Technological transformation of the economy: challenges and prospects for the financial sector in Kazakhstan

Economic Annals-XXI: Volume 210, Issue (7-8), Pages: 30-42

Citation information
Issaeva, A., Onaltayev, D., Assanova, A., Oralbayeva, Zh., & Kurbanova, K. (2024). Technological transformation of the economy: challenges and prospects for the financial sector in Kazakhstan. Economic Annals-XXI, 210(7-8), 30-42. doi: https://doi.org/10.21003/ea.V210-05

Ainur Issaeva
PhD (Economics),
Associate Professor,
Abai Kazakh National Pedagogical University
13 Dostyk Ave., Almaty, 050010, Republic of Kazakhstan
Issaeva_ainur@mail.ru
ORCID ID: https://orcid.org/0000-0003-1869-6600

Darkhan Onaltayev
PhD (Economics),
Professor,
Al-Farabi Kazakh National University
71 Al-Farabi Ave., Almaty, 050040, Republic of Kazakhstan
darkhano@inbox.ru
ORCID ID: https://orcid.org/0000-0002-7604-0987

Altynay Assanova
PhD (Economics),
Associate Professor,
Al-Farabi Kazakh National University
71 Al-Farabi Ave., Almaty, 050040, Republic of Kazakhstan
altin_assan@bk.ru
ORCID ID: https://orcid.org/0000-0003-3707-3206
SCOPUS ID: https://www.scopus.com/authid/detail.uri?authorId=56241883600

Zhanar Oralbayeva
PhD (Economics),
Associate Professor,
Al-Farabi Kazakh National University
71 Al-Farabi Ave., Almaty, 050040, Republic of Kazakhstan
oralbaeva.zhanar@mail.ru
ORCID ID: https://orcid.org/0000-0003-0817-5756

Karlygash Kurbanova
PhD Candidate (Finance),
Senior Lecturer,
Al-Farabi Kazakh National University
71 Al-Farabi Ave., Almaty, 050040, Republic of Kazakhstan
kurbanova-pismo@bk.ru
ORCID ID: https://orcid.org/0000-0002-4703-5396

Technological transformation of the economy: challenges and prospects for the financial sector in Kazakhstan

Abstract. This research investigates the technological transformation of Kazakhstan’s financial sector, examining implementation patterns, regulatory frameworks, and economic outcomes. The study addresses critical knowledge gaps regarding digitalization impacts across different financial subsectors, implementation barriers, and institution-specific adoption strategies within Kazakhstan’s unique regulatory and market environment during 2021-2023. The research examines relationships between technological implementation intensity and institutional performance while identifying distinctive transformation patterns.

The study employed mixed-methods research combining quantitative analysis of financial performance metrics from 27 Kazakhstani financial institutions (representing 83.7% of sector assets) with qualitative assessments from 45 senior executive interviews. Research instruments included a Digital Transformation Index measuring implementation across 37 distinct indicators in four domains (customer interface, operational systems, analytics capabilities, regulatory compliance).

The findings reveal Kazakhstan’s financial sector has achieved 57.4% of estimated digitalization potential with significant institutional variation. Payment providers demonstrate the highest implementation levels, while microfinance institutions show the lowest ones. Digital payment adoption increased 186% since 2020, with stark urban-rural disparities (72.3% vs. 31.7%). Institutions in the highest implementation quartile demonstrate 70.8% better profitability metrics and 30.5% improved operational efficiency compared to lowest-implementing counterparts. Implementation challenges include talent scarcity, data quality issues, and integration complexity.

Keywords: Financial Technology; Digital Transformation; Kazakhstan; Banking; Regulatory Technology; Financial Inclusion; Digital Payments; Central Asian Finance

JEL Classification: G20; G21; G23; O33; O16; L86; E44

Acknowledgements and Funding: The authors received no direct funding for this research.

Contribution: The authors contributed equally to this work.

Data Availability Statement: The dataset is available from the authors upon request.

DOI: https://doi.org/10.21003/ea.V210-05

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Received 12.04.2024
Received in revised form 11.05.2024
Accepted 20.05.2024
Available online 27.08.2024