Voice of the Industry

The cornerstones of fintech advancements in Ukraine

Tuesday 5 September 2023 09:34 CET | Editor: Oana Ifrim | Voice of the industry

Amidst challenges faced by prominent Ukrainian economic sectors, the fintech industry boldly advances domestically and internationally. What propels its growth? Rostyslav Dyuk, Chairman of the Board of the Ukrainian Association of Fintech and Innovation Companies, provides key insights.


At the beginning of the full-scale invasion, many people in Ukraine feared the collapse of the country's financial system. However, this did not happen, largely attributed to the effective fintech solutions forged in recent years. What exactly enabled the fintech breakthrough in Ukraine in the late 2010s and early 2020s? Five pivotal catalysts can be discerned, and this roster could potentially expand with the addition of another factor, Open Banking, contingent upon the adoption of requisite legislative modifications. Now more details about each of them.

Driver 1. Ecommerce

Let's begin with the statistics. According to the Ukrainian Association of Fintech and Innovative Companies, which I head, from 2017 to 2021, ecommerce in Ukraine grew by an average of 16% every year against 4% growth of Ukrainian GDP (the global indicators for the same period correspondingly demonstrated the growth of 17% and 5%). We expect this trend of ecommerce growth to continue in the coming years.

This, in turn, increases the role of ecommerce in GDP. In 2017, the share of ecommerce in Ukraine's GDP was 11%, in 2021 – 17%. Analysts of our association predict that this figure in 2024 will be 24%. If you compare the ratio of ecommerce and GDP in the world and Ukraine, the Ukrainian indicators are twice as large as the global ones. Another feature is a fairly high share of ecommerce in the retail turnover of Ukraine. In 2019, this figure was 27%. For comparison, it was 9% in Germany, 11% in the USA, 22% in Great Britain, and 35% in China (the 2019 data).

Driver 2. P2P transfers

P2P transfers (`person-to-person`) in Ukraine are better known as card-to-card transfers. According to the National Bank of Ukraine, this segment in 2017-2021 showed a huge average annual growth rate of 57%! At the same time, the number of transactions increased more than six times – from 142 million in 2017 to 894 million in 2021.

Card transfers are very often used by Ukrainians when making online purchases. For entrepreneurs, this payment method for delivered goods often aids in tax reduction. Transfers and donations to volunteers were added to ecommerce payments after 24 February 2022. For P2P transfers, Ukrainians most often use the services of two banks: PrivatBank (state-owned from December 2016) and Monobank (the first Ukrainian neobank).

Driver 3. Neobanks and Internet banking

The inaugural neobank (or virtual bank) emerged in Ukraine in 2017 as Monobank, which currently serves 7 million customers. Currently, five neobanks are operating in Ukraine: Monobank, Sportbank, Izibank, Bank Own Account and Neobank. So far, only Monobank has passed the break-even point. This segment of the fintech market will also grow in the near future.

Digitalisation has not bypassed classical banks either. Trying to increase the number of their customers, they are actively implementing and developing their own internet banking systems. Some of them are very similar to neobanks in terms of their functionality and coverage. Privat24 from PrivatBank remains the traditional leader in this segment. Internet banking systems from other banks such as PUMB, Sense Bank and A-Bank are also becoming increasingly popular.

Driver 4. Credits

In recent years, microcredits have experienced substantial growth in Ukraine, particularly through fintech platforms. While loans from fintech platforms constituted only 5% of all personal loans in 2013, this indicator reached the level of 39% in 2019. This shift underscores Ukrainians' increasing familiarity with this lending approach.

What did the war change in this segment? First of all, financial companies operating fintech lending platforms and neobanks needed an additional assessment of the borrower's credit risk, as some people have lost their jobs, while others residing abroad. The average size of the loan issued online also decreased from UAH 4,200 in 2022 to UAH 2,700 now. At the same time, the average amount of the loan issued offline increased from UAH 6.4 to UAH 9.9 thousand, respectively. Despite these negative trends, the online credit market will continue to grow. This will be facilitated by the gradual recovery of the economy in the territories unaffected by conflict,  along with an increase in the volume of ecommerce.

Driver 5. Cryptocurrencies

Almost everyone in Ukraine is discussing crypto in Ukraine, despite the topic's ambiguity. Warren Buffett considers cryptocurrency a `financial bubble`, while another famous investor – Robert Kiyosaki – on the contrary, believes in its prospects, especially for money savings. Time will tell who is right. Meanwhile, digital currency significantly captures the attention of Ukrainians. In recent news, Ukraine has secured a position in the Top 10 countries globally, showcasing the highest levels of interest in cryptocurrency. Moreover, Ukrainians are also establishing crypto exchanges such as WhiteBIT and KUNA. This keen interest is closely monitored by state regulators, including the National Bank of Ukraine and the National Securities and Stock Market Commission of Ukraine, that have been trying to regulate the digital currency market in Ukraine for many years.

Driver of the future. Open Banking

This tool has yet to be implemented in Ukraine. The opening of the Open Banking market will definitely serve as an additional driver for fintech advancement within the nation. It is still too early to talk about precise statistics, as our state needs to prepare the legislative framework for this innovation. In 2022, the `On Paid Services` law entered into force, marking the initial stride. This is followed by the National Bank of Ukraine (NBU) crafting the implementation concept for Open Banking, along with relevant specifications and by-laws. In 2025, the NBU plans to launch the first Open Banking pilot.

About Rostyslav Dyuk

Rostyslav Dyuk is Chairman of the Board of the Ukrainian Association of Fintech and Innovation Companies. Rostyslav has over 15 years of experience in the financial and banking sector, including C-level positions at banks. Now he's heading the board of the Ukrainian Association of Fintech and Innovation Companies. Before founding the association, he has been working as Team Lead for the USAID project "Financial Sector Transformation" for two years and was responsible for Digital Finance. Also, he is a member of the Social Council and the chairman of the Committee on Fintech of the Ministry of Digital Transformation of Ukraine, the author of the first Ukrainian Fintech Catalogue and Map of the Ukrainian Fintech Ecosystem, ideologist of UAFIN.TECH - the largest Fintech conference in Eastern Europe and the CIS region, an expert of the Ukrainian Startup Fund.

About Ukrainian Association of Fintech and Innovation Companies (UAFIC)

Ukrainian Association of Fintech and Innovation Companies (UAFIC) is a non-profit organisation that develops the fintech ecosystem and increases the level of financial inclusion in Ukraine. It unites government structures, classical businesses, startups, investors and communities. The association, which has more than 60 members, started working in June 2018.


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Keywords: fintech, Open Banking, digitalisation, ecommerce
Categories: Banking & Fintech
Countries: Ukraine
This article is part of category

Banking & Fintech

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