Kazakhstan's Pioneering Approach to Open Banking Revealed
Rewritten Article:
ASTANA - Kazakhstan is spearheading a significant digital payment revolution, with an emphasis on open banking and AI integration. In an exclusive interview with The Astana Times YouTube channel, Binur Zhalenov, a chief digital officer at the National Bank of Kazakhstan (NBK), discusses the intricacies of open banking and AI's role in the nation's financial ecosystem.
Binur Zhalenov is an alum of the Bolashak scholarship and chairs the National Payments Corporation. His photo graces the pages of The Astana Times.
Open banking involves the secure exchange of financial data among various banks and third-party providers, with the customer's consent. This exchange is facilitated by Open APIs. Around 100 countries worldwide are exploring this cutting-edge technology in different stages.
Digital Infrastructure for a Digital Nation
Open banking forms a crucial component of Kazakhstan's digital strategy, endorsed by the NBK in 2024. Dubbed "Digital National Bank," this initiative encompasses five key pillars designed to create a comprehensive financial ecosystem.
The first pillar focuses on creating a national digital financial infrastructure. The second pillar involves employing AI and machine learning to bolster financial institution oversight.
"The third pillar is a data-driven central bank where we build a so-called data factory, unifying the entire technology stack, from data collection to data analysis, so that all the decisions in the central bank are data-based," stated Zhalenov, who recently presented the concept of the national digital financial infrastructure to the government.
Internal digital transformation and the adoption of agile work practices are the fourth and fifth pillars.
"Open banking is part of the first pillar," said Zhalenov. "Digital tenge" also falls under this umbrella effort.
"The idea of national digital financial infrastructure is simple. As you mentioned before, Kazakhstan has a relatively mature fintech market. We have a high penetration of cashless payments, about 86%. Most of these payments are digital," Zhalenov said.
This progress is attributed to a combination of supportive regulation and interbank infrastructure that fosters seamless money transfers between banks.
"These factors promote competition. When we have competition in the market, the market players are forced to innovate to keep their consumers happy because they compete for consumers," Zhalenov explained.
In essence, Zhalenov described the national digital financial infrastructure as a network of payment paths, enabling money to move freely using various payment methods, such as card payments, peer-to-peer transfers, and QR codes. As the central bank, the NBK is responsible for establishing infrastructure for each of these types.
Empowering Customers
The ultimate objective, according to Zhalenov, is to empower consumers by giving them more control over their finances. Transferring money between banks is often an expensive and complicated process, which the NBK aims to simplify through its open banking and competitive financial ecosystem initiatives.
"We want to build a market where the consumer dictates what to do to the banks, not the other way around. Most consumers in Kazakhstan are locked in certain banking ecosystems," Zhalenov said.
"Making money transfers between banks easier, faster, and cheaper will encourage every market participant to offer something new to keep customers in the ecosystem," he added.
Components of Open Banking
Zhalenov's team is focusing on three areas for open banking implementation: interbank payments, QR payments, and account aggregation.
"Last year, we launched a faster payment system. You can send money to another bank using just a phone number, and the fee is minimal. This year, we plan to connect all banks and make participation in the system mandatory," he explained.
The second component is QR payments, which has garnered strong support among Kazakhstan's citizens but has been restricted by bank-specific terminals. This limitation will soon be addressed, according to Zhalenov.
"We will enable you to use your banking app, like Freedom, to pay with Kaspi or Halyk terminals," he explained.
The third component is account aggregation, where users can view their accounts from other banks using a single mobile banking app, subject to their consent. This feature will gradually be introduced, with personal data protection being a priority.
"Now the consumer will dictate the terms. Switching from one ecosystem to another will become easier, driving more competition in the market and ultimately reducing fees and accelerating innovation," he said.
In 2025, Kazakhstan plans to expand its open banking framework with broader functionality and more integrated digital interactions, including shifting toward product-oriented Open APIs, enabling a broad range of sophisticated financial products and services.
The launch of peer-to-peer mobile number transfers is slated for the first half of the year, while QR payments will be introduced later in 2025.
Data Privacy and Security
As Kazakhstan pursues digital transformation, data privacy concerns remain paramount. To address these concerns, Zhalenov stated that the NBK relies on stricter regulation and advanced technology tools.
"Current regulation is more liberal compared to GDPR in the EU, but we follow a similar direction," Zhalenov said.
A new banking law is under development, which will have a dedicated chapter on data privacy and protection.
Fraud Prevention
Despite a strong emphasis on digital payment services, the issue of fraud remains an area of concern. In 2024, working with banks and law enforcement agencies, the NBK established the Anti-Fraud Center to combat fraudulent transactions, respond rapidly to suspicious activities, and share information instantly between financial organizations. The center maintains a single database of all fraud-related cases.
"If an incident occurs in Halyk Bank, everyone knows about it, the details of the fraudster, and we instantly block these individuals in every bank," he explained.
According to Zhalenov, the Anti-Fraud Center blocked 1.5 billion fraudulent transactions with a total value of nearly 300 million tenge ($579,820), benefiting victims of fraud.
Role of AI
AI is increasingly applicable to various sectors, and fintech is no exception. Zhalenov revealed that the NBK is exploring 55 potential AI use cases, ranging from chatbots trained on NBK data to advanced AI tools for capital flow monitoring, compliance, and fraud prevention.
"We plan to use AI in financial oversight," Zhalenov stated. "Our partners, the financial agency, are currently implementing SupTech solutions that speed up various business processes related to financial oversight."
Given the large number of market participants subject to supervision, the deployment of AI can streamline this process with the help of vast amounts of data and AI technology.
"AI allows us to process this data better and more efficiently; most importantly, it helps us to identify potential risks early," he explained.
The central bank also has its sights set on AI to support its investment operations as the manager of Kazakhstan's National Fund and Unified Accumulative Pension Fund.
When asked about AI's overall impact on Kazakhstan's fintech market, Zhalenov expressed confidence that it would be significant. Based on a survey conducted last year, more than a third of market participants already use AI in their services, and Zhalenov anticipates that this number will double.
Most financial institutions currently employ AI for front-facing functions, such as customer engagement and communications. Expectations are high that the application will shift toward more complex uses in the future.
A More Personalized Financial Experience
Zhalenov predicted that the advancement of technologies would make financial services more personalized and offer greater customized user experiences.
"In the future, banks will offer tailor-made credit offers for every consumer," he said.
Whether this trend will lead consumers to buy more items remains debatable. However, it signifies a shift in how financial institutions interact with consumers, moving away from the one-size-fits-all mentality to a data-driven, behavior-informed approach.
Keep an eye out for the full interview with Binur Zhalenov coming this week on The Astana Times YouTube channel.
- Binur Zhalenov, the chief digital officer at the National Bank of Kazakhstan (NBK), discussed the implementation of open banking and AI's role in Kazakhstan's financial ecosystem during an interview with The Astana Times YouTube channel.
- In 2025, Kazakhstan plans to broaden its open banking framework with advanced functionalities and integrated digital interactions, including moving towards product-oriented Open APIs to offer a range of sophisticated financial products and services.
- One of the key focus areas for open banking implementation in Kazakhstan is account aggregation, which allows users to view accounts from various banks using a single mobile banking application with their consent, with a priority on personal data protection.
- To combat data privacy concerns during digital transformation, the NBK is relying on stricter regulation and advanced technology tools, with a new banking law under development that will have a dedicated chapter on data privacy and protection.
