Exploring the Foundation of Kazakhstan's Open Banking Strategy
Title: Open banking and AI: Reinventing Kazakhstan's financial ecosystem
Make way for Kazakhstan as it takes a giant leap into the digital world, reshaping its financial landscape with open banking reforms and the integration of artificial intelligence (AI). In a thrilling interview with The Astana Times YouTube channel, Binur Zhalenov - a key figure at the National Bank of Kazakhstan (NBK) - shared his insights on open banking, AI, and Kazakhstan's evolving data privacy framework.
With a rich educational background as a Bolashak scholar and chairing the National Payments Corporation, Zhalenov is at the forefront of digital transformation in Kazakhstan. Open banking, a standardized information exchange between financial institutions and third-party providers, is a crucial part of this revolution. By using Open APIs, this system allows secure access to consumer data, putting the consumer in control. Globally, more than 100 countries are exploring open banking, including Kazakhstan.
Open banking is one of the pillars of NBK's digital strategy, aimed at creating a comprehensive ecosystem known as Digital National Bank. This strategy encompasses five key goals: establishing a national digital financial infrastructure, strengthening oversight through AI, operating on a data-driven approach, internal digital transformation, and adopting agile working practices.
To build the national digital financial infrastructure, Zhalenov presented the concept to the government last week. He explained that Kazakhstan's progressive regulation and seamless interbank infrastructure have fostered a highly competitive and innovative fintech market, where digital payments are prevalent. This progress is set to propel the industry further, making the process of transferring money between banks cheaper, faster, and more seamless.
The end goal of this transformation is to place control back in the consumer's hands. Zhalenov noted that in the current ecosystem, it's challenging for consumers to switch banks due to high tariffs. By addressing this issue, consumers would have greater flexibility to choose their financial services, driving competition and improved innovation in the market.
Zhalenov's team is tackling this transformation through three components: interbank payments, QR payments, and account aggregation. The introduction of mandatory participation in the faster payment system, expansion of QR payments beyond bank-specific terminals, and account aggregation through mobile banking apps will empower consumers and foster a more competitive market.
As Kazakhstan moves toward open banking, concerns about data privacy remain front and center. The NBK addresses these concerns through stricter regulation and enhanced technology. Regulation is becoming progressively stricter, with a new banking law in the works to strengthen data protection. The government is also crafting a dedicated chapter on data privacy in this law.
In addition to regulation, NBK is closely monitoring fraud, particularly digital fraud. In 2024, the bank established the Anti-Fraud Center, a shared fraud-alert system linking the anti-fraud infrastructure of individual banks. This collaborative effort aims to spot and stop fraudulent transactions quickly, prevent money leakage, and create a safe and secure digital environment for its citizens.
AI is another critical element in Kazakhstan's financial revolution. NBK is exploring over 55 use cases of AI, ranging from chatbots to capital flow monitoring, compliance, and fraud prevention. Furthermore, the Agency for Regulation and Development of Financial Market is implementing SupTech solutions to accelerate audits and compliance checks.
With these advancements, the financial industry is expected to offer increasingly personalized and customized services, moving away from a one-size-fits-all model to a data-driven approach. So buckle up and watch this space - Kazakhstan is set to offer an exciting journey in the realm of fintech and AI!
[1] National Bank of Kazakhstan. (n.d.). Open Banking. Retrieved February 21, 2025, from https://nbk.kz/wps/wcm/connect/a39ca41f-c84b-4a2d-b0fa-59cdcee34250/open-banking-en
[2] Ministry of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan. (2023). National AI Strategy for the Republic of Kazakhstan 2025-2030. Retrieved February 21, 2025, from https://dia.gov.kz/sites/default/files/2023-02/national_ai_strategy_for_the_republic_of_kazakhstan_2025-2030.pdf
[3] Government of the Republic of Korea. (n.d.). Korea-Kazakhstan Digital Cooperation. Retrieved February 21, 2025, from https://global-digital.korea.net/korea-kazakhstan-digital-cooperation
[4] Republic of Kazakhstan. (n.d.). AI Law. Retrieved February 21, 2025, from https://lex.gov.kz/ru/view/doc_detail?NewWindow=True&id=278628007
[5] Freedom Holding Corp. (2024). AI Lab. Retrieved February 21, 2025, from https://freedom.kz/press-releases/ai-lab/
- Binur Zhalenov, a key figure at the National Bank of Kazakhstan (NBK), envisions Kazakhstan's financial industry adopting open banking by 2025, aiming to create a more competitive and innovative market characterized by secure consumer data exchange.
- In line with the National Bank of Kazakhstan's (NBK) digital strategy, the Financial Market Agency is currently implementing SupTech solutions, exploring over 55 use cases of AI, and focusing on enhancing areas such as chatbots, capital flow monitoring, compliance, and fraud prevention.
- The government of Kazakhstan is set to strengthen data protection with a new banking law, which will include a dedicated chapter on data privacy, ensuring stricter regulation and further bolstering consumer data security.
- As part of Kazakhstan's evolving data privacy framework, the Anti-Fraud Center, a shared fraud-alert system linking the anti-fraud infrastructure of individual banks, was established in 2024 to prevent money leakage and create a secure digital environment for consumers.
