Why Timur Turlov is building a diversified ecosystem of financial and lifestyle services
Many companies try to provide their clients with a variety of services these days and if these services meet expectations and satisfy the needs of their customers, a win-win situation is created.
Freedom Holding Corp. is one such company that delivers win-win situations, time and time again. And with their second quarter fiscal 2024 financial report of $436 million in a revenue, a 142% year over year increase, the evidence of their successful strategy of providing a diversified suite of financial services to satisfy their customer’s needs, is abundantly clear.
The ecosystem of financial services under the Freedom brand in Kazakhstan accounted for the lion’s share of this revenue where Freedom Bank earned $388 million, Freedom Finance Global (operating internationally) — $86 million, Freedom Broker (operating in Kazakhstan’s jurisdiction) — $35 million, and Freedom Life and Freedom Insurance — $63 and $18 million, respectively.
How has this ecosystem emerged and why is it growing so fast?
From a simple local retail brokerage grows a multi-national, diversified financial services and technology group…
Freedom was established 15 years ago amid the global financial crisis by former managers of the UniastrumBank led by Timur Turlov. Young professionals in their early 20s, they decided to establish a brokerage company in order to render services to the bank’s clients in the U.S. stock market. Since then, the company has expanded and transformed into an international holding corporations with branch offices in 16 countries in the CIS, Europe, the Middle East, and the U.S. with more than 7,000 employees.
Freedom Holding Corp.’s shares are listed on Nasdaq under the ticker symbol “FRHC” and the security’s price has risen six times since the first day of listing in 2019.
Freedom’s highly diversified financial ecosystem in Kazakhstan is the core element of the organization’s business. It includes: the retail bank; an e-payment system (Freedom Pay); two insurance companies; online airline ticket services; stock brokerages; and a telecommunication operator. According to Turlov, the founder and chief executive officer of Freedom Holding Corp., the business was structured this way for a reason. “The ecosystem is designed to give us more customer touchpoints than any other business in our region. This provides us with a high level of awareness and data which, after in-depth analysis, allows us to more efficiently deploy capital and deliver products and services that our customer’s want and need. Better business products, better services, and a better overall customer experience all contribute the win-win success we strive for in our company and helps us add to our customer base,” he underlined.
It is worth noting that each element of Freedom’s universe is ranked among the leaders of their industries. Freedom Bank, with more than $4 billion in assets, is one of the top eight financial institutes in Kazakhstan and has been rapidly growing thanks to huge demand for its flagship products: digital mortgages and digital car loans.
Freedom Broker is the leader of the stock brokerage in Kazakhstan. Through its branch network of 13 representative offices throughout the country it renders services to 220,000 customers. The company accounts for more than 50% of trading on KASE, the biggest stock exchange in Kazakhstan. “I think it’s safe to say that we have a majority of the market share in the Kazakh region,” said Sergey Lukyanov, chairman of the company’s board of directors.
Since 2020, Freedom has also been developing its international brokerage arm, Freedom Finance Global, in order to facilitate access to leading global exchanges such as NYSE, Nasdaq, and the LSE, for more than 120,000 retail investors.
Freedom Insurance (FI) and Freedom Life (FL) represent the insurance business division of the corporation, with a primary focus on car and life insurance. FL is the only company in the country that processes and pays insurance benefits through the online insurance portal dtp.KZ, a service specially designed for this purpose. According to Azamat Kerimbayev, CEO of Freedom Insurance, this online service has reduced the insurance benefits payment process by 16 times to just five business days.
Currently, Freedom Life accounts for 16% of the life insurance market share in Kazakhstan and the company wants to expand this position significantly by 2028.
After obtaining the necessary licensing from local regulators, Freedom’s contactless e-payment system, Freedom Pay, operates in Uzbekistan, Kyrgyzstan, and Kazakhstan. The company now accounts for every third online payment in Kazakhstan where it processes approximately $250 million in e-pay transactions per month on average.
New additions to the Freedom enterprise are expected to contribute to the company’s future success. Freedom Telecom, the telecommunications operator recently launched by the company, is going to focus on developing affordable fixed and mobile internet by expanding the 5G standard telecommunication network in Kazakhstan. Additionally Freedom has made investments in lifestyle e-services providers such as online air travel agencies, a food-tech/grocery organization, as well as an e-ticketing concert and entertainment group, all designed to enhance the Freedom customer experience.
Several years ago, Freedom decided to develop its international business and has opened branch offices in the U.S., Europe, Central Asia and the Middle East.
In the American market, the company was looking to build a fully functional investment bank that wouldhelp local companies enter capital markets through IPOs and secondary offerings. With this purpose in mind, 2 years ago, Freedom acquired Prime Executions, an American broker with direct access to NYSE. Additionally, in the spring of 2022 Freedom Capital Markets, the U.S. subsidiary of the organization, obtained underwriter and investment banking licenses from U.S. regulators and a few months later, it participated as an underwriter for the public offerings of Intensity Therapeutics (INTS), Beam Global (BEEM), VolitionRx Limited (VNRX), Contango ORE (CTGO) and DayDayCook (DDC).
Freedom’s headquarters for its European division arelocated in Cyprus, providing the company’s customers better access to leading exchanges around the world. Freedom is also considering expanding its footprint to include Azerbaijan, Turkey, and UAE markets where it expects to leverage the experience it has gained in Kazakhstan to offer its most successful products to customers in these regions.
One stop shopping…an all-in-one e-marketplace
Freedom Holding Corp.’s business development strategy is founded on the premise of the synergy created by its diversified product offerings. Support for this strategy is evidenced by Freedom’s rapidly increasing customer base who continue use more and more of the company’s fee-based services, as well as invest in the company’s stock.
“We want to build a fully functional and deeply integrated fintech ecosystem with various banking, telecommunication, and lifestyle product offerings that generate the kind of big data that allows us to continue innovate and build technology and financial bridges,” Turlov said, “we have always been good at building solid bridges; this is our strength,” he concluded.