Kazakhstan’s and Halyk Bank’s Digital Renaissance: Bridging Tradition and Technology

Nariman Mukushev, Member of the Management Board, Deputy CEO, Retail Banking, Soft Collection, Digital Government Services and Ecosystems

Kazakhstan is quietly undergoing a profound transformation, positioning itself as an emerging player in the global digital economy, driven in part by the Kazakhstan National Development Plan for 2019-2025 and the “Digital Kazakhstan” State Program. In a region often overshadowed by larger neighbours, the country has embraced fintech as a cornerstone of its modernization, blending strategic policymaking with a growing appetite for technological innovation.

At the heart of this shift is a burgeoning digital financial ecosystem, a development brought about through infrastructure and regulation coupled facilitating privatised technology. The nearing conclusion of the Kazakhstan National Development Plan for 2019-2025 and the concurrent progress of the “Digital Kazakhstan” State Program provide timely lenses through which to evaluate the country’s digital transformation as the country takes the next step.

Central to this transformation is Halyk Bank, Kazakhstan’s largest financial institution, which has used its scale and legacy to become a driver of digital adoption and innovation. We are witnessing a seismic shift as consumer and business rapidly adopt digital applications to manage their finances, engage in commerce, and interact with the broader economy.

Macroeconomic data highlights the scale of this transformation. Kazakhstan’s GDP is expected to grow by 4.4% in 2024, up from 3.9% in 2023, fueled in part by diversification into digital and non-resource-based sectors. Digital payments now constitute over 50% of all transactions in the country (as of 2023), with this figure set to grow further. In total, the active user base in the country grew from 5 million in 2019 to approximately 23.1 million in 2023 – an impressive 4.6 times increase and a significant leap from just five years ago.. Moreover, foreign direct investment in Kazakhstan’s fintech sector has seen a 40%increase in the past three years, reflecting growing confidence in the country’s regulatory and innovation ecosystem.

Halyk Bank’s 2024 results to date offer compelling evidence of its indispensable role in this journey. As the national development plan enters its final stages, the bank’s achievements serve as a case study in how financial institutions can drive systemic change. Its recent figures underscore the scale of the digital shift taking place. In the third quarter of 2024, the bank’s flagship Halyk Super-App recorded a 28.2% increase in payments and transfers, reaching 252.1 million transactions, with a corresponding rise in transaction volumes by 36.7% to KZT 11.5 trillion. These numbers are not just reflective of the bank’s efforts but also indicative of a broader trend: a population increasingly turning to digital solutions as a primary means of financial engagement.

This forward-thinking approach has been crucial in a country where geography and history present unique challenges. The vast expanse of Kazakhstan, coupled with its predominantly resource-based economy, has traditionally posed barriers to financial accessibility, especially in rural areas. Digital technology is dismantling these barriers, offering tools to connect individuals and businesses to the financial system more efficiently than ever before.

While urban centers like Almaty and Astana have been quick to adopt digital banking, rural areas—long underserved by traditional banking—are now integral to the country’s digital story. Halyk Bank has focused on extending mobile-first solutions to these regions, coupling innovation and inclusion, recognizing that the future of financial inclusion in Kazakhstan lies not in bricks-and-mortar branches but in technology. This approach aligns with global trends in emerging markets, where mobile banking has become the default channel for reaching underserved populations.

Small and medium-sized enterprises (SMEs), often viewed as the backbone of any economy, are also key beneficiaries of Kazakhstan’s digital transformation. In Q3 2024, Halyk Bank’s SME gross loan portfolio grew by 17.2%, reaching KZT 1,619 billion (approximately USD 3.56 billion). These figures reflect the bank’s deliberate strategy to support a sector crucial for job creation and economic diversification. By tailoring digital tools to meet the needs of SMEs, the bank is enabling a generation of entrepreneurs to navigate an increasingly interconnected and digital marketplace.

What underpins much of this progress is a regulatory framework that balances innovation with stability. Policymakers in Kazakhstan have understood that fostering fintech is not solely about adopting the latest technologies but about ensuring those technologies serve broader economic and social goals. Institutions like the Astana International Financial Centre (AIFC) have been instrumental in providing the regulatory scaffolding necessary to attract global partnerships while maintaining local relevance.

Looking ahead, the next frontier for Kazakhstan’s digital landscape includes artificial intelligence, blockchain, and sustainable finance—areas where the country has the potential to not just adopt global trends but set its own standards. The country’s regulatory foresight, combined with the technological advancements of its financial institutions, suggests a future where Kazakhstan’s fintech sector can rival more established players in emerging markets.

The exponential rise in digital transactions and the growing reach of financial tools in Kazakhstan reflect a population and economy in transition. Halyk Bank’s role in this story is emblematic of how established institutions can adapt and thrive in a changing world, but it is also a window into the unique dynamics of Kazakhstan’s digital economy. What is unfolding in Kazakhstan is not merely a case of catching up with global trends—we are, by some measures, at the leading edge of global trends by creating a digital ecosystem tailored to the country’s needs and ambitions. This evolution is not only reshaping the financial landscape of Central Asia but offering a model for other emerging markets seeking to bridge the gap between tradition and technology