Monday, November 25, 2024

Kazakhstan building a secure and inclusive digital infrastructure | Biometric Update

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Kazakhstan is progressing in its digital transformation, improving security and convenience across businesses using cutting-edge digital public infrastructure (DPI). Prime Minister Olzhas Bektenov’s recent announcement to develop a national biometric authentication system represents a significant step forward in the country’s continuous efforts to upgrade its digital environment. This unified system would streamline authentication processes for various businesses, including banking and public services, ensuring citizens have secure and efficient access.

Kazakhstan has built biometrics-based digital IDs for users to navigate digital government and private services and safely make payments across the ecosystem. The construction of a uniform biometric data system, overseen by the Ministry of Digital Development, Innovations, and Aerospace Industry, will be critical in protecting sensitive information and preventing fraud. Kazakhstan’s digital identity system is already firmly integrated with the eGov platform, which is used by more than 90 percent of the economically active population, allowing easy access to government services.

This effort is part of Kazakhstan’s overall National Digital Strategy, which focuses on public-private partnerships to promote innovation and financial inclusion. Kazakhstan’s approach to fully digitizing its economy provides useful lessons for other emerging nations beginning on similar digital journeys.

Path to inclusive digital infrastructure

Kazakhstan’s National Digital Strategy aims to create an inclusive and interoperable DPI that enables digital payments, identity verification, and data exchange. This plan, led by the Ministry of Digital Development, Innovations, and Aerospace Industry, seeks to encourage innovation and economic growth by cultivating a strong digital ecosystem. Biometric authentication is a critical component for ensuring individuals’ ease and security when accessing banking and governmental services.

Kazakhstan is using public-private collaboration to boost digital adoption across all sectors, including strategic relationships with companies such as National Information Technologies JSC and BTS Digital. The Kazakh approach is similar to that of four advanced economies with nearly universal use of digital payments—Estonia, Singapore, Sweden, and the United Kingdom. These countries also promote the inclusion of all market players in the payment system and competition in the payments market, an approach that provides users choice and flexibility at the point of purchase, fuels network effects, and facilitates cross-border transactions. These models contrast with Brazil’s Pix and India’s Unified Payments Interface, which are government-sponsored and curtail consumer choice of digital payments. By incorporating biometric technologies, the Kazakh government improves both the efficiency of public service delivery and the robustness of digital systems, giving useful lessons for other countries creating DPI frameworks.

National system for biometric authentication

Later this year, the Kazakhstan government intends to initiate a centralized national remote biometric authentication system. Prime Minister of Kazakhstan Olzhas Bektenov announced the program in response to an inquiry from a member of parliament. KYPCNB News reported.

The new national remote biometric authentication system will be implemented across all industries, including banking and public services. A nationwide system is essential for creating a single base of biometric data to ensure that this information is related and secure. The launch of the system is anticipated through the formation of a joint venture between National Information Technologies JSC and BTC Digital. This program will be formed at the end of this year and will be supervised by the Ministry of Digital Development and the innovations in the aerospace industry. Citizens will still have the option to use other authentication methods when accessing public or financial services. For instance, they can avail of single-use passwords by SMS, digital signatures, or email logins and passwords. In late August, banks and microfinance organizations were required to conduct biometric authentication when issuing online loans in Kazakhstan.

Broader digital infrastructure

Kazakhstan’s strong digital public infrastructure has gradually altered public service access and financial activities, with a digital ID program linked to the national eGov platform. This integration allows citizens to access a variety of services online, increasing digital involvement throughout the population. A large population increasingly uses online banking, which has contributed to a huge increase in digital transactions from 7 percent in 2014 to 89 percent in 2024. This transition demonstrates Kazakhstan’s commitment to financial inclusion by utilizing DPI concepts derived from global models to make digital payments accessible and secure for a large user base.

Biometric authentication is a key component of Kazakhstan’s digital economy. The government requires banks and microfinance providers to utilize biometrics to verify identities for online loans, promoting secure, user-trusted financial transactions. Kazakhstan’s approach also emphasizes the importance of the private sector, particularly through leadership from the National Bank of Kazakhstan (NBK) and collaboration with commercial banks that have made important investments in digital infrastructure and payment systems. By building a regulatory framework that promotes an open, competitive environment, the government has set the circumstances for an innovative and consumer-friendly payment system, similar to those in Estonia, Singapore, and Sweden.

In collaboration with the private sector, the Kazakh government promotes DPI by incorporating important services into banks’ super apps and promoting regulatory flexibility through programs such as the NBK’s regulatory sandbox, which allows for launching innovative financial products. Complementing this is the Astana Hub, which has served as a launchpad for over 260 entrepreneurs, including FinTech companies. Furthermore, the government encourages venture capital investment through rules that facilitate angel investment, boost startup opportunities, and scale financial innovations.

Kazakhstan’s DPI prioritizes cybersecurity and consumer protection. Payments have mostly shifted online, increasing the danger of digital fraud. In response, the central bank approved cybersecurity measures in 2022, followed by the launch of the Anti-Fraud Center in 2024, which attempts to prevent fraudulent transactions and maintain a blacklist of questionable businesses.

Kazakhstan’s model has achieved connectivity, with 92 percent of the population accessing the internet and mobile broadband covering 89 percent of the country. An effort to expand 5G services in key cities promises even greater access to digital services, allowing more residents to engage in the digital economy.

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