The banking system of Kazakhstan has had an outstanding development in the context of the digital transformation of its banking system. This shift is not an isolated process but, instead, it was preconditioned by a well-designed plan based on the national program which is called the pursuit of Digital Kazakhstan, introduced in 2018. This program was supposed to bring a modernization to some of the most important sectors of the economy with the help of digital technologies, and the banking sector has been revealed as one of the most actively effective ones. The 800 plus billion tenges (or approximately 2 billion US dollars) produced by the process of digitization during its first two years of operation alone created above 120,000 jobs, and brought in foreign investments of more than US$80 million. This broader national digital agenda has seen the banking system appreciate the use of innovative technologies to improve their efficiency, security and financial inclusion at a rapid pace.
Role of Digital Identity
One of the pillars of this transition has been the emergence of using digital identity and authentication systems. To arrive at this metric, I can mention the date when the National Bank of Kazakhstan launched remote biometric identification in 2020, which made it possible to grant citizens access to banking services without going to the bank itself. This was realized further in the year 2024 through the establishment of a national biometric authentication framework, which does not only work in financial transactions but also in working with public services. The existence of safe digital identities has worked to decrease fraud, easy customer onboarding and creation of public confidence in digital banking.
Cashless Economy
Simultaneously with the identity infrastructure, there has been a rapid development of the payment systems in Kazakhstan such that it is modern now and considered as one of the most effective in the region. The National Payment Corporation, formerly the Kazakhstan Interbank Settlement Center, has been facilitating such large-scale digital payment reforms as the implementation of Instant Payment System which makes it possible to transfer money interbank in real time. In addition, a single QR-code payment solution was introduced in the country in the first half of 2024 allowing cashless payments in all banks. More than 2.1 billion transactions on this system have been made within the first eight months alone.
These infrastructure developments have also been very instrumental in enhancing a cashless economy. By the middle of the year 2024, approximately 89 percent of the payments in Kazakhstan were performed digitally, which is as high as such advanced digital cultures as Sweden and Singapore. The example of Kazakhstan is telling as the country has a total of well over 81 million registered payment cards and more than 26 million online banking users who actively use these systems on a regular basis, a total that surpasses the total population of this nation.
One of the key agents of such a transformation has been the emergence of fintech platforms, with the leading one being the Kaspi.kz, which has become a super app with 12 million users per month. Its functions go beyond the traditional banking that include e-commerce, transport and payment of bills. Its QR code system has centered itself as the most favorable way of payment in the major industries such as retail, restaurants, and transportation. The successful experience of Kaspi.kz has encouraged other banks and startups to follow the example and led to healthy competition and constant improvements within the sector.
Kazakhstan has also progressed towards digital capabilities through creating open banking infrastructure. As of late 2023, the National Bank opened a pilot Open API system that would enable the user to access and manage accounts of various banks on a single interface. In 2024 this pilot was scaled up to incorporate additional features like account aggregation between interbank accounts, consumer-to-consumer transfers, and merchant payments. Kazakhstan also just implemented Open Banking by July 2024, allowing client access through mobile applications to conduct various actions in different banks. This has increased competitiveness, reduced the cost of service delivery and the consumers.
Fintech Ecosystem
There are also the local and foreign investors, which are interested in the flourishing fintech ecosystem. With an initial size of about 50 startups in 2018, Kazakhstan currently has more than 200 fintech organizations that provide services in the sphere of digital lending, AI-driven financial planning, blockchain-based settlements and online insurance. These companies have brought in new levels of efficiency in the conventional banking activities. As an illustration, an online bank account can currently be opened within three minutes and digital loans are processed in less than two minutes. Complete composite banking services, consisting of ID verification, account set up and credit disbursal can be accomplished in less than an hour. This has caused the e-commerce industry to expand rapidly and in 2023, e-commerce will represent over 12 percent of the retail trade that was previously at 1.8 percent in 2019, and there are estimates that e-commerce will be 20 percent of the retail trade in 2030.
The other significant movement is that the country has made some milestones in the implementation of a Central Bank Digital Currency (CBDC) or otherwise called the Digital Tenge. In 2020, work started through research and pilot studies, and by the year 2024 and 2025 a hybrid-based blockchain system would get tested. From the Kazakhstan model perspective, neither of the other regulatory types of CBDC models mentioned, which would preclude the involvement of commercial banks and payment providers in the distribution of the digital currency, would have provided a two-tier system to promote competition and innovation. The Digital Tenge will make payment across borders more efficient, access to banking in rural locations better, and support system resilience.
Cybersecurity Measures
One of the issues that have attracted a lot of concern in this digitization process in Kazakhstan is security and a lot has been done to safeguard the users. In 2022 the National Bank proposed higher requirements on cybersecurity across financial institutions. This was biometric authentication, fraud management with the support of AI, and more robust data protection frameworks that correlate to the international standards such as General Data Protection Regulation (GDPR). In early 2024 a national Anti-Fraud Center was opened to respond to digital threats in real-time, including a centralized system of blacklisting fraudulent accounts and sending transaction alerts to financial institutions.
Behind all these is the strong digital infrastructure that exists in Kazakhstan. Over 92 percent of the population is connected with the internet and more than 89 percent is connected with the mobile broadband services. The 5G is being gradually implemented in the big cities already and should arrive in the whole country by 2026. Another innovation that has made life easier to the citizens is the integration of banking with the government services. The banking apps also allow people to get access to such publicly provided services as payment of taxes, renewal of driving licenses and business registration, removing the logins and portals.
Due to strategic investment of Kazakhstan in the field of infrastructure and human capital, a situation that provides excellent condition of digital finance to excel is organized. Financial literacy programs in OECD supported educational campaign have brought about publicity in safe online banking and fraud prevention. Regulatory bodies have simultaneously created sandbox environments, within which startups can experiment with innovative products in a less strict environment and to that end, new ideas can thrive without the financial safety net being affected.
Role of AIFC
Astana International Financial Centre has been instrumental in making Kazakhstan one of the regional leaders in digital finance. With its launch in the year 2018, more than 3,000 companies (including such biggest global actors as KPMG and Binance) have already been attracted to AIFC. The Global Financial Centres Index has been ranked as the top 1 and best financial centre in Eastern Europe and Central Asia. Astana International Exchange (AIX) which operates in AIFC has attracted over US$ 11 billion worth of investments. As a regulatory sandbox, AIFC Fintech Lab encourages the innovators and secures the conformity of their products and services, and the effort at promoting Islamic finance and green finance extends the financial landscape in Kazakhstan.
The compound outcomes of such efforts have measured such results. The Return on Equity in the banking sector in Kazakhstan has reached 37 percent in 2024, which is much higher than the global average of 13 percent. This occurs on the background of a wide spread of non-cash payment adoption, reaching 70.8 trillion tenges in the first five months of 2025, which is more than twice as much as the GDP of the country in the similar period. The experiences of customers have changed and banks give the customers more customized services, quicker than ever before.
And that is why I would like to identify that, the example of how the digital transformation of the banking industry was achieved in Kazakhstan is a strong argument of what a well-planned, holistic, and progressive approach can achieve. Integrated national policy, the ingenuity of the private sector, flexible regulation, and global collaboration have given the nation one of the most developed systems of digital banking in the region. The evolution of digital identity systems, nationwide instant payments, open banking, and a healthy fintech ecosystem, as well as a pilot CBDC, have been helping to position Kazakhstan at the very head of the curve of financial innovation worldwide. With an increased focus on digitalization and a healthy cybersecurity infrastructure and prioritization on expansionary growth, Kazakhstan can be one of the front-runners in the digital banking landscape in the long run.
Mr. Muhammad Ali Pasha is a “Foreign Affairs Expert”. Furthermore, he is a author and poet.
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