BAKU, Azerbaijan, December 3. Digital transformation of the banking sector and its sustainable development pose strategic value in Azerbaijan, Executive Director of the Central Bank of Azerbaijan (CBA) Vusal Khalilov said at the 8th International Banking Forum today, Trend reports.
"Digital transformation of the banking sector and its sustainable development are strategically important both in the global context and for our country. Among the many initiatives included in the Strategy for the Development of the Financial Sector of Azerbaijan for 2024–2026, the introduction of risk-based supervision, the development of open banking, and the increase in cashless payments stand out.
I would like to highlight a few key points. The transition to risk-based supervision (RBS) requires the development of RegTech and SupTech solutions, as well as significant efforts in data management. This concerns not only the proper management of data in the CBA but also the application of data management approaches in banks and other supervisory entities," he explained.
According to him, this year has seen a 66 percent growth in cashless card transactions.
"Moreover, the new law on payment services and payment systems contributes to increased market transparency and competitiveness, providing consumers with more convenient services. Currently, the CBA has licensed 14 electronic payment organizations, eight payment institutions, and one payment system operator. This strengthens the resilience of these organizations as supervised entities and protects the interests of citizens and the financial sector as a whole," he added.
Khalilov emphasized that open banking and open finance initiatives aim to create an inclusive, transparent, and efficient financial system.
"This approach opens up new opportunities for banks, fintech companies, and consumers. For banks, it means new revenue streams, optimized services, and an improved customer experience. Fintech companies, in collaboration with banks, gain access to advanced financial tools. For consumers, it offers more choices, transparency, and security in financial services.
Due to their more developed technical capabilities and potential, banks are among the first to take advantage of these opportunities. Some banks are already ready to enter a full-fledged operational environment, while others will achieve this in the near future.
The CBA has also created a special regulatory regime that allows for testing innovative financial solutions and safely introducing them to the market. This regime has already adopted several successful products, and the second phase of their implementation is about to commence. The official concluded that this mechanism enables the testing of services not yet covered by regulatory frameworks and fosters the advancement of innovations outlined in the strategy.
To note, the 8th International Banking Forum is in full swing over two days in the bustling city of Baku, Azerbaijan, and the key topics of the forum include digital transformation (digital and neobanks), strategies for data management and analytics, the evolution of the payment landscape (transition to contactless technologies), instant, seamless, and compatible international payments, the revolution of decentralized finance (DeFi), cloud systems and alternatives to outdated technologies, digitalization through the lens of cybersecurity, stability and resilience, and green and sustainable banking (ESG).
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