BAKU, Azerbaijan, Nov.12
Trend:
The development of the concept for the development of the Kazakhstan's financial sector until 2030 is planned to be completed in the first quarter of 2021, said Chairperson of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market Madina Abylkassymova, Trend reports referring the agency.
She said that the key events of 2020 and their impact on the financial system predetermine the directions of system's further development in the medium term.
"The agency, together with the National Bank and financial market participants, is currently preparing a concept for the development of the financial sector until 2030 in a new version to determine new priorities and strategic directions for the development of the financial sector," Madina Abylkassymova said at the round table "Results of the development of the financial sector in period of the coronavirus pandemic".
The head of the agency noted that the following megatrends currently influence the situation in the financial sector.
"Firstly, this is the active application of new technologies in financial institutions with a traditional business model in order to increase business efficiency. Secondly, this is the formation of a new generation of consumers of financial services who prefer online services. Thirdly, it is the transformation of business models through the use of new technologies in order to increase the market share of disruptive business models and entry into the financial services market of technology companies (Fintech, BigTech)," the head of the agency said.
She said that most financial organizations in the global market are introducing and developing digital channels of communication with customers, as well as changing the approach to service and the formation of customer experience. According to forecasts, the revenues of financial institutions with traditional business models may decrease by more than 30 percent by 2025 due to new market players such as fintech companies and large technology companies.
"In these conditions, there are three key models of financial sector development. Firstly, the ecosystem market, where large financial institutions, using resources and economies of scale, create ecosystems that go beyond financial services. Secondly, the market of technology companies, where large technology companies begin to provide financial services. Thirdly, competitive markets, where there is simultaneous competition and cooperation of all market participants, including traditional financial institutions, fintech startups and technology companies," Abylkassymova said.
In her opinion, the developed concept for the development of the financial sector should create conditions for the transformation and increase in the competitiveness of the domestic financial system, taking into account all the indicated global trends.
"The goal of the concept is the formation by 2030 of a competitive and high-tech financial sector, contributing to ensuring macro-financial stability and maintaining sustainable and inclusive economic development of the country," she said.
Some 7 priorities were identified in the development of the financial sector within the framework of the concept.
The first priority is to ensure financial stability. The second priority is to improve the competitiveness of financial institutions.
"As part of Kazakhstan's participation in the World Trade Organization, from December this year, foreign banks and insurance organizations will have the right to open their branches in the country. By 2025, it is planned to form a common financial market of the EAEU (Eurasian Economic Union), providing for mutual admission of countries' participants to each other's markets. In these conditions, it is necessary to focus on creating a competitive financial sector. To this end, the traditional model of the banking sector must be transformed. Conditions will be created for the transformation of banks into multifunctional financial institutions that provide an expanded range of new financial services, including investment and digital banking services," said Madina Abylkassymova.
The third priority is to restore the role of the banking sector in financing the economy. The fourth priority is to improve the quality of corporate governance, risk management standards and information disclosure of enterprises.
The fifth priority is increasing transparency and diversifying the ownership structure of financial institutions.
"The correct disclosure of information allows market participants and other parties to obtain an objective view of the activities and condition of a financial institution. To this end, the requirements for financial institutions to disclose information on the ownership and management structure, capital adequacy, and risk exposure will be strengthened. This will help build market discipline and provide customers and market participants with sufficient information to make informed decisions," said the head of the Agency.
The sixth priority is to increase financial inclusion and financial literacy.
"The development of the financial market and the emergence of complex financial services require constant updating of the financial literacy system. In May 2020, the agency, together with the government, adopted a new concept for increasing the financial literacy of the population for 2020-2024, the main goal of which is to form rational financial behavior among citizens when making decisions, relating personal finance, increasing the efficiency of protecting the rights of consumers of financial services, improving the quality of life through the use of high-quality financial services," she said.
The seventh priority is the introduction of new technologies and innovations.
"In order to develop innovative technologies in the financial market, work will continue on the implementation of measures provided for by the concept for the development of financial technologies and innovations for 2020-2025 and the state program "Digital Kazakhstan", Madina Abylkassymova said.
She said that the concept for the development of the financial sector until 2030 is planned to be completed in the first quarter of 2021 and the adoption of the concept is planned after the approval of the strategic development plan of the Republic of Kazakhstan until 2025, which lays the foundation for the entire strategic planning of the country.