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Financial inclusion in Azerbaijan has improved in recent years through several key financial technology initiatives, Report informs referring to the Asian Development Bank (ADB).
It is estimated that, by 2025, 3.85 million people - approximately one-third of the population - will be using digital payments.
The Instant Payment System (IPS) developed under the central bank’s digital payment strategy, allows for the remote registration of customers and their bank accounts.
"It also enables users to retrieve balance information, maintain accounts, and close them. These operations are based on open banking principles for a secure system where vendors and banks can share account details to facilitate payments. In addition to 19 banks, the IPS platform connects to the Finance Ministry’s State Treasury Agency and the national postal service, Azerpost. Ongoing efforts are aimed at extending IPS coverage and expanding the range of digital solutions available to users. Further innovations include the introduction of 'tap to/on phone' technology and the establishment of an Electronic Knowledge Management System, which improves access to information and ensures remote identification. These initiatives are supported by efforts to develop the legal basis and standards for open finance," the bank noted.
From 2017 to 2021, the value of mobile banking increased by 14.1 times and the volume by 7.4 times. For internet banking, the value rose by 5.1 times and the volume by 2.1 times.
"In addition, banks have expanded the use of tokenization technology and the issuance of virtual payment cards among innovative payment solutions, while four banks launched an Apple Pay project in 2021. Access to bank accounts has been addressed through a 'basic banking services' project implemented in 2021. Bank reforms to develop electronic banking services - including mobile and internet banking, as well as the introduction of innovative payment solutions - have directly influenced financial inclusion.
The 'basic banking services' project offers bank services free of charge, including opening a current account, issuing a payment card, providing access to electronic banking services, and cashless payment operations. This initiative has brought about 1.5 million previously excluded individuals into the financial system. To increase financial literacy, the central bank and the Azerbaijan Banking Association, in collaboration with international financial institutions, produced several educational videos during the COVID-19 pandemic," reads the update.
"These videos were broadcast on local television, websites, and social media, providing guidance on protection against infection while shopping and using banking services, as well as on how to use payment cards effectively during quarantine. During the pandemic, the country’s banks distributed lump sum payments to 600,000 individuals as part of a government countercyclical pandemic response package totaling AZN3.5 billion (about $2.0 billion), which helped maintain economic activities and improve the living standards of the most vulnerable citizens," the bank added.
