# PAGA Case: Ard Financial Group Ard Financial Group’s Comprehensive Digital Payment Platform for Financial Inclusion. ### PAGA Case: Ard Financial Group Ard Financial Group’s Comprehensive Digital Payment Platform for Financial Inclusion. ## Description Ard Financial Group offers a digital payment platform that includes an all-in-one digital wallet with functions such as loans with AI-driven credit scoring, savings products, private pension, real-time investments and trading on the Mongolian Stock Exchange, insurance products, e-commerce, and a mini-apps ecosystem, all tied together by a blockchain-based loyalty rewards system. Ard Financial Group’s platform consists of: Ard App (wallet providing financial services): Introduced in 2018 as the first all-in-one financial application, it enables MSMEs to access financial services even in remote areas through remote self-enrollment and customer verification, using APIs to integrate to the Mongolian government’s systems. ArdCoin: Introduced in 2019, ArdCoin is a loyalty rewards system based on blockchain technology. Customers receive ArdCoins for every transaction within the Ard App, which they can trade on different crypto exchanges. Cross-border payments: Ard started a strategic partnership with the Mongol Post in October 2020, providing cross-border payments capabilities through the international payment networks of Eurogiro. Mongol Post acts like a correspondent bank and does the final transfer of the remittance to ARD’s core banking. Customers present their code for review by Mongol Post. Once the code is verified, Mongol Post transfers the final remittance amount to the customer. Net settlement is done through Swift, once a month. The cash out is done through ARD’s Super App. Customers have to go to Mongol Post to comply with AML requirements (client ID); final verification is face-to-face. e.ard.mn (MSME merchant portal) is a user- and data-friendly smartphone application designed to be accessible even in the most remote areas of Mongolia, with a real-time currency conversion functionality, addressing complex and often unfavorable currency exchange rates. The Ard App allows users to store and exchange between multiple currencies, providing for financial flexibility. Additionally, the incorporation of QR code payment facilitates easy local transactions, further simplifying the payment process for users who may have limited experience with digital currencies and financial tools. The system offers real-time currency conversion with clear, competitive rates, providing users with full visibility into the costs and processes involved in their transactions. ### Territory Mongolioa ### Participants Ard Credit NBFIArd Securities SC LLCArd Assets LLCArd PensionArd AppMongol PostEurogiroGrapeCity LLCMost FintechMerchants ### Year of introduction 2018 ## Impact Increased Financial Inclusion: Reached 95% of nomadic entrepreneurs and herders through Mongol Post’s 300 branches. User base grew to over 1.1 million, approximately one-third of Mongolia's population by 2024. Cost Reduction: Reduced cross-border transaction fees by up to 72%. Traditional SWIFT fees of USD 28-36 per transaction were lowered to approximately USD 10 via Eurogiro through monthly SWIFT settlements. Improved Transaction Speed: Cut processing times from days to minutes, enabling same-day transactions. Real-time financial operations improve business efficiency and cash flow management. Enhanced Transparency: Real-time currency conversion with clear, competitive rates. Unique one-time code system for recipients to collect funds at Mongol Post Branches. Economic Growth: Facilitated international trade and participation in the global economy for MSMEs. Processed MNT 13 billion (USD 4 million) across 5,718 transactions, showcasing the platform’s capability to handle significant transaction volumes. Technological Advancements: Leveraged blockchain, AI, machine learning, and robust cloud infrastructure. Future plans include applications in fraud detection and personalized financial AI advisory systems. ## Challenges During the development, implementation, and monitoring of Ard Financial Group’s transition from a traditional Non-Bank Financial Institution (NFBI) to a Fintech Company, several key challenges were encountered and effectively addressed. This transition provided valuable insights that align with industry standards and regulatory frameworks. As fintech companies in Mongolia became subject to new regulations for local transfers, Ard faced significant compliance challenges. To address this challenge, Ard made substantial modifications to its core banking system. The Bank of Mongolia and the Financial Regulatory Committee (FRC) were crucial for maintaining ongoing adherence to regulations. The Bank of Mongolia and the FRC implemented regulations that prohibited the exchange of cryptocurrency to Mongolian fiat currency (MNT) within the Ard App. This regulatory change necessitated discontinuing Ard’s exchange functionality. In response, Ard diversified cryptocurrency trading options to maintain user engagement while ensuring compliance. Ard demonstrated adaptability by launching iDAX, Mongolia’s first regulated crypto exchange. This initiative provided an alternative platform for Ard App users to trade their ArdCoin loyalty points, showcasing Ard’s commitment to both regulatory compliance and user satisfaction. ArdCoin's native exchange, iDAX, is officially registered as a Virtual Asset Service Provider (VASP) with the Financial Regulatory Commission, allowing it to operate as a crypto exchange in Mongolia and Internationally. Leveraging blockchain technology for customer engagement can drive rapid user acquisition and enhanced transaction security and transparency, which are key factors in building trust in digital financial services. To sustain growth and enhance user retention, Ard integrated various lifestyle products into the Ard App, including e-commerce, ticketing, services, scooter rentals, and Pick n Pay (our buy now, pay later product) merchant services. This diversification strategy aimed to create a comprehensive ecosystem that would keep users engaged with the platform beyond traditional financial services. By diversifying service offerings within a single app, we created a sticky ecosystem, improving user retention and providing multiple revenue streams, which are crucial for long-term sustainability in the competitive fintech landscape.Lessons learned Regulatory Compliance: Adhering to local regulations by discontinuing non-compliant features and launching compliant alternatives, like iDAX. Adaptability: Demonstrating flexibility in operations and services to adapt to changing regulatory landscapes and user needs. Partnerships for Innovation: Partnering with specialized firms (Grape City and MOST LLC) to implement advanced systems and technologies. User Engagement: Launching new features (e.g., blockchain-based loyalty system) and integrating lifestyle products to increase user acquisition and retention. Risk Mitigation: Rapidly adopting new technologies to mitigate risks associated with operational transformations. ## Public materials Facebook Post 1Facebook Post 2 ## Submitter Kherlen MandakhProject Manager, Ard Financial Groupherlen.m@ardcredit.com DisclaimerThe information and examples presented herein are provided for informational purposes only and do not represent the official position or views of the World Economic Forum or the IDB Lab. The World Economic Forum and the IDB Lab do not endorse, recommend, or advocate for the implementation of any specific practices, policies, or approaches described. Rather, this content simply showcases examples and perspectives shared by members of our PAGA Community.