Kaspi.kz: Re-writing the SuperApp Playbook

The artcile below is my attempt at providing you insights on Kaspi.kz's performance and strategy, based on the discussion with the Founder & CEO, from their HBR publication and the 4Q/ FY 2023 financial results.

Since the start, Kaspi.kz, Kazakhstan's leading fintech and e-commerce platform, has demonstrated remarkable growth across its Payments, Marketplace, and Fintech Platforms. Key highlights include a 51% year-over-year increase in total revenue to KZT1.9 trillion ($4.2 billion) and a 44% increase in net income to KZT849 billion ($1.9 billion) for FY 2023. The company's success is underpinned by its customer-centric approach, innovative product development, and strategic focus on increasing transaction volumes.

My analysis explores the key themes driving Kaspi's success and extracts valuable lessons for aspiring superapps in markets like Saudi Arabia and the wider MENA region.

Introduction

Kaspi.kz's journey from a traditional bank to a technology powerhouse that has transformed Kazakhstan's digital economy offers invaluable insights for the fintech industry globally. Kaspi's success is built on its unique two-sided Super App model – the Kaspi.kz SuperApp for consumers and the Kaspi Pay SuperApp for merchants. This ecosystem approach has enabled Kaspi to achieve impressive growth and profitability, making it a case study worthy of examination for technology companies aiming to replicate its success while adapting to their specific market conditions and cultural contexts.

Key Themes and Performance Metrics

Customer-Centric Approach and Engagement

Kaspi's unwavering focus on customer satisfaction has translated into remarkable engagement metrics:

• Average monthly transactions per active consumer reached a record high of 71 in FY 2023.
• The Kaspi.kz Super App achieved a 65% Average Daily Active Users (DAU) to Average Monthly Active Users (MAU) ratio, among the highest engagement levels globally.
• Active consumers across platforms grew significantly: Payments Platform reached 12.9 million, Marketplace Platform 7.1 million, and Fintech Platform 6.2 million loan consumers.

These figures underscore the success of Kaspi's strategy in creating a highly relevant and frequently used ecosystem of services.

Ecosystem Development and Platform Integration

Kaspi's ecosystem, combining Payments, Marketplace, and Fintech Platforms, has shown strong growth across all segments:

• Total Payment Value (TPV) increased 43% year-over-year to KZT28.4 trillion ($62.5 billion) in FY 2023.
• Marketplace Gross Merchandise Value (GMV) grew 45% to KZT4.2 trillion ($9.2 billion) in FY 2023.
• Total Finance Value (TFV) in the Fintech Platform increased 47% to KZT7.9 trillion ($17.4 billion) in FY 2023.

The integration of these platforms has created powerful network effects, driving both user acquisition and increased transaction volumes.

Innovation in Product Development

Kaspi's continuous innovation is evident in the rapid growth of new products and services:

• e-Commerce GMV increased 53% year-over-year to KZT1.5 trillion ($3.3 billion) in FY 2023.
• e-Grocery GMV grew 3.5x year-over-year in FY 2023, with 10% of Almaty's population using the service in Q4 2023.
• Kaspi Travel GMV increased 53% to KZT353 billion ($0.8 billion) in FY 2023, with the newly launched package tours accounting for 5% of Travel GMV in Q4 2023.

These innovations have not only driven growth but also improved profitability, with e-Commerce Take-Rate increasing to 11% in FY 2023 from 9.4% in the previous year.

Focus on Merchant Services and B2B Growth

Kaspi has successfully expanded its merchant ecosystem:

• B2B Payments TPV grew 2.1x year-over-year in FY 2023, accounting for 4% of total TPV.
• Merchant and Micro Finance reached 15% of TFV in the Fintech Platform.
• The number of active merchants reached 581,000 in FY 2023.

This focus on merchant services has opened new revenue streams and strengthened Kaspi's position in the B2B market.

Financial Performance and Profitability

Kaspi's financial results demonstrate the success of its strategy:

• Total revenue increased 51% year-over-year to KZT1.9 trillion ($4.2 billion) in FY 2023.
• Net income grew 44% to KZT849 billion ($1.9 billion) in FY 2023.
• Payments and Marketplace Platforms accounted for 66% of net income, up from 60% in 2022.

The company's ability to maintain profitability while investing in growth is a key strength, with diluted EPS increasing 45% year-over-year to KZT4,381 ($9.6) in FY 2023.

Learnings for Aspiring Superapps

• Prioritize Customer Engagement: Kaspi's success in achieving high engagement rates (65% DAU/MAU ratio) demonstrates the importance of creating a suite of services that address daily user needs. They prioritized customer satisfaction above all else, using Net Promoter Score (NPS) as their primary KPI. Specific learnings:
• Constantly listen to your customers and respond to it: Implement a robust feedback system like NPS to continuously gauge and improve customer satisfaction. I was suprised (shocked) when during my podcast, Mikhail told me that they discountinued their credit card product (which contributed 1/3rd of the bottom line) as it had a negative NPS scope. Part of getting this part of the playbook right is to create a dedicated team to analyze customer feedback and drive product improvements and ensure that customer satisfaction metrics are tied to employee performance evaluations and company strategy.
• Develop a Comprehensive Ecosystem: The integration of Payments, Marketplace, and Fintech services creates powerful synergies. Aspiring superapps should focus on building a similarly comprehensive ecosystem tailored to their market. The choice is between building your own marketplace or joining one (the choice wont be easy but its an important one)
• Build a two sided model and dont forget to focus on Merchant Services: The growth in B2B payments and merchant financing highlights the potential of serving businesses alongside consumers. Developing robust merchant services can create additional revenue streams and strengthen the overall ecosystem.
• Innovate Continuously: Kaspi's rapid growth in new areas like e-Grocery and Travel shows the importance of continuous innovation. Superapps should constantly explore new services that can leverage their existing user base.
• Invest in Technology Infrastructure: Kaspi's ability to handle increasing transaction volumes (38% growth in FY 2023) while maintaining high performance is crucial. Aspiring superapps must invest in scalable technology infrastructure.
• Balance Growth and Profitability: Kaspi's strong financial performance while investing in new areas provides a model for sustainable growth. Superapps should aim to maintain profitability even as they expand into new services.
• Adapt to Local Market Needs: Kaspi's success in Kazakhstan shows the importance of understanding and addressing local market needs. Superapps in markets like Saudi Arabia should tailor their services to local preferences and regulations.

Conclusion

Kaspi.kz's impressive performance in FY 2023 demonstrates the potential of a well-executed superapp strategy. With revenue growth of 51% and net income growth of 44%, Kaspi has shown that it's possible to achieve rapid growth at scale while maintaining profitability. The company's success in increasing transaction volumes, expanding its merchant ecosystem, and innovating across multiple product lines provides a blueprint for aspiring superapps in other markets.

For companies looking to replicate Kaspi's success in markets like Saudi Arabia, the key takeaways are clear: focus on driving customer engagement through a comprehensive ecosystem of services, continuously innovate to address user needs, develop strong merchant services, and maintain a balance between growth and profitability. By adapting these lessons to their local context and regulatory environment, aspiring superapps can position themselves for success in the rapidly evolving digital economy.

As Kaspi looks towards 2024 with expectations of continued strong growth (around 25% year-over-year increase in net income), it sets a benchmark for what's possible in the superapp space. The company's journey from a traditional bank to a leading technology platform offers valuable insights for fintech companies worldwide, demonstrating the power of customer-centricity, technological innovation, and strategic focus in driving sustainable growth and profitability.