Over 30 years ago, Kazakhstan was little known outside Central Asia despite its vast size and rich resources. Long isolated under Russian and then Soviet rule, it only opened to global trade after declaring independence in 1991, embarking on a journey towards a market-oriented, capitalistic society. This transition included integrating concepts like competition and innovation into its economic vocabulary. Despite significant strides, such as attracting global corporations to its oil sector and modernizing its infrastructure and government, Kazakhstan struggled for international recognition, potentially needing a notable brand or celebrity to elevate its global profile.
Mikhail Lomtadze during the bell ringing ceremony at Nasdaq to mark the company’s stock listing on Jan. 19 in New York. Photo credit: Nasdaq.
In recent years, Kazakhstan’s global recognition has increased, partly thanks to notable figures like professional boxer Gennady Golovkin, the first Kazakh featured in an Apple Watch commercial and Nike’s Jordan brand, and singer Dimash Kudaibergen, known for his exceptional vocal range. Despite their contributions, the country’s image as resource-dependent persisted. However, significant changes have been occurring. Five years ago, Kazakhstan’s first president Nursultan Nazarbayev stepped down, succeeded by Kassym-Jomart Tokayev, who has focused on reforms, technology adoption, and fostering an entrepreneurial economy. These efforts, along with the rise of tech-savvy entrepreneurs, are reshaping Kazakhstan’s global image, highlighting its intellectual potential and talent beyond natural resources.
In a thriving market economy like Kazakhstan’s, capital gravitates towards the most efficient and profitable ventures. A prime example is the innovative super app Kaspi.kz, which offers a range of services from cashless payments to vacation booking and accessing government services. This app has not only enhanced the lives of millions in Kazakhstan but also raised the country’s profile. Recently, Kaspi.kz made headlines with its successful Nasdaq IPO, a first for a Kazakh company.
Photo credit: Nasdaq.
Behind Kaspi’s success is CEO Mikhail Lomtadze, a co-founder who envisioned greatness against the odds. Under his leadership, Kaspi.kz has become the largest and most advanced company in Kazakhstan and Central Asia. In 2022, the app processed more transactions than Mastercard and Visa combined in Kazakhstan.
Kaspi’s Nasdaq debut, following its listing on the London Stock Exchange less than three years prior, marks a significant milestone. The company’s achievements have not gone unnoticed by the government of Kazakhstan. President Tokayev recently met with the company’s co-founders Vyacheslav Kim and Mikhail Lomtadze. We had the opportunity to delve deeper into the company’s journey in an interview with Lomtadze.
Here’s our Q&A with Lomtadze.
Your company focuses on three main areas (payment, marketplace, fintech). Could you tell a little about the products and services you offer? Who is your target customer base?
We operate a two-sided Super App business model: the Kaspi.kz Super App for consumers and the Kaspi Pay Super App for merchants and entrepreneurs.
Photo credit: Nasdaq.
Being a Super App first is at the core of everything we do. We call our mobile applications Super Apps because, unlike single-purpose apps, our apps integrate different and complex services that are used on a daily basis in one place, in a way that is simple and seamless for users.
With the Kaspi.kz Super App, consumers can shop online with fast and free e-Commerce and e-Grocery delivery, use m-Commerce to find and shop at local merchants, book travel and holidays with Kaspi Travel, pay with Kaspi QR throughout Kazakhstan, shop with our BNPL products, pay their household bills and save for the future. With integrated Government Services, consumers can also access digital documents, including passports, renew their driving licenses, and transfer car ownership.
The Kaspi.kz Super App has 13.5 million average monthly active users, 65% of whom access our services daily, giving it one of the highest levels of daily engagement among major mobile apps globally, trailing only behind Tencent’s WeChat in China.
With the Kaspi Pay Super App, merchants can sell online using e-Commerce or list their businesses and offers using m-Commerce, organize nationwide delivery with Kaspi Delivery Smart Logistics, run ad campaigns with Kaspi Advertising, participate in our promotional events and access merchant financing. Merchants can issue and instantly settle invoices, accept payments, pay suppliers and track their turnover. Kaspi Classifieds allows merchants to advertise their services and job opportunities. Merchants also have access to Government Services, including tools to initially register their business, issue fiscal receipts for all types of payments, calculate and pay their taxes, and file tax reports.
What is the company’s revenue model, and how does it plan to achieve long-term profitability?
With our two-sided Super App business model, the Kaspi.kz and Kaspi Pay Super Apps connect and facilitate transactions between consumers and merchants, from which we generate revenue. Popular payments and shopping products attract more customers, which in turn attracts more merchants, which in turn leads to more consumers and transactions. We also integrate financing options for both consumers and merchants.
Our Super Apps technology platform leads to high levels of operational efficiency and offers a powerful mix of scale and profitability.
We typically target large addressable markets, such as grocery and travel, where scale translates into meaningful net income and net income growth. As a result, we believe our Super App business model creates a structurally more profitable business than a stand-alone equivalent model.
What growth strategy has Kaspi.kz outlined post-IPO, and how does it plan to use the funds raised?
Our mission is to improve people’s daily lives by developing innovative, highly relevant, world-class mobile services. We see a substantial growth opportunity as we keep growing by innovating and digitizing more aspects of daily life.
In fact, we have a proven track record of creating new revenue streams. In only the last three years, among other services, we have launched Kaspi Travel, Kaspi B2B Payments and Kaspi Postomats. More recently, we launched e-Grocery and Kaspi Classifieds. These services are in different areas, but all benefit from the powerful network effects inherent to our Super App business model. We also keep developing value-added tools for merchants, such as advertising, new delivery offerings and invoicing products.
We believe digitalization will remain a powerful driver of economic transformation globally, and particularly in Kazakhstan and the surrounding region, where consumers are increasingly demanding digital solutions. Kazakhstan’s social and economic backdrop, namely the country’s young and growing population, rapidly increasing income levels and fast-growing GDP is incredibly supportive.
Our Nasdaq IPO did not raise new funds for the company but was designed to increase stock trading liquidity by attracting a wide range of new, high quality, international investors, most of whom have never invested in Kazakhstan before.
What’s the most exciting upcoming development or project at Kaspi.kz that you are particularly enthusiastic about? Where do you envision the company in 10 years?
We have a proven track record of introducing products and services that have been quickly adopted.
With the opportunities offered by digitalization, the pipeline of our new products remains strong.
We also want to take Kaspi.kz to other markets. Over the long term, our ambition is to serve 100 million users. With our highly scalable, asset-light Super App business model, we believe we can expand into new geographies as quickly and efficiently as we have expanded into new verticals in Kazakhstan.
While you have a strong foothold in Kazakhstan, which regions or segments hold the most potential for you to expand to?
In Azerbaijan we operate the leading classifieds platforms Turbo.az (cars), Tap.az (new and used items) and Bina.az (real estate). Since 2021, we have operated the payments platform Portmone in Ukraine. In Uzbekistan we are invested in Autoelon.uz, a leading car marketplace.
Over the long term, our ambition is to extend our geographical reach and profitably serve 100 million users, up from 13.5 million we currently serve.
Our asset-light, Super App business model is highly scalable and will allow us to expand into new geographies as quickly and efficiently as we have expanded into new business line verticals in Kazakhstan. We regularly review and assess the status of markets in neighboring countries as well as other select markets.
As we expand, our strategy will be driven by our Super App business model, and we will aim to target large addressable and profitable market segments, with the opportunity to scale all our platforms and offer a deep suite of products.
What measures have you taken to ensure the security of data and financial transactions on your platform?
One example is our Kaspi ID biometrics proprietary technology which we use to enable transactions, prevents fraud and provides extra security to our consumers. Face recognition technology also enables transactions in our Super Apps and at our ATMs.
What role do you see AI playing in your business currently and in the future?
This is a very popular question currently but we never jump on the latest bandwagon. In the case of AI, although I like to joke that it’s no substitute for our own intelligence, we have been seeing the significant benefits that it brings over the years.
For example, we developed our AI-powered virtual assistant several years ago and now leverage this powerful tool across many areas of our consumer-facing functions. Even with rapid growth, the total number of our full-time employees has been reduced from 9,310 in 2020 to 7,802 in 2022. Our virtual assistant, “Ruslan,” now does the work of approximately 1,000 employees across multiple functions, saving us approximately ₸5.3 billion (approximately $11 million) annually. I suspect you won’t find many fast-growing technology companies that have been able to reduce their headcount substantially, and “Ruslan” is just one of a growing number of examples of how we are using AI to improve what we do.
The Kazakh government is signaling that it wants to embrace technology, diversify the economy and attract foreign investment. How does Kaspi.kz fit into the emerging Kazakh economy?
Kaspi.kz is at the forefront of the new digital revolution, redefined by our Super Apps. The combination of our scale with consumers and merchants, reinforced by our Super App strategy, puts us in an extremely strong position. With the multi-year structural growth opportunity offered by digitalization in Kazakhstan still ahead of us, we thoroughly intend to capture it.
As Kazakhstan’s first Nasdaq listed company, we are showcasing to the world’s largest investors many of the positives that Kazakhstan has to offer. Over the next couple of years these investors will travel to Kazakhstan, not only to visit Kaspi.kz but to seek out the next wave of high growth and innovative investment opportunities.
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From the author:
The future seems very bright for Kaspi.kz, a super-app focused on providing a super experience for its eager customers, simplifying transactions and engagement in an ever-widening variety of digital areas. Its history-making IPO on the Nasdaq provided inspiration for other Kazakh companies to seek out greater engagement with the global economy. While Kazakhstan’s economic past has often been defined by oil and gas, Kaspi.kz is proving that technology and innovation also flow abundantly through the land.
