Some fintech companies operating in Azerbaijan could surpass individual banks in certain service segments within two to three years, the chairman of the Azerbaijan Fintech Association (AzFina), Edgar Abdullayev, told Report in an interview.

Abdullayev, who also serves as head of United Payment Azerbaijan, cautioned that no single fintech firm is yet positioned to overtake a bank outright, pointing to the short regulatory history of the sector. Licensed fintech operations in Azerbaijan only began in May 2024, while banks have accumulated decades of financial and institutional experience, he noted.

Nevertheless, he said the regulatory environment being shaped by the Central Bank of Azerbaijan (CBA), including a sandbox regime and the planned development of open banking infrastructure, is laying the groundwork for competitive disruption. "In the most optimistic scenario, two to three years would be required for this to materialise," he told Report. Under a fully operational open banking system, users would be able to manage accounts held across multiple banks and electronic money institutions through a single platform, which Abdullayev said would significantly broaden cooperation prospects across the financial market.

He also identified the mygov e-government platform as a key enabler, arguing that its wider application would carry weight beyond financial transactions. Biometric identification and know-your-customer (KYC) procedures conducted through a unified electronic platform would be particularly significant, he said, adding that once such capabilities are fully in place, the probability of fintechs surpassing banks in specific service areas would increase materially.

Among the most promising near-term opportunities, Abdullayev pointed to buy now, pay later (BNPL) services, which he said could be introduced in Azerbaijan as early as next year. He acknowledged, however, that local fintechs are not yet fully prepared to offer such products at scale. "Our capacity to conduct scoring comfortably and implement this model has not yet expanded sufficiently," he said, noting that broader open banking access and stronger integration with state information systems would be prerequisites.

He specifically cited the need for full integration with the Centralised Credit Registry, mygov, and the interagency automated information retrieval system (IAMAS) before fintechs could reliably offer on-the-spot microcredit and BNPL products. Such capabilities, he added, could also give fintechs a competitive advantage relative to banks.

Abdullayev further flagged InsurTech, combining insurance and fintech services into bundled offerings, as another avenue for market expansion. He emphasised that the success of all these initiatives depends primarily on the formation of a functioning open banking ecosystem.

AzFina, established in December 2020, regularly submits fintech sector development proposals to the CBA, which Abdullayev said maintains close cooperation with the industry.