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What's the story behind one of the largest fintechs in the world? For his first-ever podcast in English, I interviewed Mikhail Lomtadze, CEO of Kaspi.kz (NASDAQ:KSPI), a $24 billion behemoth traded on the Nasdaq and the leading tech platform in Kazakhstan.
Not only are they very innovative, but they also have incredible numbers. Kaspi serves 15 million customers, in a country with a population of 20 million; 2/3 of their clients use them daily; 2023 revenue was $4.2B with net income margin of 45%, and they’re growing at ~50% YoY.
In this episode, we discuss:
Transforming a bank into a leading tech giant
“If tech companies can do financial services, who said that financial services cannot do tech?”
In the early 2010s, Kaspi.kz embraced a bold vision inspired by the growing threat of big tech companies making inroads into financial services products. Although the Kaspi team was at the time running a bank, none of the company leaders were career bankers and they decided to leverage their outsider perspective to roll out essential online services and technology to reimagine Kaspi.kz not just as a bank, but as an e-commerce and payments company. They launched a company-wide transformation, committing to cutting edge product innovation, prioritizing the quality and appeal of their services to build a loyal customer base.
Kaspi’s obsession with customer service, product development, and Net Promoter Score
“If you plan to be launching new services, it's important that your current consumer base loves your products. Because if your current consumers don't love your products, then anything new you launch is going to be a disaster.”
Central to Kaspi's transformation was a relentless focus on customer satisfaction, measured meticulously through Net Promoter Scores (NPS) at every step of the way. The focus on NPS continues to this day - in 2024, around 300,000 users are contacted and surveyed monthly with the sole company goal to act on their feedback and ensure high-quality product development. The company has also implemented an organizational structure where small, dedicated teams are each led by a directly responsible individual who manages every aspect of their respective product. The goal of this approach is to cultivate accountability, ownership, and startup-like agility within the company to always be driving for improvement and innovation. Interestingly, most managers at Kaspi do not have financial targets as part of their quarterly or yearly objectives, instead they are measured on NPS levels of customer satisfaction as the primary metric.
Turning customer feedback into products
“There's so many services in just one single application, that there are pretty much no companies that would be comparable to Kaspi.”
Every new product at Kaspi begins with a "three-pager" document written in simple language that anyone can understand. This document is paramount within the company culture and it outlines the current consumer experience, the anticipated changes, and addresses the top ten questions a consumer might have. By putting themselves in the consumers' shoes during this initial phase, the team aims to uncover insights that drive better product design and development. Once the concept is clear and validated internally, the team moves on to prototyping, testing the product extensively within their own team, and conducting consumer reviews. This new product process ensures that by the time the product reaches the market, it is well-aligned with consumer expectations and needs.
Additionally, product launches at Kaspi are approached with a philosophy of drastic simplification. Instead of overwhelming consumers with a fully-featured product from the start, Mikhail's team identifies the single most important and necessary feature and releases it first. Additional features are introduced incrementally in the following months, leading to an iterative approach that allows the team to gather and incorporate consumer feedback continuously, ensuring the product evolves based on actual user experience and needs.
Mikhail’s background from humble beginnings in Georgia to Harvard Business School, to CEO of Kaspi
“Everything we had went into our education. We didn't have food on the table, but I always had a teacher. I would have secondhand clothes, but I definitely had a teacher.”
Growing up in the Republic of Georgia, a small Central Asian nation, Mikhail Lomtadze experienced a childhood marked by financial constraints, yet his parents prioritized education above all else. Despite limited resources, his family ensured he always had access to teachers, even if it meant wearing secondhand clothes. It is clear to me that this strong focus on education instilled in him a deep desire to learn and a strong sense of responsibility to succeed, which continues to be a driving force throughout his life. Despite his professional success in Kazakhstan since 2006, his ties to Georgia and his family remain strong.
The amazing story of Kazakhstan’s digital transformation and how digital payments replaced cash from 15% to 85% market share in just eight years… and a lot more!
“In 2015, cashless payments were ~15% of payments in Kazakhstan. Now, it's vice versa. Now 85% of all payments are cashless.”
Over the last decade, Kazakhstan has emerged as a leader in cashless payments, experiencing a dramatic shift from 15% cashless transactions in 2015 to over 85% today. This incredible swift transition was driven by the development of robust mobile services and payment solutions, spearheaded by companies like Kaspi.kz. The supportive legal framework and easy access to talent in Kazakhstan have further accelerated this transformation, positioning the country at the forefront of digital payment innovation.
Mikhail also attributes the success of Kazakhstan's digital transformation to the strong collaboration between government entities and private companies. For instance, services like transferring car ownership and paying taxes have been streamlined through digital solutions, thanks to private industry partnerships with the government. These highly convenient government services have led to widespread adoption of digital products, making life significantly easier for Kazakhstani citizens and setting an enviable benchmark for digital innovation worldwide.
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Mikhail Lomtadze, Kaspi.kz CEO - Building a $24Bn Tech Titan, From Kazakhstan to the World