• Azizbek Sultanov , General Manager of Main Operations Department at Gross Insurance


• 25.07.2022 12:45 pm
#insurtech #crypto #islamicfinance

Digital transformation and interaction

Uzbekistan is the point of development of the Central Asian region, today one of the most dynamically developing countries, and more open both for international cooperation and new investments, for innovative technologies.

In 2020, the Law Payments and Payment Systems came into force in Uzbekistan, designed to ensure the continuity of payments and the widespread introduction of innovative technologies, as well as the efficient, reliable, and secure functioning of payment systems in Uzbekistan. Regarding the policy of market openness and creating equal conditions for all participants, the Central Bank of Uzbekistan supports not only local startups but also attracts major players in the financial industry to the country, to accelerate digitalization processes in Uzbekistan. According to KPMG, in 2020, the e-commerce market in Uzbekistan was USD643.9 million.

According to KPMG (2020), Kazakhstan is a leader in FinTech in Central Asia, but it is rapidly catching up with Uzbekistan, which in a short time has made a digital breakthrough with the help of payment systems, adopting a course on a legislative basis for introduction and active development of digital banks. Consequently, within two years, three digital banks were opened in Uzbekistan - TBC Bank, Anor Bank, and Apelsin Bank.

Centre of attraction

It should also be mentioned, that financial technologies in Uzbekistan are supported at the state level. Following this, in 2019 the IT Park Uzbekistan was founded in Tashkent, on the basis of which there are about 30 start-up projects and 200 centres for training and development of information technologies in the country.

IT Park Uzbekistan has launched the TashRush program, under which IT specialists and foreign companies are provided with services for registering legal entities, finding offices, recruiting personnel, and for IT specialists - assistance in adaptation and employment in companies - residents of the IT park. Since the beginning of 2022, more than 3,000 foreigners have taken advantage of the program. In addition, from April 1, Uzbekistan introduced a three-year IT visa for foreign specialists in the field of information technology. Besides, IT Park Uzbekistan offers startups acceleration and incubation programs and organizes various projects to support, promote and attract investment in IT projects.

In turn, ex-CEO Yota Vladimir Dobrynin founded the FinTech startup Humans, which today operates in the US and Uzbekistan. According to him, having invested USD15 million in Uzbek service, the company received USD25.2 million in revenue a year later. One of the reasons for choosing Uzbekistan, to launch a FinTech platform was the homogeneous population, and another was the rapid development of the country and growth of its economy.

Cryptocurrency market

As for such a promising trend as crypto business, Uzbekistan also does not remain aloof from world trends - recently an agency regulating crypto policy has appeared in the republic. This structure was created through the reorganization of the National Agency for Project Management into the National Agency for Perspective Projects. The main task of new department was the development and implementation of a policy in the field of circulation of crypto assets.

Infrastructure development

The infrastructure as a service (IaaS) Uzbek market has already been formed, there are large telecom operators and internet providers, that provide virtual servers as additional service to their customers. This became possible, due to the fact that, international companies specializing in exclusively cloud technologies, having deep expertise in this industry and applying international standards, entered the country's market. According to PRO DATA experts, the size of the IaaS market in Uzbekistan, at the end of 2020 amounted to USD9.17 million, by 2025 it will more than double and amount to USD20.89 million.

Islamic finance

The ongoing reforms in Islamic finance in the Republic are leading to colossal changes not only in the banking sector but also in the capital markets, leasing and insurance, where 93% of the population are Muslims. Following this, the Islamic Development Bank plans to finance projects in Uzbekistan for USD509 million.

InsurTech industry

Uzbekistan has adopted a Presidential Resolution - On additional measures to digitalize the insurance market (InsurTech) and develop the life insurance sector, according to which, from July 1, 2022, it will be allowed to carry out all types (classes) of insurance in E-form.

GROSS Insurance, the first company to develop a system, started sales of E-Insurance policies for compulsory motor insurance. An electronic civil liability insurance policy for vehicle owners, which is equivalent to a paper one, can now be purchased online on the company's website or via the GROSS Mobile application.

2020 has changed the worldview in insurance. Every day the capacity of the online services market is growing, and people feel all its benefits.

Besides, the company has developed the FinTech platform of insurance products such as car loans, financial risks and microloans insurance and cooperating with ASAKA Bank and Trust Bank.

Starting from 2020 was a substantial period for GROSS Insurance. The company made insurance services more convenient for consumers, in this regard the Global Banking & Finance review recognized GROSS Insurance as the - Best online insurance company in Uzbekistan, and the - Best insurance company in Uzbekistan in travel insurance, at the end of 2020, as well as the winner of the - Best Mobile Application for Insurance in 2021. In addition, GROSS Insurance was recognized as the - Brand of the Year 2020 by consumers and experts.

Should also be noted that, in 1Q21, Azimuth Insurance began its activities, as a player with an international background. AIC is a British insurance enterprise in the Uzbek market, that fully meets the high requirements of foreign investors.

The global strategy & trends of the Uzbek market, in particular:

• challenge the traditional constructs and constraints of current models, and find alternative ways to reach target customers through cross-industry partnerships, InsurTech alliances, and affinity channels;

• create new personalized offerings by embracing innovations such as IoT devices, wearables and digital assets. Pay close attention to how the world of digital assets and virtual environments (cryptocurrencies, NFT tokens and the metaverse) are evolving;

• build cloud forward, future-ready architecture, and take advantage of API-based, ‘as-a-service’ technology platforms that allow insurers to offer ‘plug and play’ access to their products and services. Install the modularity, agility, and portability needed to integrate with third-party platforms, such as other insurers, distribution partners and InsurTech;

• invest in capabilities and cultures that truly adopt a digital mindset. Companies need to modernize legacy systems and deepen connectivity with the partners.

Banking sector and Payments industry

Remote banking services are used by 22 million people, and the number of bank cards in circulation is more than 28 million. The number of installed payment terminals in the country has reached to 432.9 thousand, and 13.4 thousand devices have already been installed in ATMs.

The growth of indicators was due to a number of prerequisites. Thus, in 2021, a number of fundamental decisions were made and new approaches were introduced in the work of the Central Bank, in particular:

• a strategic program for transformation and denationalization of the banking sector is being implemented, which is designed to increase the efficiency of the banking sector as a whole;

• the legal basis for remote biometric identification of clients has been laid, which opens up wide opportunities for the development of non-banking financial services;

• A centre for combating fraud and cyber threats has been created, which will serve to increase the transparency and security of financial services.

Retail payment systems based on bank cards - Uzcard and Humo - operate in the market of Uzbekistan. In 2018, the launch of the retail payment system Humo contributed to the formation of a competitive environment, a significant increase in the scale of cashless payments in the economy, and a reduction in risks associated with the activities of payment service providers.

In 2020, the commissioning of the Instant Payment System has become another important achievement in the field of cashless payments in Uzbekistan. Considering the rather high level of digitalization of financial services in the country, in order to ensure information security and counteract fraud and cyber threats, this year was created a CERT-CBU centre at the Central Bank of Uzbekistan.

International financial institutions, such as the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), as well as international companies such as KPMG, PwC, Mckinsey, Finextra - are involved in the transformation of FinTech in Uzbekistan.

About the author

Azizbek Sultanov is a General Manager of Main Operations Department at GROSS Insurance. Highly motivated Insurance & Reinsurance, Risk Management Specialist with a demonstrated history of working in insurance industry. Skilled in Underwriting, Report Writing and Financial Analysis. Strong finance professional with a Bachelor of Science - BS focused in Finance, International Relations and Corporate from Tashkent State University of Economics.