Turning the Tides: Revolutionizing Payments in Kazakhstan
Exploring the Driving Forces of Kazakhstan's Open Banking Movement
Hop on this fascinating journey as we explore Kazakhstan's ambitious venture into digital payment reforms, particularly open banking. Let's sit down with Binur Zhalenov, the chief digital officer at the National Bank of Kazakhstan (NBK), for a thrilling chat about the Nation's vision and AI's role in reshaping its financial landscape.
Binur Zhalenov, a Bolashak scholarship graduate and the chair of the National Payments Corporation, joins us for an insightful interview on The Astana Times YouTube channel.
Open banking is more than just a buzzword in Kazakhstan - it's a standardized exchange of financial data between various financial institutions and third-party providers, all with the customer's consent. This secured exchange is made possible by Open APIs (application programming interfaces).
Right now, around 100 countries are exploring open banking at various stages, with Kazakhstan being no exception.
Creating the Digital National Bank
Open banking is an integral part of the digital strategy endorsed by the NBK in 2024, aiming to build a Digital National Bank with five key pillars:
- Establishing a National Digital Financial Infrastructure
- Implementing Supervisory Technology with AI and machine learning for strengthened financial institution oversight
- Unifying the entire technology stack to made data-driven decisions at the central bank
- Driving internal digital transformation and adopting agile working practices
- Achieving banking sector efficiency via open banking and a more competitive financial ecosystem
During a recent government presentation, Zhalenov showcased the vision behind the national digital financial infrastructure.
Simplifying Financial Transactions
The national digital financial infrastructure is envisioned as the smooth "payment rails," encompassing card payments, seamless peer-to-peer transfers, and QR codes. From cashless transactions to mobile banking applications, the progress in Kazakhstan has been tremendous, with around 86% of transactions being digital.
Regulation and interbank infrastructure have enabled healthy competition in the market. As a result, financial institutions are encouraged to innovate, offering customers a delightful experience while keeping them within their respective ecosystems.
Empowering Consumers
The ultimate goal for the NBK is to give consumers greater control over their finances by making it simpler, quicker, and cheaper to transfer funds between banks. Current processes can be cumbersome, so it's essential to eliminate these barriers, allowing customers to freely switch between banking ecosystems, fostering a more competitive, innovative, and affordable market.
These ambitions are being achieved through three components:
- Interbank payments advocate for faster, cheaper, and more accessible transactions between banks
- QR payments will expand their reach beyond bank-specific terminals to simplify transactions for users
- Account aggregation allows customers to view accounts across banks, providing greater control and flexibility
As technology advances, Kazakhstan is poised to expand its open banking capabilities in 2025, making interactions more integrated and sophisticated. The full implementation of peer-to-peer mobile transfers and QR payments is slated for this year.
Data Privacy and Security
As the Nation embraces digital transformation, data privacy concerns are at the forefront. To address these issues, the NBK focuses on stricter regulation and enhanced technology. A new banking law is in development, which will include a dedicated chapter on data privacy and protection. In addition, the NBK partnered with law enforcement agencies to launch the Anti-Fraud Center, designed to combat fraudulent activities and act as a shared fraud-alert system among financial organizations.
AI and the Future of Fintech
AI is poised to revolutionize the way financial services operate. In Kazakhstan, the NBK is exploring more than 50 AI use cases, ranging from AI chatbots for customer service to capital flow monitoring, compliance, and fraud prevention. AI tools are expected to reshape the fintech market, making services more personalized and tailored to individual customer needs.
Expect to see a full interview with Binur Zhalenov on The Astana Times YouTube channel in the coming days. Stay tuned!
- The Digital National Bank's digital strategy, endorsed by the NBK in 2024, includes open banking as a key pillar, aiming to establish a National Digital Financial Infrastructure and other objectives.
- Binur Zhalenov, the chief digital officer at the National Bank of Kazakhstan, is working towards making financial transactions simpler by focusing on the smooth "payment rails," encompassing card payments, peer-to-peer transfers, and QR codes.
- As part of their efforts to give consumers greater control over their finances, the NBK is developing a new banking law with a dedicated chapter on data privacy and protection, and launching the Anti-Fraud Center, a shared fraud-alert system among financial organizations.
- In 2025, Kazakhstan plans to expand its open banking capabilities, enforcement of the new banking law, and fully implement peer-to-peer mobile transfers and QR payments, making interactions more integrated and sophisticated.
