ADB names Azerbaijan fintech leader in CAREC region

Azerbaijan has emerged as one of the leading countries in fintech development in the Central Asia Regional Economic Cooperation (CAREC) region, the Asian Development Bank (ADB) said on Tuesday.

Report informs, referring to ADB, Azerbaijan ranks first in CAREC for institutional capacity and second – after China – for technological development. The bank said these indicators signal the country"s ability to accelerate capital market growth in a short period by leveraging fintech solutions along with existing regulatory and business frameworks.

Fintech technologies, the ADB noted, can boost the efficiency of traditional capital markets and enable alternative financing platforms. Despite limited experience in regional financial cooperation, Azerbaijan is expected to take a leadership role by fully utilizing its technological and institutional potential.

Potential initiatives cited by the bank include creating a regional fintech passport, establishing a regional regulatory "sandbox" and fintech community, harmonizing digital identification regulations, and developing cross-border payments using distributed ledger technology (DLT) and similar solutions.

The ADB stressed that regional cooperation is crucial for accelerating capital market development within CAREC, as it helps create broader, more liquid markets where companies can access efficient financing sources and investors can find productive opportunities. It also supports risk management amid financial globalization and integration.

Key strategies for regional fintech cooperation include developing payment systems and money transfers, integrating capital markets, and coordinating cross-border fintech regulation and supervision.

However, the ADB cautioned that developing capital markets remains a complex, long-term task requiring coordinated policy across multiple areas. While fintech and regional collaboration can accelerate progress, structural limitations may slow change, and a phased, strategic approach could take 10 to 20 years depending on the country.