17:31 - 18.03.2024

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March 18, Fineko/abc.az. Is Azerbaijan on the brink of a financial revolution? Konstantin Tserazov, a seasoned economist and former Senior Vice President of Otkritie Bank, delves into the burgeoning fintech sector of Azerbaijan. Tserazov navigates the landscape where economic growth, driven by the nation's strategic position and resource wealth, is paving the way for innovative financial technologies. He explores how this sector is not only empowering the country's youth but also energizing startups, thereby transforming Azerbaijan into a hub of digital finance and technological progress.

Azerbaijan's promising fintech environment, supported by a robust economy and a GDP projected at $80 billion in 2024. The nation benefits from its strategic location and is diversifying its oil and gas wealth into other sectors, notably fintech. With a population of 10.402 million, Azerbaijan boasts a high internet usage rate, creating an ideal ground for financial innovations.

The Central Bank of Azerbaijan (CBA) reported a 22.3% increase in payment cards in 2023, with over 70% being contactless. The growing fintech startup landscape in Azerbaijan offers varied transaction methods, and cashless payments are gaining momentum in retail and public transport.

The country's startup ecosystem, beginning with the Startup Azerbaijan event in 2012 and the establishment of Applab, reflects a commitment to tech innovation. Government initiatives like The Pirallahi High Tech Park further endorse this trend. In 2023, Azerbaijan ranked 84th globally in innovation ecosystems. The youth of Azerbaijan, particularly those under 25, show keen interest in starting new ventures, with fintech being a prominent focus area.

Azerbaijan's fintech scene includes notable players like Golden Pay and eManat. The presence of global companies like Apple, Google, Visa, and Mastercard adds to the dynamic fintech landscape, offering advanced solutions like Visa Tap to Phone and Mastercard's Masterpass.

The money transfer and payments sector in Azerbaijan attract both international and local entities. Legislation, such as the new Law "On payment services and payment systems," came into effect in November 2023, facilitating fintech expansion.

CBA's Financial Sector Development Strategy 2024-2026 forecasts significant growth in cashless transactions and digital payments. The bank is also enhancing regulatory frameworks and promoting the Open Banking platform.

The online purchase volume in Azerbaijan reached $11 billion in 2023, with fintech startups focusing on online payments, e-wallets, and payment aggregators. The typical Azerbaijani fintech company employs up to 25 people and often relies on founder funding, although venture capital is also a key funding source.

AI integration is becoming increasingly prevalent in Azerbaijan's financial sector, with applications in fraud detection, customer service, and credit risk assessment. AI-powered Robo-advisors are managing significant assets, and the use of AI in loan processing is on the rise.

In summary, Azerbaijan's fintech sector is burgeoning, driven by economic growth, technological advancement, and supportive legislation, indicating a bright future for financial innovations in the country.