Developing Financial Landscape in Kazakhstan: Exploring the Catalyst for Open Banking
Revamped: Open Banking Revolutionizing Kazakhstan's Digital Payments
Enter the digital age of finance in Kazakhstan, where open banking is taking center stage. In an engaging chat with The Astana Times YouTube channel, Binur Zhalenov, a digital maestro at the National Bank of Kazakhstan (NBK), breaks down the essence of open banking and AI's essential role in Kazakhstan's financial landscape.
With open banking, financial institutions and third-party providers can share consumer data, unlocking opportunities for seamless digital transactions and innovative financial services - all with the consumers' approval. Globally, over 100 countries are embracing open banking, and Kazakhstan is no exception!
So, what's the plan in Kazakhstan? Open banking forms a key part of the NBK's strategic vision for a Digital National Bank, featuring five pillars:
- Building a national digital financial infrastructure
- Adopting advanced supervisory technology, including AI and machine learning
- Data-driven decision-making within the central bank
- Internal digital transformation
- Agile working practices
Let's dive a bit deeper!
National digital infrastructure
The first pillar focuses on creating a robust, standardized digital network for financial services. This foundation empowers Kazakhstan's advanced fintech market, with over 86% cashless transactions, where 8 out of 10 transactions are digital, thanks to progressive regulation and interbank infrastructure.
It's all about the consumer
What's the final goal? Empowering the consumer! With open banking, consumers take charge, easily moving money between banks, enjoying faster, easier, and cheaper transactions.
But there's more! Open banking breaks the barriers that previously kept consumers "locked in" to certain banking ecosystems, fostering a fiercer competition among banks and fintech companies that refuses to back down. In essence, think of the national digital financial infrastructure as the highways connecting banks, enabling smoother financial transactions via 'payment rails', including card payments, peer-to-peer transfers, and QR codes. The NBK ensures the smooth operation of these 'roads'.
Open banking at work
The NBK's approach toward open banking consists of three vital components:
- Interbank payments: Facilitating cheap, fast transfers between banks
- QR payments: A cashless, smart payment solution expanding nationwide
- Account aggregation: Allowing consumers to see balances and transactions from all their banks in one application
Privacy and security
As digital transformation sweeps across Kazakhstan, safeguarding data privacy remains paramount. NBK relies on both tighter regulations and cutting-edge technology to protect your information. A new banking law, under construction, will strengthen protection measures for users' data.
Cracking down on fraud
The rise of digital transactions has stirred concerns about fraud. To counter these threats, the NBK partnered with banks and law enforcement agencies to launch the Anti-Fraud Center in 2024. This system helps financial organizations detect fraudulent transactions, rapidly react to suspicious activities, and share vital information with each other, forming a comprehensive fraud-alert network.
The future of AI in fintech
AI technology is swiftly making strides in various sectors, including fintech, offering numerous advantages such as smart chatbots, automated processes, personalized services, capital flow monitoring, and enhanced fraud prevention. Kazakhstan's financial ecosystem is approaching a future where AI-powered solutions will play a dominant role in enabling seamless, fully-integrated digital financial services.
Stay with us for the full interview with Binur Zhalenov, coming soon on The Astana Times YouTube channel!
Open banking, a key part of Kazakhstan's Digital National Bank strategic vision, facilitates the sharing of consumer data among financial institutions and third-party providers, leading to the development of innovative financial services in the technology-driven business landscape of Kazakhstan. The National Bank of Kazakhstan (NBK) ensures the smooth operation of digital 'payment rails' as part of the open banking approach, which includes interbank payments, QR payments, and account aggregation to empower consumers and enhance privacy and security.
