in its main •• In early 2018, Credit24 joined Mintos, international Kazakhstan’s FinTech market competitor in Kazakhstan’s online food order and online platform for mutual lending. After signing delivery market — Foodpanda Group. the agreement, Kazakhstan became the first Kazakhstan’s FinTech market country from Central Asia to join Mintos. As a result, outlook until 2020 •• Next, in June 2017, Chocolife.me acquired a 100 European citizens will be able to invest money percent stake in Besmart.kz, its main competitor. in online in online loans denominated in tenge using the mutual lending (P2P) platform . 06 Appendix •• In November, Chocofamily increased its stake in iDoctor.kz, online doctor search platform. 07 Contacts

90 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder map: venture funds

01 Foreword

02 Key findings

Overview of the FinTech 03 Major businessmen in Kazakhstan invest market Venture fund, venture finance, Although the venture capital market The law introduces new concepts inherent in venture funds but register them abroad in Kazakhstan has not taken shape yet, to venture financing, such as venture fund, Overview of Russia’s FinTech venture manager: accumulate due to lack of straightforward regulation and 04 the government encourages development venture financing, and venture manager. market incentives from the government. cash/other assets and of venture investment institutions. Both The key function of the venture fund Overview of Kazakhstan’s Timur Toktabaev, 05 legislative and investment measures are taken is to accumulate cash/other assets and operate FinTech market conduct operations solely for Vice-Minister for Investments and to achieve this. solely for venture finance purposes. The Development, Kazakhstan venture finance purposes. law also stipulates legal forms for venture The FinTech market in figures Investment measures include issuance funds — joint-stock companies, business of grants via AO National Agency for Technology partnerships, and simple partnerships, as well The current situation in Development to companies implementing as unincorporated simple partnerships. Kazakhstan’s FinTech market innovative projects. Around 150 companies According to the new law, venture funds are FinTech market stakeholder work on export projects in the special economic required to have at least two participants. map zone in the Innovative Technology Park Only a legal entity which is a participant in the in Almaty. Correspondingly, Astana Startup Hub venture fund can be the venture manager. Supply in the FinTech market will be open in the capital. However, these forms Venture funds are prohibited to advertise of the government support are not typical themselves to wide audiences. The law also Demand in the FinTech market venture mechanisms. introduces new forms of contracts which can be signed between venture funds and their Barriers for development of In June 2018, venture investment initiatives portfolio companies. Such contracts comprise Kazakhstan’s FinTech market were supported through approval of the law joint-stock agreements for joint-stock venture Drivers for development of “On amendments and additions to laws and funds or agreements on exercising rights Kazakhstan’s FinTech market regulations on risk (venture) financing.” The of participants in the event that the venture draft law provided a legal basis for developing fund is established in the form of a business Kazakhstan’s FinTech market venture financing including introduction partnership. State support measures for outlook until 2020 of new contract temapltes and instruments industrial and innovative initiatives are 06 Appendix in Kazakhstan’s law. The state support for supplemented by a new mechanism for industrial and innovative initiatives was also state co-financing of venture funds. For this strengthened by adding new measures purpose, venture funds can be included in the 07 Contacts expanding co-financing options for Kazakhstan industrial and innovative infrastructure. The venture funds. law also introduces an option to provide state co-financing for venture funds via development institutions and other national companies.

91 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder roadmap: business angels

01 Foreword

02 Key findings

Overview of the FinTech 03 A business angel market Overview of Russia’s FinTech is an individual or a legal 04 Adil Nurgozhin Murat Abdrakhmanov Kenes Rakishev market entity which invests part Adil is a business angel, entrepreneur and Murat is a co-founder of Astel and Kaztranscom Jointly with Israelli businessmen, Kenes Rakishev Overview of Kazakhstan’s 05 of its funds in the innovative a partner of I2BF Global venture fund. He is the telecommunication companies, as well as Denta founded Sirin Labs. On 12 December 2017, Sirin FinTech market chief managing director of the Kazakhstan Lux dental care clinic chain. Forbes lists him Labs held ICO for Finney, first blockchain-based companies at the earliest branch of Kazakhstan-Russia Venture Fund for among top fifty influential businessmen smartphone and raised USD 157.8 million. The FinTech market in figures stages (seed stage and Nano-Technology. in Kazakhstan. As a result, the company was able to accept pre-orders for the device. The Finney sales are The current situation in start-up stage). In May 2017, he and Timur Turlov jointly invested In 2016, Murat invested USD 1 million expected to start in November 2018. Kazakhstan’s FinTech market approximately USD 2.23 million in Chocofamily, in Chocofamily Holding. FinTech market stakeholder Kazakhstan’s Internet holding company. map

Supply in the FinTech market

Demand in the FinTech market

Barriers for development of Kazakhstan’s FinTech market Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

92 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder map: accelerators

01 Foreword

02 Key findings

Overview of the FinTech 03 market An accelerator is company StartUp Kazakhstan iStartUp Overview of Russia’s FinTech 04 tasked with assisting other International online program for acceleration: A business incubator for IT-projects. The company market TechGarden.kz, Global Venture Alliance. operations span from e-commerce, to cloud companies (accelerator Amounts: USD 30,000 (stage 1), USD 100,000 (stage 2) computing, and nedia technology. Overview of Kazakhstan’s 05 residents). Amounts: n/a FinTech market The FinTech market in figures Acceleration program of MOST business Tech Garden acceleration incubator The current situation in Accelerators offer structured programs Kazakhstan’s FinTech market The local acceleration program. Organizer: Acceleration program of MOST business incubator to residents thus allowing companies TechGarden.kz. provides comprehensive support to startup FinTech market stakeholder to optimize the business models, win contracts, entrepreneurs including training, coaching, monitoring, map and increase sales. The program continues for and access to financing. Fintechstars Amounts: USD 5,000 3-6 months. As usual, accelerators have co- Supply in the FinTech market working space which resident companies may Partners: Seed Stars (Switzerland-based fund) and use during the acceleration process. MOST (business incubator). Ten leading international Demand in the FinTech market startups participate in the contest. Amounts: USD 20,000 (stage 1), USD 350,000 (stage 2) Accelerators generate income by obtaining Barriers for development of stakes in companies and reselling them later. QR Pay Technology Smart Pay Ules Kazakhstan’s FinTech market Therefore, they often cooperate with venture Drivers for development of funds (the latter allocate money and the former Kazakhstan’s FinTech market provide training programs, networking, and infrastructure). Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

93 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Stakeholder map: development institutions and associations 01 Foreword

02 Key findings

Overview of the FinTech 03 market Development institutions and TechGarden.KZ KAZFINTECH MOST Overview of Russia’s FinTech 04 associations are represented Tech Garden innovation cluster is a professional The goal of Kazakhstan FinTech Association MOST is a club for young entrepreneurs and a business market environment for developing new technology is to coordinate and consolidate operations incubator which provides co-working space for by organizations which for businesses based on the mutually beneficial of companies operating in the online lending market, creation where future businessmen can design Overview of Kazakhstan’s 05 cooperation between businesses, startups, investors, develop the market and FinTech industry as a whole, projects, exchange experience, receive advice from FinTech market contribute to development educational and research institutions. promote and protect the interests of the industry professional businessmen and raise funds for their players, as well as protect consumer interests. business initiatives. of the FinTech industry The FinTech market in figures Key technology development areas: The business incubator is an official member of Youth including financial support Main goals of the Association are as follows: Business International and Global Entrepreneurship The current situation in •• Smart industry and new materials; Week, as well as an official partner of Seedstars •• Create a floor for a dialog inside the industry Kazakhstan’s FinTech market in implementing projects •• Smart environment; World, Startup Weekend, Get in the Ring , and other on issues and topics related to the market, industry international initiatives in the startup industry. (in the form of grants, •• New-generation utilities and lean technology; and companies within the sector. FinTech market stakeholder map • Interact with state agencies, industry organizations participation in the charter •• FinTech, e-commerce and new media. • Offered services: and associations on market regulation issues, and Supply in the FinTech market capital of portfolio companies, development of legislation, i.e. ‘rules of the game’ •• Acceleration program; Services: in the interest of the market and industry. and issuance of loans). •• Consulting services; •• Strategic consulting, development of startup •• Ensure interaction with the society and consumers. Demand in the FinTech market technology to the next maturity stage with the aim •• Provision of floors for and organization of accessing foreign markets; •• Attract new professional and responsible of conferences; Barriers for development of association members. •• Assistance in developing cooperation with major •• Working space Kazakhstan’s FinTech market companies in Kazakhstan and CIS; The current members of the Association include Drivers for development of •• Recruitment of highly-skilled specialists who may the following companies: Dengi.click, MoneyMan. Kazakhstan’s FinTech market help to develop and promote your startup; kz, Credit24, Zaymer, Zing, MFC «Chestnoe Slovo». Kazakhstan’s FinTech market •• PR services — access to and coverage of the stratup outlook until 2020 operations in mass media. Yerlan Smaylov is an executive director. 06 Appendix Provided finance to the following FinTech projects:

•• Bukhta.kz — online accounting; 07 Contacts •• iDocs — electronic exchange platform for significant legal documents.

94 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Supply in the FinTech market (1/2)

01 Foreword

02 Key findings

Overview of the FinTech 03 market FinTech industry segmentation Overview of Russia’s FinTech During the survey we asked our experts 04 market Lending Digital banks Scoring to evaluate the potential of the above- mentioned FinTech fields in the medium term Overview of Kazakhstan’s 05 Online lending Bank product Client data analysis (1-3 years) in Kazakhstan. FinTech market Blockchain, big data, machine learning, Machine learning, artificial Cloud technology, SaaS, API, predictive artificial intelligence intelligence analytics, artificial intelligence, big data, Based on the results of our analysis The FinTech market in figures business intelligence, machine learning, we calculated a relative rating of various POS-lending in the real-time semantic analysis, deep learning FinTech segments (on the scale from The current situation in mode 0 to 4, where 0 corresponds to zero relevance Kazakhstan’s FinTech market Biometric analysis and 4 corresponds to very high potential). FinTech market stakeholder map The leading fields with very high relevance The importance of the segment The importance of the segment The importance of the segment 3.3 3.8 3.4 in Kazakhstan include digital banks and scoring Supply in the FinTech market (rated 3.8 and 3.4, respectively). The outlook for various FinTech fields is reviewed in Section Demand in the FinTech market Loyalty programs Insurance Management accounting “The rating of FinTech fields with the highest market potential until 2020.” Barriers for development of Cashback service Insurance telematics Online accounting Kazakhstan’s FinTech market Big data Cloud technology Cloud technology, API Drivers for development of Kazakhstan’s FinTech market Advertising platform Crowdsurance Online accounting Big data, machine learning, predictive Blockchain, API, biometric SaaS Kazakhstan’s FinTech market analytics, API analysis outlook until 2020 Comprehensive solutions 06 Appendix Cloud technology, API

07 Contacts 3.2 The importance of the segment 2.4 The importance of the segment 2.9 The importance of the segment

Product Applied technology

95 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Supply in the FinTech market (2/2)

01 Foreword

02 Key findings

Overview of the FinTech 03 market FinTech industry segmentation Overview of Russia’s FinTech 04 market Investments Marketplace Overview of Kazakhstan’s 05 Crowdfunding Financial supermarket FinTech market

P2P-lending The FinTech market in figures API The current situation in Kazakhstan’s FinTech market

The importance of the segment The importance of the segment FinTech market stakeholder 2.9 3.2 map

Supply in the FinTech market Infrastructure solutions Demand in the FinTech market Bank chat bots and robo-advising Deep learning, neural networks, Barriers for development of predictive analytics, blockchain, Kazakhstan’s FinTech market machine learning Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market 3.1 The importance of the segment outlook until 2020 06 Appendix

07 Contacts

Product Applied technology

96 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Demand in the FinTech market

01 Foreword

02 Key findings

Overview of the FinTech 03 market Retail segment Catering facilities Overview of Russia’s FinTech 04 •• Online payment service •• Online payment service market Overview of Kazakhstan’s •• Сashback service •• Сashback service 05 FinTech market •• Кeal-time POS-lending •• Кeal-time POS-lending The FinTech market in figures •• mPOS •• mPOS The current situation in Kazakhstan’s FinTech market FinTech market stakeholder map Microfinance organizations Investment companies Supply in the FinTech market •• Business process automation •• Bank chat bots and robo-advising Demand in the FinTech market •• Client data analysis

•• Market analytics Barriers for development of Kazakhstan’s FinTech market •• P2P-lending Drivers for development of •• Real-time POS-lending Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

Products

97 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Demand in the FinTech market

01 Foreword

02 Key findings

Overview of the FinTech 03 market The structure of the sentiment towards Online lending: sentiment balance value (on a scale from –1 to +1) 0.79 0.58 0.04 0.23 0.08 Overview of Russia’s FinTech online lending (by age and gender) Positive 04 attitude market 1 027 987 Atyrau Overview of Kazakhstan’s Woman 36% 64% 0.13 05 0.28 FinTech market Man 43% 57% Astana Aktau 0.14 0.03 The FinTech market in figures 0.52 619 18–25 years 36% 64% 0.27 The current situation in 26–45 years 34% 66% Almaty 386 Kazakhstan’s FinTech market 0.33 0.22 46 years and older 39% 61% FinTech market stakeholder 0.22 0.19* 76 map Neutral Positive sentiment attitude Supply in the FinTech market Negative sentiment The balance value Demand in the FinTech market 2014 2015 2016 2017 2018 Barriers for development of The balance value of the digital footprint Women are twice as optimistic about Number of digital footprints Kazakhstan’s FinTech market Sentiment balance value in Kazakhstan in 2013-2018 was 0.19 indicating online loans compared to men (0.28 vs. Drivers for development of that the overall perception of online loans 0.14) based on footprint index values. 26- *The average level of sentiment Kazakhstan’s FinTech market remains neutral. 45 year-old respondents are more positive toward online lending products towards online lending, while the older Kazakhstan’s FinTech market Aktau is the city with the highest share of users respondents (over 46 years) are less optimistic Negative outlook until 2020 with positive perception (0.52). (0.33 vs 0.22, respectively). attitude 06 Appendix

07 Contacts

98 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Contribution of FinTech products to achievement of the SDGs in Kazakhstan 01 Foreword

02 Key findings

Overview of the FinTech 03 market The table below lists FinTech solutions which contribute the most to achievement of some SDGs in Kazakhstan. Overview of Russia’s FinTech 04 market Segment Product Overview of Kazakhstan’s 05 FinTech market Lending Online lending The FinTech market in figures POS-lending in the real-time mode The current situation in Insurance Crowdsurance Kazakhstan’s FinTech market Management accounting Online accounting FinTech market stakeholder Online accounting map Comprehensive solutions Supply in the FinTech market Investments Crowdfunding

P2P-lending Demand in the FinTech market

Infrastructure solutions Bank chat bots and robo-advising Barriers for development of Kazakhstan’s FinTech market Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

99 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Contribution of FinTech products to achievement of the SDGs in Kazakhstan 01 Foreword

02 Key findings

Overview of the FinTech 03 market SDG 1 11.4 Valuation results So far, it is too early to discuss and assess the According to the assessment potential contribution of Kazakhstan’s FinTech Overview of Russia’s FinTech SDG 2 7.5 04 of Kazakhstan’s FinTech companies’ potential in achieving the SDGs. Currently, the share market SDG 3 6.2 contribution to the SDGs in Kazakhstan, of non-bank lending in the market is less than Overview of Kazakhstan’s 05 SDG 5 4.4 the highest expectations are tied with 10 percent, with online lending accounting for FinTech market achievement of SDG 9 (Industry, Innovation and 2 percent. Once the share of online lending SDG 6 5.0 Infrastructure), and particularly the following exceeds 5 percent, one may contemplate about The FinTech market in figures SDG 8 10.8 target: its contribution to sustainable development. SDG 9 The key drivers will be actions of the regulator, The current situation in 18.8 •• 9.3 Increase access of small industrial and access to the data, new generation coming Kazakhstan’s FinTech market SDG 11 2.0 other enterprises (especially in developing to the market. countries) to financial services including FinTech market stakeholder SDG 17 4.7 Assem Nurgalieva affordable loans, as well as expand their map (First Credit Bureau) integration in production and supply chains Supply in the FinTech market and markets.

SDG 1. End poverty in all its forms everywhere least 7 percent gross domestic product growth per Demand in the FinTech market Similarly to FinTech solutions in Russia, the 1.4 By 2030, ensure that all men and women, in annum in the least developed countries. Kazakhstan products may have a significant particular the poor and the vulnerable, have equal 8.4 Improve progressively, through 2030, global Barriers for development of rights to economic resources, as well as access to basic resource efficiency in consumption and production contribution to achievement of SDG Kazakhstan’s FinTech market services, ownership and control over land and other and endeavour to decouple economic growth from 2 (Zero Hunger). The potential contribution forms of property, inheritance, natural resources, environmental degradation, in accordance with the to achievement of SDG 1 (No Poverty) and SDG Drivers for development of appropriate new technology and financial services, 10-year framework of programmes on sustainable Kazakhstan’s FinTech market including microfinance. consumption and production, with developed countries 8 (Decent Work and Economic Growth) is less obvious and extensive compared to the Russian 1.a Ensure significant mobilization of resources from taking the lead. Kazakhstan’s FinTech market a variety of sources, including through enhanced 8.10 Strengthen the capacity of domestic financial FinTech. outlook until 2020 development cooperation, in order to provide institutions to encourage and expand access to adequate and predictable means for developing banking, insurance and financial services for all. The evaluation methodology used to analyze 06 Appendix countries, in particular least developed countries, to SDG 9. Build resilient infrastructure, promote inclusive the contribution, as well as detailed results for implement programmes and policies to end poverty in and sustainable industrialization and foster innovation. all its dimensions. each SDG are listed in the Appendix. 9.3 Increase the access of small industrial and other 07 Contacts SDG 8. Promote sustained, inclusive, and sustainable enterprises (especially in developing countries) to economic growth, full and productive employment and financial services including affordable loans, as well decent work for all. as expand their integration in production and supply 8.1 Sustain per capita economic growth in accordance chains and markets. with national circumstances and, in particular, at

100 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Barriers for development of Kazakhstan’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market Top five barriers for market development Regulation is indeed a source of significant The rating of the problems faced by FinTech companies Overview of Russia’s FinTech (according to representatives of FinTech obstacles affecting FinTech, as this business in Kazakhstan 04 companies): is very risky from a fundamental standpoint. market Cyber threats As for the personal data protection, Kazakhstan 3.8 Overview of Kazakhstan’s •• Cyberthreats (3.8); 05 lacks standards similar to the ones in Europe. Shortcomings of government regulation of the industry FinTech market •• Shortcomings of government regulation of the However, despite this and in the absence (administrative, trade, economic and other barriers) 3.7 industry (3.7); of the personal data protection culture, there The FinTech market in figures Currency risk (national currency depreciation) has been no serious precedents. In addition, 3.5 •• Currency risks (3.5); The current situation in I don’t think it is a significant barrier. Weak protection of the personal data •• Insufficient protection of personal data (3.4); 3.4 Kazakhstan’s FinTech market Low attractiveness for foreign investors Low appeal of Kazakhstan’s FinTech for foreign investors •• Low appeal of Kazakhstan’s FinTech industry FinTech market stakeholder is due to small economically active population 3.2 for foreign investors (3.2); map survey (9 million), as such small market can Insufficient infrastructure (e.g. penetration of the Internet) 3.1 be interesting mainly for Russian investors. Supply in the FinTech market In contrast to Russia, where key problems are Growing cost of debt However, for most investors, Kazakhstan seems closely related to the macroeconomic situation 3.0 to be a ‘Cinderella’ market where no foreign Demand in the FinTech market in the country (according to respondents from Lack of flexibility in the tax system with respect to FinTech investment institutions are represented 2.8 FinTech companies), experts from Kazakhstan except for AFC and EBRD which invest only Barriers for development of tend to point out to problems inherent to the Low purchasing power of the population in some industries. 2.6 Kazakhstan’s FinTech market industry. Assem Nurgalieva Geopolitical risks 2.5 Drivers for development of (First Credit Bureau) Kazakhstan’s FinTech market The respondents attached high importance Lack of access to international equipment and services 2.4 to digital security problems. Cyberthreats (3.8) Kazakhstan’s FinTech market and insufficient protection of the personal Higher unemployment rates due to automation and RPA outlook until 2020 data (3.4) are among top five problems 1.6 in Kazakhstan’s FinTech industry. Significantly increased environmental footprint due to heavier use of energy resources 06 Appendix 0.7 The suboptimal situation in the industry 07 Contacts is emphasized by a relatively strong negative On the scale from 0 to 4 assessment of the infrastructure (3.1).

101 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Drivers for development of Kazakhstan’s FinTech market 01 Foreword

02 Key findings

Overview of the FinTech 03 market Trend The rating of FinTech company strategies in Kazakhstan Entering new markets is an obvious option The most attractive strategies for Kazakhstan in a situation where there are barriers Overview of Russia’s FinTech Launch of new products/services to on the market 0.95 04 FinTech companies include extension of the such as market regulation and lower market product and service mix (0.95) and cost cutting Cost cutting 0.95 numbers of economically active people. Overview of Kazakhstan’s 05 (0.95). Kazakhstan’s FinTechs are primarily looking FinTech market Short-term capital optimization and operating model revision 0.85 at markets such as Indonesia, Vietnam and In contrast to Russia, the respondents attached some African markets. All in all, Africa is a region The FinTech market in figures Expansion into new markets 0.85 high importance to working capital optimization with quite strong potential. If we look at more The current situation in in Kazakhstan (0.85) and the need to revise Implementation of new technology 0.85 sophisticated indicators, we can see that some the operating model which indicates that local countries in this region are demonstrating Kazakhstan’s FinTech market FinTech companies are interested in finding Organic growth 0.70 evolutionary leaps that we have seen in South FinTech market stakeholder the most optimal development models in the East Asia. For example, Ramnet has already set Talent investment 0.70 map current economic environment. up operations in this region. As for particular Higher promotional spending; marketing 0.65 countries, these are Kenya, Nigeria, Ghana Supply in the FinTech market Kazakhstan FinTech companies less often and Morocco. It is an important factor when tend to revise strategies based on increasing Economic impact (impact on GDP) 0.55 a country has a credit bureau. I have just Demand in the FinTech market R&D expenditures (0.35). They are also reluctant named new destinations. Among traditional Currency risk hedging 0.50 to implement M&A strategies (0.25). destinations, there are and Barriers for development of Kazakhstan’s FinTech market Social impact (lower poverty) 0.50 Uzbekistan, primarily due to language similarity and openness to companies from Kazakhstan. Drivers for development of Raising capital from external sources 0.45 Assem Nurgalieva Kazakhstan’s FinTech market (First Credit Bureau) Higher spending on R&D and business 0.35 development Kazakhstan’s FinTech market outlook until 2020 Merger or/andand/or acquisition strategy 0.25 06 Appendix On the scale from 0 to 1

07 Contacts

102 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market What is your view of Kazakhstan’s FinTech market outlook for 2020? What is your view of your company’s outlook for 2020? Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 Trend 0.65 Trend FinTech market 0.40 Kazakhstan’s FinTech companies are more The outlook for company perspectives optimistic both about the current situation and is at 0.65. The FinTech market in figures the future. Most respondents (90 percent) are confident The current situation in Most respondents (80 percent) expect the that the situation in their companies would only Kazakhstan’s FinTech market situation to improve. The balance value improve by 2020. FinTech market stakeholder indicator is 0.4. map 80% 90% Supply in the FinTech market

Demand in the FinTech market

Barriers for development of Kazakhstan’s FinTech market Drivers for development of

20% Kazakhstan’s FinTech market 10% Kazakhstan’s FinTech market outlook until 2020 Situation to improve Situation to improve Situation to deteriorate No significant changes 06 Appendix Optimism index for Balance Kazakhstan’s FinTech industry (on a scale from –1 to +1) 07 Contacts

The weighted balance indicator for the respondents on a scale of -1 to 1 where 1 percentage point equals 0.01

103 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market Evaluation of the regulator’s efficiency

01 Foreword

02 Key findings

Overview of the FinTech 03 market What is the change in the regulator’s efficiency with respect to support and Please evaluate the efficiency of the regulator’s current effort aimed Overview of Russia’s FinTech development of the FinTech industry in Kazakhstan? at supporting and developing the FinTech industry in Kazakhstan. 04 market Overview of Kazakhstan’s 05 Trend 1.5 Trend FinTech market The respondents were divided in their opinions A half of the respondents (50 percent) indicated regarding the efficiency of the regulator’s effort that the efficient of the Regulator’s current The FinTech market in figures in the FinTech indistry. 40 percent of the effort is low. Only one in five respondents 20% respondents saw changes for the better, believed that the efficiency was high. The current situation in Kazakhstan’s FinTech market 40% while another 40 percent believed that the The balance value indicator is 1.5. This situation deteriorated. One in five respondents is 16 points below the similar indicator for FinTech market stakeholder (20 percent) stated that there have been Russia. map no significant changes neither for the netter nor 30% for the worse. Supply in the FinTech market 20% Demand in the FinTech market

Barriers for development of Kazakhstan’s FinTech market 50% 40% Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market 0% outlook until 2020 Positive changes High efficiency No changes Medium efficiency 06 Appendix Negative changes Low efficiency Balance Average regulator efficiency 07 Contacts

104 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market The rating of FinTech segments with the highest market potential until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market Please, evaluate the importance of the proposed FinTech segments in the medium term (one-three years). Trend Overview of Russia’s FinTech According to the respondents, scoring and 04 digital banks are the FinTech segments with market World Kazakhstan the highest market potential both globally and Overview of Kazakhstan’s Scoring 3.6 Digital banks 3.8 05 locally. Lending ranks the third both on a global FinTech market Digital banks 3.5 Scoring 3.4 and local scale. Importantly, top three FinTech The FinTech market in figures Crediting 3.4 Crediting 3.3 segments with the highest market potential are the same both in Russia and Kazakhstan. Investments 3.3 Loyalty 3.2 The current situation in Kazakhstan’s FinTech market Loyalty 3.2 Marketplace 3.2 According to the respondents, investments have the highest market potential in the Personal finance accounting 3.0 Infrastructure solutions 3.1 FinTech market stakeholder global FinTech market, while loyalty programs map Marketplace 3.0 Personal finance accounting 2.9 and marketplace would be in higher demand in Kazakhstan. Supply in the FinTech market Infrastructure solutions 2.9 Investments 2.9

Management / accounting 2.8 Management / accounting 2.9 The management accounting and insurance Demand in the FinTech market Insurance 2.7 Insurance 2.4 were rated rather low among other FinTech segments both in Russia and Kazakhstan. Barriers for development of Kazakhstan’s FinTech market Drivers for development of Kazakhstan’s FinTech market Kazakhstan’s FinTech market outlook until 2020

06 Appendix

07 Contacts

On the scale from 0 to 4 105 FinTech Market Trends 2018 | Overview of Kazakhstan’s FinTech market The rating of technologies with the highest market potential in Kazakhstan until 2020 01 Foreword

02 Key findings

Overview of the FinTech 03 market The rating of the above-listed technologies with the highest market potential until 2020 Trend Overview of Russia’s FinTech (in which technology would you invest your money?) According to the experts, the technologies with 04 the highest market potential are big data and market Big data analytics 0.94 predictive analytics (0.94). Overview of Kazakhstan’s Predictive analytics 0.94 05 FinTech market Artificial intelligence 0.90 Kazakhstan’s FinTech companies rate cluster Cluster analysis 0.89 analysis and IoT higher (21 and 18 points The FinTech market in figures Internet of Tthings (IoT) 0.89 above the average, respectively) than Russian companies. The current situation in Biometric analysis 0.85 Kazakhstan’s FinTech market Deep learning1 0.83 However, there are the same technologies 2 FinTech market stakeholder Data mining 0.83 in the end of the rating both in Kazakhstan and map Neural networks 0.81 Russia, i.e., augmented and virtual reality (0.57), Machine learning3 0.80 as well as blockchain (0.55). Supply in the FinTech market

Contactless payments 0.80 Demand in the FinTech market API4 0.78 Semantic analysis5 0.75 Barriers for development of Cloud technology 0.65 Kazakhstan’s FinTech market

6 BI – Business Intellegence 0.61 Drivers for development of Augmented reality (AR) 0.57 Kazakhstan’s FinTech market Virtual reality (VR) 0.57 Kazakhstan’s FinTech market Blockchain 0.55 outlook until 2020

06 Appendix 1 Deep learning is a combination of machine learning methods 2 Data mining means discovery and analysis of “hidden” data patterns 3 Machine learning is based on the use of AI methods 07 Contacts 4 Application programming interface 5 Semantic analysis involves recognising and “understanding” texts 6 Business Intelligence is about software solutions for managers to analyse information on their company and its environment

On the scale from 0 to 1 106 FinTech Market Trends 2018

01 Foreword

02 Key findings

Overview of the FinTech 03 market Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 Appendix FinTech market

06 Appendix

07 Contacts

107 FinTech Market Trends 2018 | Appendix Ratings by regions

01 Foreword

02 Key findings

Overview of the FinTech 03 market North America...... 189 Europe...... 59 South America...... 21 Overview of Russia’s FinTech Canada...... 118 Austria...... 37 Argentina...... 23 04 Mexico...... 28 Belgium...... 36 Brazil...... 24 market USA...... 422 Czech Republic...... 31 Panama...... 17 Overview of Kazakhstan’s 05 Denmark...... 51 Uruguay...... 18 FinTech market Estonia...... 31 ASEAN Finland...... 37 06 Appendix Asia...... 46 France...... 82 Bahrain...... 27 Germany...... 128 07 Contacts China...... 72 Greece...... 24 India...... 28 ...... 25 Indonesia...... 21 Iceland...... 29 Japan...... 88 Italy...... 38 Kazakhstan...... 24 Luxembourg...... 51 Malaysia...... 38 The Netherlands...... 74 The Philippines...... 20 Norway...... 44 Singapore...... 110 Poland...... 37 South Korea...... 64 Portugal...... 31 Thailand...... 31 Ireland...... 66 Turkey...... 27 Russian Federation...... 32 UAE...... 50 Spain...... 55 Sweden...... 81 Australia and Oceania...... 88 Switzerland...... 110 Australia...... 127 England...... 224 New Zealand...... 50

108 FinTech Market Trends 2018 | Appendix The list of FinTech companies in Russia

01 Foreword

No Company name Product Line of business No Company name Product Line of business 1 Coinkeeper PFM platform PFM 25 StartTrack Crowdinvesting Investments 02 Key findings 2 Easyfinance.ru PFM platform PFM 26 BondyBox Crowdinvesting Investments Overview of the FinTech 03 3 Moi koshelki (My wallets) PFM platform PFM 27 Crowd 1.0 Crowdinvesting Investments market 4 Keep soft PFM platform PFM 28 Simex Crowdinvesting Investments Overview of Russia’s FinTech 5 Dzenmoney PFM platform PFM The platform for buying securities and training 04 29 cyberFund Investments market for exchange trading 6 CashOff PFM platform PFM Overview of Kazakhstan’s 30 Zaymigo P2P lending Investments 05 7 Panda money PFM platform PFM FinTech market 31 Loanberry P2P lending Investments 8 PlanCaban PFM platform PFM 32 Gorod deneg (Money city) P2P lending Investments 9 Wise Cards PFM platform PFM 06 Appendix 33 fundico P2P lending Investments 10 Fingood PFM platform PFM 34 bezbanka P2P lending Investments 11 Anybalance PFM platform PFM 07 Contacts 35 Penenza P2P lending Investments 12 Esia.Finance B2B technology solutions Investments 36 Finback P2P lending Investments The platform for buying securities and training 13 Artquant Investments for exchange trading 37 FundAid Crowdinvesting Investments The platform for buying securities and training 38 Start Track P2P lending Investments 14 Conomy Right Investments for exchange trading 39 Platforma Crowdinvesting Investments The platform for buying securities and training 15 Yango Investments The platform for buying securities and training for exchange trading 40 Fins.money Investments for exchange trading The platform for buying securities and training 16 freedom24.ru Investments 41 BiznZip Crowdinvesting Investments for exchange trading 42 Aktivo Crowdinvesting Investments The platform for buying securities and training 17 Thesis Investments for exchange trading 43 Mirdeneg.ru P2P lending Investments 18 EXPatterns B2B technology solutions Investments 44 Madnessplatform Investments Investments The platform for buying securities and training 45 Invest Battle Game Investments 19 Madness Management Investments for exchange trading 46 Skidavemsya (Let’s chip in) Crowdinvesting Investments The platform for buying securities and training 20 UnicornBay Investments Infrastructure for exchange trading 47 Bankex Distributed ledger and smart contracts solutions The platform for buying securities and training 21 optiacs Investments Infrastructure for exchange trading 48 Farzoom Business process automation solutions The platform for buying securities and training 22 Simple Invest Investments Infrastructure for exchange trading 49 Waves ICO platform solutions 23 Planeta.ru Crowdfunding Investments Infrastructure 50 Blocknotary Identification solutions 24 Boomstarter Crowdfunding Investments solutions

109 FinTech Market Trends 2018 | Appendix The list of FinTech companies in Russia

01 Foreword

No Company name Product Line of business No Company name Product Line of business Infrastructure Infrastructure 02 Key findings 51 StocsNeural Bank chat bots and robo-advising 69 Tarantool Data analysis and processing solutions solutions Overview of the FinTech Infrastructure Infrastructure 52 DataFabric Identification solutions 70 RelationRate Identification solutions 03 solutions solutions market Infrastructure Infrastructure Overview of Russia’s FinTech 53 Novi Information security 71 SafeTech Information security 04 solutions solutions market Infrastructure Tsentr rechevykh 54 OzForensics Identification solutions Infrastructure Overview of Kazakhstan’s solutions 72 tekhnologiy (Speech Identification solutions 05 solutions technology center) FinTech market Infrastructure 55 Recfaces Identification solutions solutions Infrastructure 73 Orion Labs Identification solutions 06 Appendix solutions Infrastructure 56 VisionLabs Identification solutions solutions Infrastructure 74 Smart Engines Identification solutions solutions 07 Contacts Infrastructure 57 Brainysoft API solutions solutions Infrastructure 75 Mirocana ICO platform solutions Infrastructure 58 TeddyID Identification solutions solutions Infrastructure 76 Algomost Data analysis and processing solutions Infrastructure 59 Cofite Bank chat bots and robo-advising solutions Infrastructure 77 Cindicator ICO platform solutions Infrastructure 60 THE WAAY solutions Infrastructure 78 Arcona solutions Infrastructure 61 Edisoft E-factoring solutions Infrastructure 79 iDVp Data analysis and processing solutions Infrastructure 62 Cryptogramm Identification solutions solutions Infrastructure 80 Block4chain solutions Infrastructure 63 Финдоставка Identification solutions solutions Infrastructure 81 Confideal Distributed ledger and smart contracts solutions Infrastructure 64 EMIIA solutions Infrastructure 82 DolphinBI Bank chat bots and robo-advising solutions Infrastructure 65 Graphenelab solutions Infrastructure 83 ZrCoin solutions Infrastructure 66 FinCase Business process automation solutions Infrastructure 84 Humaniq solutions Infrastructure 67 Iqstore Bank chat bots and robo-advising solutions Infrastructure 85 Erachain Business process automation solutions Infrastructure 68 Exerica Business process automation solutions

110 FinTech Market Trends 2018 | Appendix The list of FinTech companies in Russia

01 Foreword

No Company name Product Line of business No Company name Product Line of business Infrastructure 113 Kviku Bank product Lending 02 Key findings 86 Viarium solutions 114 Koshelek (Wallet) Card agreggator Loyalty programs Overview of the FinTech Infrastructure 87 API Bank API solutions 115 Cardberry Card agreggator Loyalty programs 03 solutions market 116 Plazius Market analytics Loyalty programs Infrastructure Overview of Russia’s FinTech 88 Keepsoft Home accounting office 04 solutions 117 Shopingbox Cashback service Loyalty programs market 89 vcredit24.ру POS-lending in the real-time mode Lending DLS (Digital 118 Market analytics Loyalty programs Overview of Kazakhstan’s loyalty System) 05 90 Revoplus POS-lending in the real-time mode Lending FinTech market 119 SweetCard Market analytics Loyalty programs 91 Retail Credit Systems POS-lending in the real-time mode Lending 120 Pay2U Cashback service Loyalty programs 06 Appendix 92 Plati potom (Pay later) POS-lending in the real-time mode Lending 121 Beelme Cashback service Loyalty programs 93 Ammopay POS-lending in the real-time mode Lending 122 Beelme Market analytics Loyalty programs 07 Contacts 94 Suretly P2P lending Lending 123 Segmento Advertising platform Loyalty programs 95 Zaymer Online lending Lending 124 CashOff Market analytics Loyalty programs 96 webbankir Online lending Lending 125 Vcredit24.ру Advertising platform Loyalty programs 97 Platiza Online lending Lending 126 Revoplus Advertising platform Loyalty programs 98 Pay P.S. Online lending Lending 127 Retail Credit Systems Advertising platform Loyalty programs 99 MoneyMan Online lending Lending 128 Plati potom (Pay later) Advertising platform Loyalty programs 100 MILI Online lending Lending 129 Ammopay Advertising platform Loyalty programs 101 kredito24 Online lending Lending 130 7seconds Advertising platform Loyalty programs 102 eKapusta Online lending Lending 131 Rubbles Market analytics Loyalty programs 103 Turbozaym Online lending Lending 132 Coloreyes Market analytics Loyalty programs 104 CredIT POS-lending in the real-time mode Lending 133 AltKraft Advertising platform Loyalty programs 105 Solva Online lending Lending 134 heedbook Market analytics Loyalty programs 106 7seconds POS-lending in the real-time mode Lending 135 Psycheya Market analytics Loyalty programs 107 Carmoney Online lending Lending 136 DataFuel Market analytics Loyalty programs 108 Mandarinbank POS-lending in the real-time mode Lending 137 DATA4 Market analytics Loyalty programs 109 Bystrodengi Online lending Lending 138 Iqcard Cashback service Loyalty programs Chestnoe slovo (Word 110 Online lending Lending of honor) Bonusny Club 139 Cashback service Loyalty programs (Bonus Club) 111 SMS Finance Online lending Lending 140 Pinbonus Card agreggator Loyalty programs 112 Vivus Online lending Lending

111 FinTech Market Trends 2018 | Appendix The list of FinTech companies in Russia

01 Foreword

No Company name Product Line of business No Company name Product Line of business 141 finhub Bank marketplace Marketplace 170 Ru-beacon Online payment service Payments 02 Key findings 142 banki.ru Financial supermarket Marketplace 171 Splitpay Online payment service Payments Overview of the FinTech 03 143 sravni.ru Financial supermarket Marketplace 172 PayQR Online payment service Payments market 144 EasyWallet Bank marketplace Marketplace 173 Benzuber Online payment service Payments Overview of Russia’s FinTech 04 145 bankcreditcard.ru Bank marketplace Marketplace 174 UnitPay Payment aggregator Payments market 146 Moi kapital (My capital) Financial supermarket Marketplace 175 PayNetEasy Payment aggregator Payments Overview of Kazakhstan’s 05 147 Moneymatika Financial supermarket Marketplace 176 WalletOne Payment aggregator Payments FinTech market 148 Unicom24 Financial supermarket Marketplace 177 Uniteler Internet acquiring Payments 149 Carcoin Marketplace 178 SimplePay Payment aggregator Payments 06 Appendix 150 TRYCREDIT Bank marketplace Marketplace 179 Linenergo Online payment service Payments 151 Finvale Financial supermarket Marketplace 180 Prostocash Exchange office Payments 07 Contacts 152 RealAtom Financial supermarket Marketplace 181 Merkata Mobile point of sale Payments 153 Plazius Online payment service Payments 182 Payber Online payment service Payments 154 Best2pay Online payment service Payments 183 Pimpay Payments 155 Kvartplata24 Online payment service Payments 184 Fixrisk Risk hedging Risk management 156 bitaps Online payment service Payments 185 Agredator Client data analysis Scoring 157 Payler Internet acquiring Payments Fintech-Yadro 186 Client data analysis Scoring (FinTech Core) Pay-up.Platezhi (Pay-up. 158 Online payment service Payments Payments) 187 Scorista Client data analysis Scoring 159 Futubank Online payment service Payments 188 Aksiomatica Client data analysis Scoring 160 Cloudpayments Internet acquiring Payments 189 Scortech Client data analysis Scoring 161 Onlinepay Online payment service Payments 190 Sputnik Client data analysis Scoring 162 Ecommpay Payment aggregator Payments 191 Fscorelab Client data analysis Scoring 163 Lifepay Mobile point of sale Payments 192 Finkarta Client data analysis Scoring 164 2can Mobile point of sale Payments 193 DoubleData Client data analysis Scoring 165 Moy kassir (My cashier) Mobile point of sale Payments 194 HouseScan Client data analysis Scoring 166 Pay-me Mobile point of sale Payments 195 mindScope Client data analysis Scoring 167 Ubank Online payment service Payments 196 Zaimix Client data analysis Scoring 168 Mobicash Online payment service Payments Fiksator riskov Management 197 Comprehensive solutions (Risk fixator) Accounting 169 Machinomy Online payment service Payments

112 FinTech Market Trends 2018 | Appendix The list of FinTech companies in Russia

01 Foreword

No Company name Product Line of business No Company name Product Line of business Management Management 02 Key findings 198 Prosto plan BFM 209 Risk-monitoring Online accounting Accounting Accounting Overview of the FinTech Kontur. (Contour.) Management Management 199 Online accounting 210 Galament Comprehensive solutions 03 Accounting Accounting Accounting market Management Management Overview of Russia’s FinTech 200 Nalogia Online accounting 211 Iq300 Comprehensive solutions 04 Accounting Accounting market Management Management 201 Nebo Online accounting 212 Flowlu Comprehensive solutions Overview of Kazakhstan’s Accounting Accounting 05 FinTech market Management Management 202 Moyo delo Online accounting 213 MySaldo Online accounting Accounting Accounting 06 Appendix Management Management 203 First online accounting Online accounting 214 Smartan Online accounting Accounting Accounting 07 Contacts Management Management 204 Seeneco BFM 215 Tranzaptor Comprehensive solutions Accounting Accounting Management Management 205 CyberFT Comprehensive solutions 216 Avanpost Comprehensive solutions Accounting Accounting Management 217 TalkBank Bank product Digital banks 206 Factorb Online accounting Accounting 218 HandyBank Bank product Digital banks Management 207 Freshdoc Online accounting 219 Fundery Accounting Management 208 Iteco Comprehensive solutions Accounting

113 FinTech Market Trends 2018 | Appendix The list of FinTech companies in Kazakhstan

01 Foreword

No Company name Product Segment No Company name Product Segment 1 Baribirge Crowdfunding Investments 27 E-kzt E-wallet Payments 02 Key findings 2 Nebank.kz P2P lending Investments 28 Allpay E-wallet Payments Overview of the FinTech 03 3 Ules P2P lending Investments 29 Kassa.24 Payment terminal Payments market 4 Lendex P2P lending Investments 30 Smart POS terminal Mobile points of sale (mPOS) Payments Overview of Russia’s FinTech 04 5 Intervale Infrastructure solutions 31 mini POS Mobile points of sale (mPOS) Payments market Regional payment Telebank.Retail Telebank. 32 torgai Mobile points of sale (mPOS) Payments 6 Infrastructure solutions Overview of Kazakhstan’s systems Corporate InfoMe 05 33 Processing.Kz Internet acquiring Payments FinTech market 7 Paybox Online payment service Infrastructure solutions 34 ePay Internet acquiring Payments 8 Kredit24 Online lending Lending 35 Paypoint Online payment service Payments 06 Appendix 9 CreditOn Online lending Lending 36 Stock Metrix Bank chat bots and robo-advising Payments 10 altTenge Online lending Lending 37 M'PAY Online payment service Payments 07 Contacts 11 ccloan.kz Online lending Lending 38 Quickpay Online payment service Payments 12 MFC «Chestnoe Slovo» Online lending Lending 39 Taulink Payment collection system Payments 13 DеngiМаркет Online lending Lending 40 Buhta Online accounting Management Accounting 14 DengiClick Online lending Lending 41 Fin-Apps Comprehensive solutions Management Accounting 15 DoPoluchki Online lending Lending 42 iDocs Online accounting Management Accounting 16 Solva Online lending Lending Podpishi online (Sign Service for real-time signing 43 Management Accounting 17 Zing Online lending Lending Online) of documents 18 Zaymer Online lending Lending Planeta uchyota 44 Online accounting Management Accounting (Accounting Planet) 19 Moneyman Online lending Lending 45 Uchet.kz Online accounting Management Accounting 20 LemonTree Advertising platform Loyalty programs Pervoye kreditnoye byuro 21 Kopilka.kz Cashback service Loyalty programs 46 (First Credit Bureau) 22 Chocolife.me Cashback service Loyalty programs 23 BeSmart Cashback service Loyalty programs 24 Prodengi Financial supermarket Marketplace 25 BAI.kz Financial supermarket Marketplace 26 Wooppay E-wallet Payments

114 FinTech Market Trends 2018 | Appendix NF Myers-Briggs types: SJ type

01 Foreword

02 Key findings

Overview of the FinTech 03 market SJ Type ESFJ. Overview of Russia’s FinTech The distinguishing features of this type are ESFJ people are practically minded, open for 04 stability and reliability. People of this type enjoys new ideas. They are easy to talk to and build market tradition and security. The shortcoming is the strong relationships with colleagues. Overview of Kazakhstan’s 05 slowdown of the process due to excessively FinTech market formalized approach to compliance with rules, ISFJ. somewhat bureaucratic approach. This type They are calm and responsible. Corporate 06 Appendix is suitable both for manager and subordinate interests are a priority for them. They perform roles, can take any role in the structure in which work in strict accordance with the plan. 07 Contacts they work. They fulfill their responsibilities fully and completely. ESTJ. ESTJ type are take-charge people, natural They often act as founders of popular leaders. They like planning and achieving goals. movements and administrators; tend to take responsibility for other people’s actions. ISTJ. Another shortcoming is their conservative ISTJ is the most reliable and the most views, as the SJ type people are gradualists conservative type. They follow traditions, keep by nature. Such people are not always sensitive the word, like to structure the information. and sometimes tend to wear a mask. Summary: conservative, calm, friendly.

115 FinTech Market Trends 2018 | Appendix NF Myers-Briggs types: NT type

01 Foreword

02 Key findings

Overview of the FinTech 03 market NT Type ENTJ. Overview of Russia’s FinTech This type is the rarest and includes only ENTJ are leaders and managers by nature. They 04 10 percent of population in any given country. always have goals and finds various instruments market They like the intellectual work and easily adapts for achieving them. They like new knowledge Overview of Kazakhstan’s 05 to new conditions. They tend to doubt what and continuously improve in various fields. FinTech market other people say and do not believe then until verify themselves. They often take offense INTJ. 06 Appendix if they are accused of incompetence. Assertive, do not recognize any authority, like logic and uses it in all actions and solutions. 07 Contacts

ENTP. Demonstrate well-developed intuition which is offered used in practice. Like new ideas and are enthusiastic about new work.

INTP. Intellectuals slightly inclined to patronizing. Capable of making objective assessments of the situation, aways have new ideas in stock, has the ability to convince, usually a ‘wordsmith.’

Summary: innovator and an idea-driven personality. The main creed: leadership and superiority in everything.

116 FinTech Market Trends 2018 | Appendix NF Myers-Briggs types: SP type

01 Foreword

02 Key findings

Overview of the FinTech 03 market SP Type ESFP. Overview of Russia’s FinTech The key characteristics of this type are love Optimistic. Like to make friends. Like activity 04 of freedom and high risk tolerance. The prefer and movement. Hate loneliness. market to live here and now. They like the process Overview of Kazakhstan’s 05 more than the end result. The most suitable ISFP. FinTech market professions for them are creative ones: Always need constant emotional support. Love design, painting, and photography. They like freedom and have positive attitudes. 06 Appendix new emotions. They display leader qualities to a lesser extent than NT-type personalities but ESTP. 07 Contacts in some situations their inventiveness is striking. People from this group never get tired. Like risk, good at building relationships with other people.

ISTP. Like technical devices, can fix everything. The oriental type of personality. They don’t strive for education or prestige; they like calm and fulfill themselves in their favorite occupation, proceeding to completion.

Summary: a sensitive and freedom- loving personality.

117 FinTech Market Trends 2018 | Appendix NF Myers-Briggs types: NF Type

01 Foreword

02 Key findings

Overview of the FinTech 03 market NT Type ENFJ. Overview of Russia’s FinTech Usually find their mission as intermediaries; Persons in this group are clear leaders. 04 constantly search for the purpose of life. They They are extroverts and sensitive to other market are nomads by nature and visionaries; like people and their feelings. They do not like Overview of Kazakhstan’s 05 spiritual dimension and find it even in small monotonous routine. FinTech market things. They want to find harmony with the environment, like to get new knowledge and INFJ. 06 Appendix share it with other people. As a result, they People of this personality type have deep succeed in teaching. Such people are in demand intuition. They apply astuteness and sharp wit 07 Contacts in commerce, advertising and other fields. They in building relationships with other people. They have strong intuition and are capable of feeling enjoy the success of others. what their partners expect them to feel. The key supporters of this group are females. ENFP. Astute personality. Sensitive and sophisticated persons, deny the usefulness of pure logic, often acts spontaneously.

INFP. Calm idealists with a strong sense of dignity. Ardent supporters of ideals and common values.

Summary: have good intuition and use it in combination with common sense. Take a proactive approach to life

118 FinTech Market Trends 2018 | Appendix The methodology for assessing contribution to the UN SDGs 01 Foreword Target coverage ratio is the relation between The methodology for assessment and rating calculation the number of targets within a given SDG 02 Key findings The contribution to achievement of the UN SDGs is calculated on the basis of the target coverage within the which depends on FinTech advancement Overview of the FinTech SDGs in each of the FinTech segments which influence the achievement of the SDGs, as well as the materiality to a significant extent, on the one hand, and the 03 market of contribution of these FinTech segments in the achievement of the covered targets. total number of targets within that SDG as listed Overview of Russia’s FinTech in the Global Agenda, on the other hand. 04 Assessment market Russia Kazakhstan results Contribution materiality ratio reflects Overview of Kazakhstan’s 05 The relative The relative the impact of a certain FinTech segment FinTech market Materiality Materiality SDG Target coverage rating Target coverage rating on achievement of the SDG targets adjusted of contribution of contribution of contribution of contribution to the market size in the reviewed industry. 06 Appendix SDG 1 No poverty 3/7 26.6 11.4 1/7 20.3 2.9 The impact on the target achievement SDG 2 Zero hunger 2/8 42.0 10.5 2/8 45.2 11.3 07 Contacts is rated on a scale from 1 to 5 where 1 means SDG 3 Good health and well-being 2/13 52.0 8.0 1/13 80.6 6.2 that the target can be achieved only through using the potential of other industries, while SDG 5 Gender equality 1/9 88.2 9.8 1/9 39.6 4.4 5 means that a given FinTech segment has the SDG 6 Clean water and sanitation 1/8 54.4 6.8 1/8 40.0 5.0 most significant impact on the achievement SDG 7 Affordable and clean energy 1/5 8.0 1.6 - - - of the target. Given that one segment often has an impact on several SDG targets, the assigned Decent work and economic SDG 8 3/12 55.2 13.8 3/12 23.2 5.8 growth impact reflects the average value of impacts on each specific target. Industry, innovation and SDG 9 1/8 142.4 17.8 1/8 150.4 18.8 infrastructure We used the survey results in order to calculate Sustainable cities and SDG 11 1/10 60.0 6.0 1/10 20.0 2.0 the market size for each segment. communities

Responsible consumption SDG 12 2/11 8.25 1.5 - - - and production

SDG 13 Climate action 1/5 4.0 0.8 - - -

SDG 17 Partnerships for the goals 2/19 58.9 6.2 2/19 35.2 3.7

119 FinTech Market Trends 2018 Contacts

01 Foreword

Ivan Kukhnin Lora Zemlyanskaya Director Deloitte CIS Research Center Leader 02 Key findings Sustainability Group Leader Tel.: +7 (495) 787 06 00 ext. 2299 Overview of the FinTech Tel.: +7 (495) 787 06 00 ext. 5213 E-mail: [email protected] 03 market E-mail: [email protected] Overview of Russia’s FinTech 04 market Overview of Kazakhstan’s 05 Elizaveta Ustilovskaya Dmitry Kasatkin FinTech market Assistant Manager Senior specialist Sustainability Services Deloitte CIS Research Center 06 Appendix Tel.: +7 (495) 787 06 00 ext. 5436 Tel.: +7 (495) 787 06 00 ext. 1605 E-mail: [email protected] E-mail: [email protected] 07 Contacts

Maria Zyulyaeva Yulia Afanasyeva Business Analyst Analyst Sustainability Services Deloitte CIS Research Center Tel.: +7 (495) 787 06 00 ext. 1092 Tel.: +7 (495) 787 06 00 ext. 1652 E-mail: [email protected] E-mail: [email protected]

120 deloitte.ru

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