Digital Finance in Central Asia: How Fintech Can Drive Inclusion and Regional Integration

The report argues that fintech can help Central Asia leapfrog weak financial systems, expand financial inclusion, and support small businesses, but only if digital infrastructure, regulation, and skills improve together. Its core message is that regional cooperation—especially on payments, standards, and digital identity is essential for fintech to deliver broad-based and sustainable growth across CAREC countries.

A  report, Unlocking the Potential of Fintech in Central Asia, by the Asian Development Bank (ADB), developed in close collaboration with the CAREC Institute and supported by research contributions from institutions such as Access Partnership and other regional experts examines that, while CAREC countries have invested heavily in roads, railways, and trade corridors, their financial systems have not kept pace. Millions of people remain outside the formal banking system, and small businesses struggle to access finance. Fintech is presented as a practical solution, not just new technology, but a way to modernize finance, widen inclusion, and connect national markets into a stronger regional system.

Taking Stock of Fintech Progress

To assess where the region stands, the report introduces a four-part framework covering finance, technology, institutional capability, and regional cooperation. Using this approach, it compares nine emerging CAREC fintech markets. The results show sharp differences. Kazakhstan and Mongolia stand out for higher financial inclusion and better digital infrastructure, while countries such as Pakistan and Tajikistan face deeper gaps in access, connectivity, and regulatory readiness. Across the region, digital payments dominate fintech use, far ahead of digital lending, insurance, or investment services. This reflects both strong consumer demand for payments and the caution of regulators and banks when it comes to more complex financial products.

Financial Inclusion at the Core

A central message of the report is that fintech success depends on basic financial inclusion. Where people have bank accounts, receive wages digitally, and own debit cards or mobile wallets, fintech adoption grows quickly. Where these basics are missing, digital finance struggles to take root. The report highlights how mobile money and digital payments expanded rapidly during the COVID-19 pandemic, helping households and businesses cope with disruption. At the same time, it shows that poor households, women, rural populations, and small firms remain underserved. Fintech can help close these gaps, but only if supported by policies on affordability, digital literacy, and consumer protection.

Technology and Rules That Enable Innovation

Fintech, the report argues, cannot thrive without strong digital foundations. Reliable internet access, mobile broadband, fast payment systems, and national digital identity programs are treated as essential public infrastructure. Some CAREC countries have launched real-time payment systems and digital IDs, but progress is uneven and often limited to banks, excluding nonbank fintech firms that could drive competition. Equally important are rules and skills. Many countries have adopted laws on electronic transactions and data protection, yet regulatory systems often struggle to keep up with fast-changing technology. Regulatory sandboxes, innovation hubs, and fintech accelerators are shown to be effective tools where they exist, helping regulators balance innovation with financial stability. However, low digital skills across much of the population remain a major constraint.

The Case for Regional Cooperation

The report’s strongest forward-looking argument is that fintech’s real value lies in regional cooperation. Despite CAREC’s long history of working together on trade and infrastructure, cooperation on fintech is still limited. Cross-border payments, shared standards, and mutual recognition of regulations remain rare. By contrast, ASEAN’s experience with linking fast payment systems and coordinating digital policies shows what is possible. The report argues that fintech is inherently cross-border, especially for remittances, trade finance, and e-commerce, and that CAREC countries must work together to unlock its full benefits. Country case studies, including Georgia’s role as a potential fintech bridge and Pakistan’s rapidly evolving ecosystem, illustrate both the opportunities and the risks.

The report presents fintech as a powerful but not automatic solution. Technology alone will not transform Central Asia’s economies. Progress depends on inclusive finance, strong digital infrastructure, adaptable regulation, skilled people, and above all, regional cooperation. If CAREC countries align these elements, fintech can become a driver of shared growth and deeper integration in an increasingly digital global economy.