Exploration of the Driving Forces Behind Kazakhstan's Open Banking Strategy

Exploration of the Driving Forces Behind Kazakhstan's Open Banking Strategy

Kazakhstan's Digital Banking Revolution: The Open Banking Journey

Ashgabat – Kazakhstan is marching forward with digital payment reforms, spearheading open banking and AI integration in its financial ecosystem. Binur Zhalenov, a tech-savvy insider at the National Bank of Kazakhstan (NBK), reveals the intricacies of open banking and the revolutionary role AI plays in the heart of the nation's finances.

Binur Zhalenov, a Bolashak scholar, steers the National Payments Corporation. Credit: The Astana Times

What is Open Banking?

Open banking transpires when disparate financial entities exchange customer data through a standardized protocol, paving the way for seamless transactions between banks and third-party providers at the customer's consent. The conduit for secure data sharing is open APIs (application programming interfaces).

Globally, over 100 nations are exploring open banking endeavors, each at varying stages.

National Digital Infrastructure

Open banking anchors Kazakhstan’s digital strategy, NBK's master plan to birth a Digital National Bank. This ambitious 5-pillar initiative aims to instate a comprehensive financial ecosystem around NBK's central banking and supervisory functions.

The first pillar targets constructing a national digital financial infrastructure. The second puts regulatory technology – AI and machine learning – to use for strengthened financial institution oversight.

Zhalenov recently presented the concept of the national digital financial infrastructure to the authorities, highlighting that:

This speech is a condensed version; missing details are available in the original article.

Internal transformation and a shift to agile working practices are the fourth and fifth pillars.

Embracing the Open Banking Concept

The first pillar encompasses open banking and the Digital Tenge, which is part of the Digital National Bank’s mission.

Kazakhstan boasts a thriving fintech market, with over 86% of transactions executed online. This digital finance ocean stems from progressive regulations and an interbank infrastructure that boosts competitiveness.

** Empowering Consumers**

Propelling open banking and strengthening market competition is Kazakhstan's ultimate objective for offering consumers more control over their finances.

Nowadays, shuffling cash between accounts is generally expensive and arduous. The NBK seeks to streamline this process, making money movements smoother, swifter, and less expensive for everyone.

This isn't merely about providing customers with the freedom to shift their accounts;it is about creating a market where financial institutions battle to impress consumers with innovative offerings to prevent customer attrition.

Open Banking Unveiled

Zhalenov’s team is executing open banking in three phases. First, address interbank payments with fast and inexpensive money transfers using mobile numbers. By the end of this year, all banks are set to participate in the system by law.

Second, introduce QR payments, now popular among the populace, to eliminate bank-specific terminals' limitations.

Lastly, augment account aggregation, allowing consumers to see their balances across platforms with just one mobile banking application.

However, personal data protection issues may prolong the introduction of account aggregation.

In 2025, Kazakhstan promises a broader open banking framework with more integrated digital interactions and sophisticated financial services.

This year, consumers can anticipate the full launch of peer-to-peer mobile number transfers, along with the introduction of QR payments.

Tackling Data Privacy Concerns

As Kazakhstan ventures into digital transformation, data privacy remains a prime concern. To address this, the NBK relies on two tools: stricter regulations and cutting-edge technology.

A new banking law is under construction, directing from President Kassym-Jomart Tokayev. The legislation will embed a dedicated chapter on data privacy and protection.

Combating Fraud

In 2024, NBK, in partnership with banks and law enforcement agencies, established the Anti-Fraud Center, engineered to spot and thwart deceitful transactions, react promptly to suspicious activities, and exchange information instantly with other banks. The center also maintains a single database of fraud-related incidents.

Stay tuned for the full interview with Binur Zhalenov, coming soon to The Astana Times' YouTube channel *.

[1] The Astana Times. (2024, March 1). Interview: National Digital Bank and the Digital Tenge. Available at https://astanatimes.com/2024/03/interview-national-digital-bank-national-bank-binur-zhalenov-cbdc-digital-tenge/[3] Investment Trends. (2024, February 15). The AIFC and the Future of Kazakhstan's Fintech Landscape. Available at https://investmenttrends.com/what-the-future-holds-for-kazakhstans-fintech-landscape/

1. By the end of 2021, Kazakhstan's National Bank, led by tech-savvy Binur Zhalenov, plans to implement open banking in three phases, starting with an interbank payment system for fast and inexpensive mobile number transfers.
2. In the heart of Astana, Zhalenov, a Bolashak scholar and steerer of the National Payments Corporation, presents the concept of open banking and the Digital Tenge as part of the Digital National Bank’s mission, aiming to provide consumers more control over their finances and stimulate market competition.
3. Reflecting Kazakhstan's march towards digital payment reforms and open banking, President Kassym-Jomart Tokayev has directed the construction of a new banking law, embedding a dedicated chapter on data privacy and protection to address concerns surrounding digital transformation.
4. In the face of an increasingly digital fintech market, where over 86% of transactions are executed online, Kazakhstan's ambitious 5-pillar initiative, unfolding in 2025, envisages a broader open banking framework with more integrated digital interactions and sophisticated financial services.

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