论文总字数：59741字

Case study on Mobile Banking Services in Kazakhstan

by

Arykbay Mukhtar

Under the Supervision of Fei Zhong Lin

Graduation thesis submitted for obtaining a Bachelor’s degree

International Economics and Trade Department

School of Overseas Education

Nanjing Tech University

2020

Abstract

Ever since the internet has become a vital part in people’s lives, the banking industry has experienced a major transition. Before the internet was so popular for conducting banking transactions, people had a necessity of visiting a bank directly, stand in long queues and then wait for their turns even if they simply wanted to check their account balance, withdraw cash or transfer money. But now they do not need to visit a bank anymore to carry out different kinds of banking transactions since they can use mobile banking services. Mobile banking has simplified the lives of many people and provided with the easier way to transfer money, receive it, check account balance, pay bills, etc. by using mobile phones. Mobile banking was implemented over a decade ago. It is a clear extension of online banking as cell phones get more powerful and start to mimic computers. In the recent times, people in Kazakhstan are starting to become aware of the availability of those services too. Thus, Kazakhstan has a huge opportunity to become a developed country which would have its unique cashless payment systems and mobile banking applications offering a large variety of banking operations.

Key words: Mobile banking, e-commerce, mobile market, cashless society, online payment, Kazakhstan, mobile payment system

Table of Contents

Abstract I

Chapter I Introduction 1

1.1 Research background 1

1.2 Literature review 2

1.2.1 Introduction of mobile banking services 2

1.2.2 Mobile banking history and development in Kazakhstan 3

1.3 Research Methodology 4

Chapter II The history of development of mobile banking services in Kazakhstan 5

2.1 The first stage 5

2.2 The second stage 5

2.3 The third stage 6

2.4 The fourth stage 6

2.5 Summary 7

Chapter III Important Features of Mobile Banking and Factors influencing on the adoption of Mobile Banking in Kazakhstan 8

3.1 Features of mobile banking services 8

3.1.1 Methods for banks to implement mobile banking 8

3.1.2 Fundamental features 8

3.1.3 Unique innovative mobile banking features 8

3.2 Factors influencing on the adoption of mobile banking services in Kazakhstan 10

3.3 Adoption of mobile banking in Kazakhstan based on the above factors 11

3.4 Summary 13

Chapter IV The evaluation of mobile banking features in Kazakhstan and comparisons with other foreign banks 14

4.1 Characteristics of mobile banking services in Kazakhstan 14

4.2 Comparisons with other foreign banks 16

4.2.1 Comparisons with other CIS countries 16

4.2.2 Comparisons with one of the best banks in the world 17

4.3 Summary 18

Chapter V Conclusions, Limitations, Recommendations and Predictions 20

5.1 Conclusions 20

5.2 Limitations 20

5.3 Recommendations 20

5.4 Future predictions 21

References 22

Chapter I Introduction

1.1 Research background

Kazakhstan is currently preparing for the implementation of banking and the Internet industry to its citizens even more obsessively, during which the overall number of people who use electronic payment systems, Internet banking and mobile banking will significantly increase. But if the Internet banking appeared in Kazakhstan in the early 2000s, the segments of mobile banking, electronic money and banking terminals are still in the early stage of development. There are still people who are not yet ready to abandon the traditional alive interaction when performing different financial transactions.

The evolution of electronic payment services in Kazakhstan began in the mid-90’s with the occurrence of ATMs and POS-terminals, and in the 2000s info terminals emerged. In the year of 2000 Internet banking started to develop, and finally only in 2005 the first mobile banking project of Halyk Bank within the country was launched. In 2011 it was the turn for electronic money and national universal payment systems after the launch of the first mobile payment system “MyPay” and it led to the development of mobile banking services more intensively.

The goal of this research is to accurately evaluate the overall development of mobile banking services in Kazakhstan using different sources containing relevant information and preparing certain strategies that Kazakhstan can take in order to overcome the potential challenges and threats. By having a solid knowledge about mobile banking services, countries can easily perform a wide variety of different business operations. Thus, it certainly would be an essential step that Kazakhstan can take since many countries are becoming a cashless society. It certainly would have a positive impact on country’s economic development considering the latest trends in payment systems. It is argued that the overall development of mobile banking services and e-commerce in general are relatively low and are in the early stage of development in Kazakhstan. However, in the recent years more and more people are becoming familiar with the terms like mobile payment, mobile banking, and e-commerce. Moreover, statistics conducted clearly shows us that there is a considerable growth in e-commerce usage and mobile banking activities. In order to prove this statement, different kinds of sources about the development of mobile banking will be implemented. This paper analyzes the overall development of mobile banking services in a chronological order and concentrates on the comparison of business formats of the banks of Kazakhstan with the other countries’ in terms of mobile banking. Also this paper shows the strong and weak parts of the mobile banking patterns in Kazakhstan and how those weaknesses can be overcome in the future by focusing on the innovative features of mobile banking provided by developed countries and adoption behavior of customers in Kazakhstan. Limitations, recommendations and future predictions regarding the mobile banking will be presented too.

1.2 Literature review

1.2.1 Introduction of mobile banking services

Mobile banking may be a service operated by a bank or other financial organization that grants its clients a chance to perform financial transactions remotely employing a mobile device like a smartphone or a tablet. It usually uses software, called an app for that purpose. Mobile banking depends on the existence of a data or Internet connection to the mobile device. Some financial institutions have restrictions on which accounts might be accessed through mobile banking, and also on a limit on the amount that can be transacted. (Disha Experts, 2017)

BBVA Group (2012) states that transactions via mobile banking typically depend on the mobile banking app features and generally include obtaining lists of latest transactions and account balances, P2P payments and funds transfers between a customer’s or another’s accounts, remote check deposits, and electronic bill payments. Using a mobile banking app enhances ease of use, speed, flexibility and improves security as well since it integrates with the user built-in mobile device security mechanisms. The first mobile banking services were through SMS, a service known as SMS banking. SMS banking is known as a service utilized by some banks or other financial institutions to send messages to its users’ mobile phones by using SMS messaging, or a service granted by them that allows the clients to perform some financial transactions by using SMS. And it was the earliest mobile banking service provided to the customers and actually had been an emerging field in the banking segment in fact. However, older mobile phones had limited functionality, and besides that palm PCs and PDAs were lacking hardware and software support. Besides that, the high cost of data plans and the slow network speed were also the reasons for the limitation of the growth of mobile banking as a whole. Nevertheless, mobile banking has been improved with the development of software, hardware and technology. The cost of mobile devices was decreased drastically, apart from that the network speed was improved and data plans are not as expensive as it was. All these modifications have in fact granted the necessary raw materials for the development of mobile banking. Customers, who were using computers for online banking, are now shifting towards mobile banking as it provides easier and faster way of conducting banking operations.

A recent study by “Mapa Research team” in May 2012 gives us a suggestion that over a 3^rd of banks have the function of mobile device detection upon entering the banks’ main website. There are many functions like redirecting to an app store, redirection to a mobile banking specific website or providing a listing of mobile banking options from where the users can choose the needed one using a mobile device.

Ensor and Wannemacher (2015) think that the improvement of mobile platform technologies allows m-banking users to perform banking services anytime from anywhere. The fresh patterns of banking services in the last decade have modified the form of retail banking, with new types of services and products and new ways of interaction with their customers. Floh and Treiblmaier (2006) believe that the existing high degree of mobility offers banks the chance to adjust their products and services to the needs of their customers or to the specific location in order to preserve them. Additional advantages appearing from the mobile banking mechanisms:
•For the consumers, mobile banking decreases time wasted as well as the expenses by letting its users monitor transactions, transfer funds, pay bills, check balances, and carry out many

other financial services with no relatively costly phone calls to a client service call center or by paying a visit to the corresponding branch. (Kim et al, 2009 and Hoehle et al, 2012)

•For the financial industry, mobile banking grants banks additional profits such as cost-savings, attracting new customers, and keeping old ones. This channel enables the bank to sell their different complex banking products and services. (automobile loans, credit cards, etc.) Moreover, mobile banking contributes banks to improve their service effectiveness, client satisfaction and cost efficiency. (Hoehle and Huff, 2012).

1.2.2 Mobile banking history and development in Kazakhstan

These days the business in Kazakhstan is being operated in the post-industrial society. The flexibility and integrity of business operations are far more prioritized compared to the functional skills and their specialization in the industrial period. Mobile technology has expanded systematically over the past few years. Development of this type of technology has a strong connection with our reality as the country is starting to become an information society (Galiya and Zhanar, 2013). According to the statistics provided by DigitalBuzzBlog in 2011 more than 70 percent of the entire population of our planet now has a mobile phone, so it is in fact over 5 billion mobile subscribers. In Asia this number is nearly 3billion, and in Kazakhstan it is around 20 million.

The mobile market in Kazakhstan is characterized as constantly gaining the profitability from a diversified market that puts forward an energetic and competitive environment. Statistics from Strategic Growth Concepts website says that the total number of mobile subscribers was presumably 21 million in 2011 and 19.8 million in 2010. Interestingly, the mobile invasion (129%) was far more compared to the Internet subscribers using Internet services (only 21%). The number of citizens of the country who favored mobile banking was around 900 000 people around the same period. The most popular bank which provides a mobile banking was JSC Halyk Bank (about 450000 clients in total). Internet banking services were used considerably less, about 600 000 people.

Mobile banking market in Kazakhstan is gaining a momentum. Experts predict that within a few years, the rise in this segment of financial services will be in the range of 30-40%. They also stated that the Kazakhstanis’ passion to high-tech gadgets and a consistent improvement in online commerce as well as non-cash payments will surely boost this market (Gani Uzbekov, Chairman, Capital Bank Kazakhstan, 2016). Kazakhstan was in fact among the top 8 countries in the amount of active SIM cards per 100 people, and first in CIS. Share of cashless payments increased from 10 to 15% in the country and the growth of non-cash payments was in total 60% comparing to the same period last year.

At the moment Kazakhstan has already gained some experience in e-finance, becoming the first electronic public framework launched in Central Asia (Kaulanova A, 2014). It is one the initial public system which was developed by API (Application Program Interface) in order to deliver the online services from the electronic government including mobile banking services. After that implementation, it has enabled to work with just over 40 million electronic requests per year. According to the Global UN’s e-Government Knowledgebase which was based in 2018, Kazakhstan takes the 39th place among the 193 countries regarding e-commerce. Regarding the bank sector, it can be noted that the information provided by Forbes.kz about the 10 largest commercial banks of Kazakhstan can be used for evaluating the performance of theirs. (Vorotilov, A. and Aulbekova, A., 2018) There are: “HalykBank”, “Kaspi Bank”, “Housing Construction Savings Bank of Kazakhstan”, “Tsesna bank”, “Sberbank”, “CenterCredit Bank”, “ForteBank”, “Home Credit Bank”, “Altyn Bank” and “ATF Bank”. According to it most of the banks have a stable position in the market, and the largest of them by its bank assets are: “National Bank of the Republic of Kazakhstan or Halyk Bank (it represents the upper tier of the banking industry in Kazakhstan), “Tsesnabank”,” Sberbank” and “Kaspi Bank” (all the three banks are second-tier). Most of the banks in the list provided by Forbes.kz have their own version of mobile banking that might even be better than those large commercial banks’ features of mobile banking.

The structure of national EPS (electronic payment system) ecosystem in Kazakhstan includes remote financial services and bank or non-bank terminals. The remote financial services are divided into mobile (mobile, SMS banking) and non-mobile banking (Internet banking), and ultimately non-banking non-mobile (electronic money) services. The payments without cash are available through the Internet or mobile network with the usage of mobile phones, smartphones, tablets or computers. Considering the terminals, the banks in Kazakhstan are now introducing remote access devices such as POS-terminals, imprinters, ATMs and bank terminals. In the past, there were only 3 electronic purses: “the Kazakh KZM” (Alliance Bank JSC), “Tau-purse”, and the Russian “QIWI-purse”. However, currently there are 11 payment systems, including “National Payment System”, “MyPay”, “HandyPay” and more in the market. It was the payment service by mobile phone, when money is written off from the account of the operator, but not from the card base. Today, however, after the development of technology in the country, this kind of opportunity has occurred and implemented successfully. (Nadezhda Akulova, 2013)

Mobile banking services can be adopted by a country according to the specific factors (Minna Mattila, 2002). There are 5 factors of innovation adoption presented by Rogers, E. M. in 1995 and those factors also affect the adoption of mobile banking services: “Relative Advantage”, “Complexity”, “Compatibility”, “Observability”, “Trialability”. And the most important factor is

known as “Perceived Risk”. Security and trustworthiness of using the service is indeed the most important factor within every target segments when deciding on banking service delivery channel. In the year of 2014, Chung carried out an investigation about Kazakhstan and revealed perceived risk, trustworthiness and Rogers’ five innovation patterns as important determinants for the adoption. As a result, it was noted that trustworthiness and perceived risk are crucial determinants of the adoption due to the high uncertainty avoidance characteristics of the Kazakh society.

1.3 Research Methodology

Throughout the entire research, lots of articles, journals, books both in domestic and foreign language have been reviewed by an author concerning the topic. Old archives of newspapers related to mobile banking development starting from the year 2005 have been collected. Suggestions, opinions, and predictions of many experts and authors have been reviewed and author’s own point of view has been created based on them. Furthermore, the collected data and information will be extended in explanation and detailed features of mobile banking services will be provided to obtain a solid understanding by the methods of investigating and researching. By providing a solid data from the official websites of the banks conducting mobile banking, the idea of the functionality of those mobile banking features in Kazakshtan can be investigated.

Chapter II The history of development of mobile banking services in Kazakhstan

2.1 The first stage

The bank in Kazakhstan known as “Halyk Bank” for the first time has granted its customers a completely new range of service called “mobile banking” for the holders of both local and international bank cards on May 16, 2005. This kind of opportunity will allow the customers to monitor the movement of funds on the card account in real time on a daily basis sending SMS messages to a mobile phone. A card holder, who is connected to this new service of the bank, when making any transaction or authorization on a card account receives an online SMS notification on the mobile phone. The first implementation of this project hasn’t gained much popularity among the customers and only little number of users was using mobile banking services, only around 13000 people by the end of the year 2005. The development of mobile banking during this period was in its earliest stage of development offering only limited and fundamental features of mobile banking services to its users and only via SMS messaging. At this first stage, the holder of any Halyk Bank payment card connected to the service received an instant SMS notification on the mobile phone when any card account transaction was being carried out (purchase, payment for services, receipt of salary, payment, etc.). Additionally, a user of mobile banking is able to send the requests for card balance, transaction history, account debt, can instantly block the card if necessary, etc. (only 8 basic features of mobile banking in total) to the bank from the mobile phone.

Mobile banking system was launched for the subscribers of the GSM-operator at the first period (Beeline, K-mobile, Excess – mobile network operators). Then, on July 25, 2005, the services of the Mobile Banking system were expanded to users of the CDMA-operator Altel JSC (Dalacom, Pathword). And finally, on August 11, 2005, with the connection of the third operator GSM Kazakhstan LLP (K-cell, Activ), the mobile banking service covered the entire mobile market within the country. The contribution to this project is being carried out simultaneously in 5 CIS countries (Azerbaijan, Belarus, Kazakhstan, Russia, and Ukraine), and Halyk Bank of Kazakhstan became the second bank to launch this service after the Russian Sberbank.

On March 1, 2006, the mobile banking system introduced the opportunity of performing payments for mobile communications directly from a mobile phone (subscribers of K-mobile, Beeline, Dalacom, Pathword, K-cell, etc.). Throughout the 10 months of 2006, total of 27.5 thousand of such payments were made with the amount of 26.7 million tenge.

2.2 The second stage

On November 29, 2007, for the total of 206 thousand users of the mobile banking system of the Halyk Bank of Kazakhstan, a new version of the applet was introduced - a small application that displays a convenient banking menu on a mobile phone. A feature of the new version of the “HalykBank” applet is the ability to transmit the applet via Bluetooth, infrared port and a data cable (before that only download from the WAP was supported), as well as maintenance for communicators on Windows Mobile. These features will allow mobile subscribers using different kinds of communication devices to use the capabilities of mobile banking services via a convenient interface. It is also possible to make any payments (for cellular communications, utilities, in the online stores, etc.) and transfers (intra-bank, inter-bank, card to card transfers, etc.) directly from the mobile phone. And most importantly, those payments will be absolutely safe as they will be verified by the electronic digital signature of the client.

On July 31, 2008, “Halyk Bank of Kazakhstan JSC” and “Kazakhinstrakh JSC” announced the launch of a joint service - mobile banking for insurance services. Now the country’s largest online services of the mobile banking system carried out by “Halyk Bank” have been expanded in terms of the insurance services provided to the customers. And thanks to the mobile banking system the customers of “Halyk Bank” are able to receive SMS notifications on the imminent expiration of the insurance contract on time or about the upcoming installment payment. SMS notifications will be sent to customers a month and then a week before the expiration of the insurance policy (car, property, accident insurance and other products) in order to warn the clients about the necessary completion of procedures related to re-signing the insurance contract.

2.3 The third stage

The first universal mobile payment system “MyPay” has been launched in the country on October 3, 2011. It is a joint development of “Intervale Kazakhstan” and “Halyk Bank” of Kazakhstan. It provides an opportunity for a subscriber of any Kazakhstani GSM-communication operator to purchase goods and services of more than 50 trade and service enterprises using a mobile phone. Moreover, the subscriber does not necessarily have an access to the Internet; it is enough to be in the coverage area of the cellular network. In addition, MyPay application is the first step towards the development of NFC technology (which will allow consumers to pay for goods with a mobile phone with an NFC chip).

On January 23, 2012, Kazakhstan’s first mobile application (MyPay) for conducting mobile payments with a bank card was adapted for iOS. Previously, this mobile application was only available for phones and smartphones based on Java, Symbian, Windows Mobile and Android. Users were able to pay for the services of more than 50 companies including cellular communications, the Internet, television, utilities and so on. By the end of the year, the list of services provided were expected to be updated with the following features: payment of fines of the traffic police, payment of taxes, purchase railway or air tickets, and so on.

On September 27, 2013, “MyPay” was implemented to WinPhone-based devices. There are 4 new categories added to its features: "Transfer of donations", "Payment for security monitoring services", "Payment for maintenance services" and "Tuition fees".

2.4 The fourth stage

On October 26, 2017, mobile payments via QR codes were finally available. The bank which is known as “Kazkommertsbank” announced the initiation of a new payment service Homebank Pay, which allows the users to pay for services and goods by using QR codes. As a result, trading and service enterprises were able to accept cashless payments without using POS-terminals. And the process of payment for goods and services was greatly simplified.

On February 03, 2020, Halyk Bank’s “Homebank” mobile banking application allowed to perform a contactless payment using any Android smartphone with NFC module (Near Field Communication – a short range wireless communication interface). Owners of NFC-enabled Android smartphones were able to perform one-touch payments by “Homebank” application so that to use the contactless payments provided by the global sale and service companies which are equipped with POS terminals enabling contactless payments.

2.5 Summary

More and more banks have been adding mobile banking services to its functions starting from 2014 till now after the implementation of “MyPay” payment system. As a result, more people are becoming aware of existence of such services and actively are using them. The popularity of Internet banking and mobile banking were growing enormously day by day. Many people have changed the traditional way of payment and it is having a great impact on becoming a cashless society. Banks in Kazakhstan have been trying to follow the standardized patterns of mobile banking adopted from the modern countries. However, because of that they are providing relatively same mobile banking features between each other and on a fundamental level compared with the modern countries’ mobile banking patterns. There are no unique mobile banking applications that can offer something new to the customers and do have the certain ideal mobile banking features which will be attractive to everyone.

Chapter III Important Features of Mobile Banking and Factors influencing on the adoption of Mobile Banking in Kazakhstan

3.1 Features of mobile banking services

3.1.1 Methods for banks to implement mobile banking

Modern technology is shifting almost all the available services to the online provision of it. It is certainly less efficient to use the regular method of services provided as it was in the past since via online it is possible to save an energy and time. As it was expected, the same approach was performed in the banks. Any modern bank is able to maintain the leading positions in the corresponding market with a well-made mobile application that is versatile and easy to handle allowing its users to be able to perform different important operations more efficient than any other sources via mobile. This type of service has lots of benefits not only for customers but also for banks. After deciding to be engaged in this direction, the first and most essential step is to create an app in which the certain set of functions should be implemented allowing the app to be widely used among the customers. Further, the requiring fundamental as well as some interesting unique features of a mobile banking app will be explained in detail in order to give an idea of an ideal app that is appealing to everyone. And the format of it should be picked by banks in Kazakhstan providing mobile banking services as well to gain a maximum knowledge about the ideal features of the mobile banking which can be noticed and highly accepted by the people throughout the country.

3.1.2 Fundamental features

There is a list of minimal set of functionality that has to be presented in the mobile app. Typical banking app features in which possibilities such as obtaining account balances, lists of latest transactions, electronic bill payments, remote check deposits, P2P payments, funds transfers between a customer’s or another’s accounts, finding ATMs, receiving notifications and alerts are naturally included as BBVA Group stated. It is highly recommended to pick the latest possible tools and technologies. Each of the important basic and also completely new innovative features will be named and interpret accordingly to demonstrate how existing mobile banking apps solve the appearing difficulties regarding the bank operations in daily life.

3.1.3 Unique innovative mobile banking features

Biometric authentication

Biometric authentication monitors physical metrics of a human in order to recognize and verify him or her. This kind of technology is able to identify a human voice, typing rhythm, and

even a body motion. Furthermore, many other interesting characteristics of it can be implemented too

Intelligent chat bot for customer support

By providing the most personalized treatment to the clients the following success is guaranteed. It is significantly important to make sure that the customers are receiving 24/7 support and can get a professional consultation or advice anytime they are requiring it. An AI chat bot is the best option for that approach. A smart chat bot can easily reply to hundreds of customers at the same time without making them wait in line.

QR code payments

By Scanning QR codes directly from a mobile banking app customers can experience easier, faster, and more convenient way of paying for goods and services. Interestingly, although QR codes are not a fresh technology, not all the banks have launched payments by QR code so far.

Voice payments

Voice banking is finally launched by the Royal Bank of Canada and Barclays. They have become the early adopters of this new technology in mobile banking. Now the clients of these banks are able to ask Siri to pay the bills.

Budget amp; money planner

Not fresh, but still relatively new feature. It allows the customers to get the idea of their spending habits.

Context-aware notifications

None of the banks have implemented this feature yet. This feature would allow the users to enjoy special offers (discount coupons, interesting goods) depending on your location. For example, if a customer is sitting in the café, the banking app would send a discount coupon for a dessert. Customers would enjoy this feature for sure.

Apps for wearables

请支付后下载全文，论文总字数：59741字