Uzbekistan’s only mobile-exclusive bank, TBC Bank Uzbekistan, owned by London Stock Exchange-listed TBC Bank Group, has raised $38.2 million in a fresh equity investment. It plans to expand its local presence in the country and introduce new financial products, as well.

TBC Bank Group has led the latest funding in TBC Bank Uzbekistan by infusing $23 million, while shareholders European Bank for Reconstruction and Development (EBRD) and World Bank’s International Financial Corporation (IFC) have participated in the round by investing $7.6 million each.

After serving customers in Georgia, TBC Bank Group decided to expand outside that country’s borders in 2019 and found Uzbekistan as its first international market. The bank started its Uzbekistan operations in 2020 through a separate entity, TBC Group Uzbekistan, which launched the mobile-only bank after its debut, with no physical branches in the country. The plan was to leverage Uzbekistan’s increasing digitization effort and foresee business growth in the country, which has the biggest population after Russia and Ukraine in the region — the second-largest among all the Commonwealth of Independent States countries — and has upright economic and socio-demographics.

“Before TBC came in, there were no banking apps in Ukraine … Fast forward four years, most of the banks have got a mobile app, but TBC is far ahead of the field,” said Oliver Hughes, head of international business at TBC Group, in an exclusive interview.

According to official data, Uzbekistan has a 70% smartphone penetration rate and 77% internet penetration rate; 59% of its population of 37 million is under 30 years old, making it a viable market for a mobile-specific business.

TBC Bank Uzbekistan offers a mobile app through which customers can open bank accounts and access services including cash loans and deposits. This omits the requirement of physically going to a bank branch to access banking.

Hughes told TechCrunch that a couple of years ago, customers in Uzbekistan typically had to visit their bank and stand in a queue to get any of their banking work done.

Alongside the mobile-only bank, TBC Group Uzbekistan owns Payme, the digital payments app for individual users and small businesses, as well as the Sharia-compliant credit business, called Payme Nasiya. To broaden its coverage, it looks to integrate some experiences from these two businesses within the bank or sync them with the bank’s operations.

For instance, through its app, TBC Group Uzbekistan will offer tips, recommendations and user-generated content on local events, entertainment, concerts and travel to provide complementary services that are not strictly financially related. Some of these features will first arrive on the Payme app but will be available to the TBC Bank Uzbekistan customers over time.

Similarly, Payme Nasiya currently serves Uzbek customers with its point-of-sale and installment loans. To expand the credit business, it will introduce e-commerce and offline buy-now-pay-later. This is expected to attract more local businesses and eventually help the mobile bank gain more customers.

In addition to the new financial products in the pipeline, TBC Group Uzbekistan plans to bring AI experiences to its mobile bank. Hughes told TechCrunch the group has built a large language model predominantly using its customer dataset and is working on a voice assistant to deliver banking and financial services through a chatbot integrated within its app.

In the fall, TBC Bank Uzbekistan will use the fresh funding to add credit cards and an insurance product next year, Hughes said.

The bank’s roadmap includes additional services such as current accounts, as well as accounting, offline payments, e-commerce payments and lending specifically for small and medium enterprise customers, Hughes added.

“This investment will allow us to further capitalize on the immense opportunities in Uzbekistan, a fast-growing country with a population of over 37 million people where TBC UZ continues to leverage its growth momentum,” said Vakhtang Butskhrikidze, CEO of TBC Bank Group, in a prepared statement.

At the end of 2022, TBC Bank Uzbekistan broke even, and 2023 was the bank’s first full year of profit. As of March 2024, the bank had a user base of 4.8 million unique registered users. It also recorded monthly active users of 1.2 million in the first quarter of 2024.

Overall, TBC Group Uzbekistan, with a registered user base of 15 million users, reached profitability two years after launch and recorded 85% year-on-year revenue growth in the first quarter of this year. The company achieved gross loans of $296 million and deposits of $216 million through all three of its subsidiaries. Its net profit hit $23 million for the financial year 2023, most of which came from Payme. However, TBC did not disclose the mobile bank’s revenues or profits.

“TBC UZ’s impressive growth trajectory and innovative approach align with our mission to support sustainable economic development in the region,” said Andi Aranitasi, Head of Uzbekistan, EBRD.

Hughes said that by 2025, TBC Group Uzbekistan is projected to generate $75 million in net profit, most of which would come from TBC Bank Uzbekistan.

“We are encouraged with the progress TBC UZ has made so far and remain confident in its potential to contribute to economic growth and financial inclusion in Uzbekistan,” said Neil McKain, Country Manager, Uzbekistan, IFC.