TBC: its entrance, challenges and brought
innovations to Uzbekistan Banking System
The report (case study) sheds light on the process of TBC
entrance to Uzbekistan, challenges this electronic bank
encountered and some benefits (innovation) mostly about
digitalisation of banks that are brought by this entity
TBC came to Uzbekistan as a first digital bank. Being the first in
any field means there are some pros and cons and TBC was not
an exception. Considering the fact that the level of financial
literacy for Uzbek people was quite lower back in 2019 and
even they do not rely on traditional banks in terms of their
money. In this kind of situation, it is not easy for anyone to
enter the competition as an active player, if it is a digital bank
that Uzbekistan population had never seen before, it turns out
to be even more difficult. However, TBC started its operations
quite well and nowadays, has a stable number of clients to run
its operating activities
Below we will analyse three objectives that TBC encountered to
establish a strong digital banking in Uzbekistan
INTRODUCTION
Before giving information about TBC, there is a question to be
answered. Why TBC chose to enter Uzbekistan in 2019/2020?
Georgian Bank TBC Bank Group PLC started planning entering the
Uzbek banking market in the beginning of 2019. In April 2020, TBC
received its licence which allows to operate in Uzbekistan. This was the
first digital bank even operating in Uzbekistan (in the same year,
Anorbank was established too).
Until June 2022, its program was downloaded 2.4 million times. TBC has
10 showrooms (a large area where a company’s products are displayed)
in 9 cities of Uzbekistan and 33 buildings serves as client activating
areas.
In September 2021, European Bank for Reconstruction and
Development and International finance corporation purchased its 20%
shares each for $9.4 million
Shareholders as of September 2022:
TBC Bank Group PLC – 60%
European Bank for Reconstruction and Development – 20%
International finance corporation – 20%
(Source: https://uz.wikipedia.org/wiki/TBC_Bank_(O%CA%BBzbekiston))
What kind of challenges did TBC face in
their entrance to Uzbekistan?
Being the pioneer in a new market
No doubt that Uzbekistan banking system converted from close
banking system to open one. Not only banking sphere, but the whole
economy encountered this. This, in turn, makes Uzbekistan banking
system attractive to foreign financial institutions
TBC was the first and the only digital bank serving in Uzbekistan in the
early 2020. Global pandemics caused by Covid-19 was one of the
factors that triggered its operations. Like delivery services, an online
serving bank became an ultimate solution for people in the era where
people were advised to not step out of their homes
Lack of financial literacy
Even now, the financial literacy level of Uzbek people is not high
enough on average. Back in 2020, even people did not use to believe in
conventional banking, TBC should “teach” them about online/digital
banking advantages, innovation and comfort that is created by them.
Nowadays, TBC is a big player in Uzbekistan banking system despite of
the fact that they tried to “play” in the most unknown type of banking
Current fintech race
Even though TBC was opened as the first digital banking, now there a
few of them in Uzbekistan, such as AnorBank and Apelsin. However,
TBC has higher market share than these digital banks. But the
competition is still alive and all of them are trying to be a
technologically-rich bank to survive in this fierce competition
(Sources: Financial Inclusion, Regulation, and Literacy in Uzbekistan |
Asian Development Bank)
Case Study: The Impact of TBC on Uzbekistan’s Banking
System
Quick Intro
TBC is a digital bank that started in Georgia, and around 2020 they decided to enter the Uzbek
market. But instead of doing things the old-school way with offices and paper forms, they
launched TBC UZ – a digital-only bank. Basically, they were like, “Hey, you can do everything
from your phone now.” And for Uzbekistan, where people were used to waiting in long lines at
banks, this was something new and kind of exciting.
Before TBC showed up, most of the banks in Uzbekistan were old-school, mostly owned by the
government. Services were kind of slow, and customer service wasn’t always helpful. Even
though a few banks had mobile apps, they weren’t great – sometimes they didn’t work properly
or didn’t have many features.
Because of that, a lot of people (especially young people and small businesses) didn’t enjoy
using banks much. Doing simple things like opening an account or getting a loan took a long
time and lots of paperwork. Basically, going to the bank felt like a chore.
TBC Steps In
When TBC came to Uzbekistan, they brought something fresh. Right away, people noticed how
easy it was to start using it. You could open a bank account on your phone, without going
anywhere. The app was simple, fast, and didn’t look or feel like a typical bank.
One cool feature was their instant microloans. You didn’t need to wait days or talk to bank staff
– you just pressed a few buttons in the app, and boom – the money was in your account. This
was a totally new experience for people here. Freelancers, students, and small business owners
really liked it.
It Wasn’t All Perfect Though
Even though TBC did a lot of good things, they still had some challenges. For one, not everyone
in Uzbekistan has internet or a smartphone, especially people in rural areas. So TBC couldn’t
reach everyone right away.
Another issue was the laws. Uzbekistan has pretty strict banking rules, so TBC had to work
closely with the government and the Central Bank to stay legal. That probably slowed them
down a bit in the beginning.
For example, TBC couldn’t just start offering loans or opening accounts right away – they had
to first get a special license from the Central Bank of Uzbekistan, which took time. They also
had to build a local IT system that followed all Uzbek data protection laws, meaning all
customer data had to be stored inside the country, not on servers in Georgia or elsewhere.
Another rule was about currency exchange and international transactions. In Uzbekistan,
banks need to follow strict rules for converting currencies and sending money abroad. TBC had
to make sure their app followed those limits exactly, otherwise they could get in trouble.
And of course, like all banks here, they had to follow anti-money laundering and know-yourcustomer (KYC) regulations. That meant setting up systems to check people’s ID properly
before giving loans or opening accounts, even though everything was digital.
So yeah, they couldn’t just launch and go crazy with features – they had to move step by step,
while staying inside the rules.
Also, older people are still used to doing things the traditional way. Many of them prefer going
to the bank and talking to someone face-to-face. So it’s not so easy to change everyone’s habits.
https://www.tbcbankgroup.com/news-and-media/press-releases/news/2020/tbcobtains-preliminary-banking-licence-in-uzbekistan
The Numbers Say a Lot
By 2023, TBC UZ had over 2 million users – not bad for a digital-only bank with no physical
offices.
They also gave out millions of dollars in microloans, and most of them were approved in just a
few minutes. That kind of speed was really new for our country.
Reviews online are mostly positive. People like how fast and easy the app is, and how they can
do most things without needing help.
Problem
According to the cbonds.com the rating of TBC UZ is went down to its
worst level (BB-), (Fitch Ratings affirmed the "BB-" LT Int. Scale (foreign
curr.) credit rating of TBC Bank (Uzbekistan) on December 13, 2024. At the
same time the rating agency revised outlook to negative from stable.)
according to the economic rating companies this rating is considered as
a non-investment grade. TBC Group workers says that it is not a big
deal (tbcgroup.com), however the main reason for that was not enough
capital in bank then the amount of money they lend from clients as a
deposit. So main risk in here is that when all clients try to get back their
sweet money back due to some negative news or unexpected
situations the bank go bankruptcy. That’s it, this is a problem in simple
words.
Solution
To tell the truth I do not know exact solution for that controversial
issue, but I think that they have to attract more foreign investors as
much as they can even it is hard and obvious. Another best solution in
my mind is specifically for TBC case. As far as they are banking as a
service company and online service, thy have to provide new services
which are profitable, by not losing client but by finding some. That’s it
what I want to say now
Conclusion
In conclusion, the whole world was facing with globalisation and
digitalisation, and Uzbekistan had to go with the tide. We need an
initiative and it was TBC, as we said above “TBC changed the game”
After the entrance of TBC and people started having comfort using
digital banks, a lot of banks in Uzbekistan created their own designated
apps that let them to operate as a digital bank to some extent
TBC Bank entered Uzbekistan at a time when the country was opening
up its banking system. They were the first digital bank, and that gave
them a big advantage in the banking system, especially during COVID19 when people were not allowed to go outside. Their well-designated
app, fast services, and online loans made life easier for many people.
They also helped people understand money better through tips and
education. Because of TBC, other banks in Uzbekistan had to improve
and offer better digital services
But there were challenges too. In 2020, many people didn’t trust banks
or know much about digital banking. TBC had to earn their trust and
teach them. Also, laws and rules in the country were tough, and not
everyone had smartphones or internet, especially in villages. Now, they
face strong competition from other digital banks like Apelsin and
AnorBank
In 2024, their credit rating went down to BB-, which is not a good sign
for a bank. The main reason is they gave out more loans than the money
they had in deposits. If something bad happens and everyone wants their
money back, the bank might go bankrupt
To make it correct, TBC should attract more foreign investors and offer
new, smart services to grow withoyr any possible danger