Kazakhstan's Backing of Open Banking Agenda: An Insight

Kazakhstan's Backing of Open Banking Agenda: An Insight

Astana, Kazakhstan is pushing full steam ahead with ambitious digital payment reforms, including an open banking initiative. In a chat with The Astana Times YouTube channel, Binur Zhalenov, the digital chief at the National Bank of Kazakhstan (NBK), sheds light on what open banking entails and the role of AI in the country's financial ecosystem.

Binur Zhalenov is a distinguished graduate of the Bolashak scholarship. He also chairs the National Payments Corporation. Credit goes to The Astana Times for the image.

Open banking, in essence, is the exchange of financial data between various financial institutions and third-party providers with the customer's consent, made secure through Open APIs (application programming interfaces). The global financial community, with around 100 countries exploring open banking at various stages, stands intrigued by its potential.

In the heart of Kazakhstan, open banking is part of an extensive digital strategy implemented by NBK in 2024. This strategy aims to establish a comprehensive digital ecosystem around central banking and supervisory functions. The strategy consists of five pillars.

The first pillar focuses on building a national digital financial infrastructure, the second involves leveraging AI and machine learning to intensify regulatory oversight of financial institutions, and the third is the creation of a data-driven central bank, where decisions are based on data. Zhalenov recently presented this national digital financial infrastructure idea to government officials.

Internal digital transformation and adopting agile practices are the fourth and fifth pillars. Open banking shares the spotlight with Digital Tenge, an action part of that effort. The fintech market in Kazakhstan has shown remarkable progress, with an impressive 86% penetration rate of digital transactions, making it one of the most advanced in the region.

This growth has been fueled by progressive regulation and an interbank infrastructure that allows seamless transfers between banks, promoting competition that drives innovation. Zhalenov describes the national digital financial infrastructure as "roads between banks," enabling money to move freely through "payment rails," including card payments, peer-to-peer transfers, and QR codes. NBK is responsible for building this infrastructure for each type.

The ultimate objective is to give more control to consumers by making cross-bank money transfers smoother, quicker, and more affordable. Zhalenov explains that consumers are currently trapped in banking ecosystems, making it challenging to transfer money between banks. By addressing this issue, transactions would become more straightforward and less expensive, compelling every market participant to offer new services to retain customers.

The approach of Zhalenov's team has three primary components: interbank payments, QR payments, and account aggregation. Interbank payments have already been introduced through a fast payment system. This year, all banks will be required to participate in the system. The second component involves QR payments, which hold great appeal among the citizens but have previously been restricted by bank-specific terminals. The third component is account aggregation, which will allow users to see accounts from other banks with their consent, ensuring accountability and enabling easy transitions between ecosystems.

As Kazakhstan pursues digital transformation, concerns about data privacy are the order of the day – for both regulators and the public. To address this issue, NBK relies on regulatory measures and technological advancements to preserve privacy. A new banking law is currently being drafted to strengthen data privacy and protection measures.

To combat fraud, NBK, in collaboration with banks and law enforcement agencies, established the Anti-Fraud Center. This center helps banks detect and stop fraudulent transactions and react swiftly to suspicious activity, with the power to share information across banks. This shared network prevents money laundering. In 2024, the center blocked 1.5 billion fraudulent transactions and protected more than $579,000 from being lost to scammers.

AI, as rapidly becoming applicable across sectors, finds its niche in fintech as well. NBK is exploring 55 AI use-cases, ranging from chatbots to advanced tools for capital flow monitoring, compliance, and fraud prevention. These AI tools will be employed in financial supervision and investment operations, helping NBK identify financial risks at an early stage and streamline supervisory processes. The future of Kazakhstan's fintech market appears to be bright, with hopes that the application of AI will shift from transactions to more complex services, promoting more personalized financial services and enriching the user experience.

1. Binur Zhalenov, who chairs the National Payments Corporation, discussed open banking in Astana, Kazakhstan, explaining that it involves the exchange of financial data between various financial institutions and third-party providers, secured by Open APIs.
2. In 2025, Kazakhstan's National Bank (NBK) plans to establish a national digital financial infrastructure as part of its broader digital strategy, with open banking playing a significant role.
3. Zhalenov further explained that the national digital financial infrastructure, which he described as "roads between banks," aims to give more control to consumers, making cross-bank money transfers smoother, quicker, and more affordable.
4. In order to maintain data privacy and combat fraud in this digital era, NBK is drafting a new banking law to strengthen data privacy and protection measures, while also collaborating with banks and law enforcement agencies to establish the Anti-Fraud Center, which blocks fraudulent transactions and prevents money laundering.

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