ASTANA – The National Bank of Kazakhstan (NBK) and the National Payment Corporation compiled the first results on the newly designed Open API and Open Banking pilot project in a report published on the bank’s website in early January. The initiative aims to modernize the country’s financial sector and transform digital financial services.
The client will see current accounts from other banks in one mobile application, as well as bank details and the transaction history for each account. Photo credit: evertecinc.com.
The Open Banking concept implies a standardized exchange of financial information between financial institutions and third-party providers on the initiative and consent of the client. The exchange is provided by Open API, application programming interfaces, for secure access to consumer data.
Apart from managing multiple accounts and making regular payments and transfers, Open API technology allows the client to optimize financial statements, analyze income and expenses.
The pilot project was carried out with the participation of focus groups of 128 clients and second-tier banks, including Bank RBK, Altyn Bank, Home Credit Bank, Bank CenterCredit, and Otbasy Bank.
Following the results over the past year, Kazakhstan updated a roadmap for the implementation of the Open Banking concept for 2024.
This year, it is planned to focus on the inclusion of market participants in the account aggregation process and the development of account aggregation scenarios adapted for use by legal entities.
The bank’s report emphasizes the importance of ensuring equal conditions and opportunities for all participants, transparency of processes, a high degree of confidentiality, and protection of personal and financial data of clients.
Kazakhstan’s financial system is characterized by a bank-centric model – banks form closed ecosystems, contributing to a high concentration of financial services, and hindering the development of competition and cooperation in the financial market.
In addition to fostering innovation and protecting the interests and data of the citizens, it is expected that the Open Banking model will enhance the building of a transparent and competetive financial ecosystem.
The country now follows the concept of development of Open API and Open Banking for 2023-2025, which was approved by the National Bank of Kazakhstan, the Agency for Regulation and Development of Financial Market, and the Agency for Protection and Development of Competition in December 2022.
Open banking is changing the financial industry globally.
The data from the report indicates its growing demand – approximately 100 countries have developed the Open Banking model or are at the stage of its implementation. For example, the experience of Australia, Brazil, China, Japan, Russia, the European Union countries, the United Kingdom, and the United States has proved its efficiency.
Today, the volume of transactions worldwide within the Open Banking model is estimated at $57 billion, reads the report. By 2027, this volume is expected to grow to $330 billion, and experts suggest the increase of the number of transactions from $102 billion to $508 billion.
The Online Banking concept is applied not only to banking operations. It now expands its influence on related industries, such as insurance, real estate, trade, offering new ways to create value and increase the efficiency of business processes.
