From Central Asia to the world: Digitalization drive pushes new biometric startups
Nestled between large countries such as India, China and Russia, Central Asia has long suffered from poor connections — both physically and digitally. But over the past years, the region has been investing in its digital infrastructure, including its biometric industry with startups now expanding across the world.
A big impetus for this was the COVID-19 pandemic which hastened the introduction of digital services. But the region is also seeing attention rise for domestic products after Russia’s invasion of Ukraine.
Central Asia used to be the default market for Russian companies, including facial recognition firms such as VisionLabs or Ntechlab, says Uakhat Bastimiyev, co-founder of Kazakhstani biometric verification provider Verigram.
“In our region, we have a big impact from companies from Ukraine, Belarus and Russia because we are near them and historically, we’re ex-USSR countries,” he says.
But as sanctions and increased scrutiny hit many Russian technology companies, the financial sector in Central Asia has turned towards local solutions. Verigram is now trying to compete with big names, Bastimiyev adds. Its algorithms have been assessed by NIST, and are in the top 10 in the wild category as of April 21.
With 70 million people interspersed across five countries, the region is relatively small and crowded. But thanks to public sector investment in e-government projects, the biometrics industry has been rising.
The regional leader is Kazakhstan which ranks 28th in the UN E-Government Survey 2022 with the highest EGDI (E-Government Development Index) values. The country aims to be among the top 30 developed countries in the world by 2050.
“As a country, we’re pouring a lot of money into so-called e-government,” says Bastimiyev.
In 2020, the National Bank of Kazakhstan launched a remote biometric identification service allowing citizens to access commercial financial services. The launch allowed banks to open accounts remotely for crediting social benefits during the pandemic. About 2.5 million Kazakh citizens can now access over 400 public services through the eGov Mobile application only using biometrics.
Biometric technologies have also become widespread in the banking sector. With the help of the business sector, the country has moved towards a cashless economy, with more than 74 percent of transactions now being cashless.
Although lagging behind Kazakhstan, other Central Asian countries are also investing in digital strategies. The Digital Kyrgyzstan 2019-2023 strategy plans to provide 80 percent of public services online. Among the last in the region to follow in digital public services investment was Uzbekistan, which launched its Digital Uzbekistan 2030 strategy in 2020. It plans to digitize all of its government services by 2026.
More investment into digital services may come from global players: While China is expanding its presence with its Digital Silk Road strategy, the European Union has been promoting digital cooperation through the EU-Central Asia Digital Connectivity initiative. The World Bank has been working on digital infrastructure through its Digital CASA Regional Program and the Eurasian Economic Union (EAEU) is carrying out its Digital Agenda until 2025.
Companies like Verigram are now expanding from Kazakhstan to other countries. Alongside striking cooperation deals with a local division of Dutch telecommunications giant Veon, Japan Tobacco International (JTI) and Cisco, Verigram has expanded into neighboring countries such as Kyrgyzstan and Uzbekistan. The company’s next stop is South-East Asia where it is already conducting pilots.
“We’ll probably go a little further with Uzbekistan because right now it’s having a kind of boom in a lot of economic sectors and financial industry but last year, we also started to think about going global and becoming an international company,” says Bastimiyev.