Konstantin Tserazov: Fintech in the CIS Countries - The Competition for Talents

Are the CIS countries on the brink of a fintech revolution or struggling to keep up with global trends? Konstantin Tserazov, a seasoned economist and former Senior Vice President of Otkritie Bank, delves into the dynamic landscape of fintech in the CIS region. He explores the fierce competition for talent, the economic and technological challenges, and the unique opportunities that lie within these nations. From Russia's booming stock market and government support to Kazakhstan's strategic positioning and Uzbekistan's young digital workforce, Tserazov paints a comprehensive picture of a region at a critical crossroads in its fintech journey.

The CIS countries have a shared history rooted in their Soviet past, which continues to influence their strong economic ties today. The Eurasian Economic Union (EAEU), encompassing Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia, boasts an aggregate GDP exceeding $2.5 trillion and a population of more than 185 million, with Russia as the pivotal force in terms of both population and economic output.

Migration within these countries is intense due to the common labor market, fostering significant fintech business and startup activities as companies strive to attract a diverse pool of talents. Notably, in 2022, a significant number of young professionals, particularly in IT and fintech, relocated within the region, accelerating digital infrastructure developments in Armenia, Kazakhstan, and Kyrgyzstan. This migration has increased the demand for digital services and fintech solutions, particularly those facilitating money transfers to and from Russia, and has given a notable boost to online trade and banking.

Despite the sanctions imposed by the West, Russia remains attractive for foreign workers in the tech sector. The country has adapted by enhancing its digital services, such as Gosuslugi and Multifunctional Centers, which simplify various administrative processes. Governmental support, including tax breaks and preferential mortgage programs for IT and fintech professionals, has lured some Russians back from abroad. Moreover, the sanctions have inadvertently boosted the Moscow stock market, with significant gains in 2023 emphasizing investor confidence in local projects.

Still, Russia faces a considerable deficit in fintech specialists. The government has started to reform immigration laws to streamline the recruitment of foreign experts, aiming to make the process more digitally transparent to better manage and protect both the economy and the migrants.

While all CIS countries share historical and economic bonds, some are actively developing economic and logistical ties beyond their traditional sphere. For instance, Azerbaijan is increasingly aligning with Turkey, and Kyrgyzstan is strengthening its ties with China. Armenia, under Prime Minister Nikol Pashinyan, is pushing for closer cooperation with the EU and the USA, with a notable high participation of women in the fintech sector.

Kazakhstan presents a unique case; it is not under Western sanctions like Russia and is thus free to enhance its economic relationships with both Western and Eastern powers. It plays a strategic role within the Organization of Turkic States, working to establish a digital customs corridor that could streamline trade across the region.

The CIS countries face challenges in recruiting fintech talent due to language barriers and cultural mismatches between traditional employment expectations and the dynamic, often unstable, startup environment. Additionally, while fintech salaries in these countries might seem competitive given the lower cost of living, they generally do not match the levels expected in more developed economies, which can deter talent retention and attraction.

Moreover, the CIS's technological reliance on imports—from semiconductors to data center equipment—hinders its ability to compete on a global scale, necessitating a stronger domestic industrial base to support the fintech sector and justify higher wages.

Uzbekistan is leveraging its young, digitally skilled workforce to advance its fintech sector, offering salaries that are attractive both locally and to expatriates, contrasting with the generally modest pay outside this industry across the region.

In summary, while the CIS countries hold strategic advantages and significant human capital, substantial challenges remain. Each nation needs to capitalize on its unique strengths and address its specific hurdles to effectively compete in the global digital economy and attract the necessary talent to thrive in the fintech industry.