Vector of digitization: Banking sphere

During extended session of the Government dedicated to outcomes of the first half of the year, President Gurbanguly Berdimuhamedov highlighted that implementation of digital technologies to production processes is a priority objectives of heads of all branches at present time.

Large-scale work for introduction of digital technologies to banking system of Turkmenistan is carried out at the moment. Digital transformation will allow expanding range of banking services and capabilities of national payment system provided to the clients, increasing competiveness of credit institutions.

Regarding to banking services, the transformation is represented by fundamental change of relations between the participants of financial market and clients, which provides acceleration of provision of services and time saving by use of alternative service channels.

In this context, promptness and widespread access of provided services bring relations between the banks and clients on entirely new level.

This spheres is always modernized; development of various banking products and services is carried. Analysis of activity of credit organizations demonstrates that process of introduction of innovations by use of new scientifically and technical achievements is required for efficient work and achievement of competitive advantages.

Applications, which users go to internet for checking balance of their accounts, review of recent operations, transfers and payment of services as well as for receiving or paying credits, purchasing, insurance, etc., become convenient and efficient tool with development of technologies of mobile internet and expansion of functions of smartphones.

From the day of introduction of mobile applications for payment of different services and products, the number of non-cash payment is growing significantly.

Opportunity to pay fuel bills by bank cards via terminals has been made at Türkmennebitönümleri gas stations. Mobile terminals for refilling of road cards used for payment of public transport services have also been installed.

All branches of CJSVs Ashgabat City Telephone Network, Altyn Asyr, Turkmentelecom and Turkmenpochta State Companies have capability to pay by card.

Bank clients commonly use services of Internet Bank and Mobile ban systems for payment of mobile phone, IP TV and internet bills. Special applications allows buying train and intercity bus tickets.

The banks of the country propose services for opening of deposit bank cards Goýum bank karty with 5 – 7 percent annual interest rate. As per requirements of Maşgala (family) card holder, the members of the family are able to use salary card within certain set limit.

As of today, number of bank cards used in Turkmenistan has exceeded 4 million (4,288,600 as per information from Central Bank of Turkmenistan). The volume of non-cash payments using bank cards has exceeded 814.8 million manats in January – July this year, which is 2.42 times more comparing with the same period of the last year.

Permanent monitoring as well as serious work are carried out for provision of safety of payment system after increment of number of bank card, ATMS, payment and information terminals and expansion of range of transactions.

Testing of QR-Code (quick payment confirmation code) have been carried out successfully by Rysgal Joint Stock Commercial Bank for provision of modern technologies in payment and settlement system of Turkmenistan to the clients. Contactless bank cards have also been put into circulation.

Cash back service has been developed for the clients for further increment of number and volumes of non-cash payments in banks of the country. The service provides return of part of spent money after purchasing to bank card.

Having studied the world practice, relative amendments have bene made in normative base of Turkmenistan. It is worth to mention that amount of money returned during use of Cash Back Service is 0.5 – 2 percent from the amount of transaction made by clients of crediting organizations of the country. It is remarkable that stable growth of clients using advantages of this service is observed.

Turkmen banks works closely with the leading European economic and financial institutes. It includes European Bank for Reconstruction and Development, International Monetary Fund, World Bank, Asian Development Bank, Islamic Development Bank as well as Islamic Corporation for financing of private sector and Ministry of Finances of Japan and other organizations.

Cooperation of Turkmenistan with international financial institutes is growing according to the Programme of Development of foreign economic activity of the country in 2020 – 2025 approved by President Gurbanguly Berdimuhamedov.

The establishment of digital bank is planned in the future. At first, this bank has no departments, which are replaced by personnel of Call centre. Such bank has to have developed distant digital services like internet banking, mobile banks, personal cabinets, websites and other specialized services for private and corporate clients. Normally, more than 90 percent of client contacts use these channel, which operate 24 hours.

Number of comprehensive preparation measures are required for systematic and steadfast implementation of new financial technologies. Improvement of business processes for satisfaction of their growing volume provides the development of relative software for processes and tools used in banking sphere.

Development of automation level will allow reducing time and cost as well as will make direct effect on satisfaction of clients’ requirements as transactions will be carried out rapidly and with high level of security and control.

Establishment of infrastructure for introduction of technological innovations is an organization of digitization process management, establishment of mechanisms of provision of informational security.

Training specialists in the sphere of informational security, systematic analysis of financial flows, developers, administrators of informational systems, engineers and other specialists is also required.

Definition of orientation of credit institutes in business sphere and market segmentation includes clear orientation to clients, development of new products, banking informational system and system of relations with clients.

Digitization of service involves availability of powerful, reliable and flexible technological platform ,which is able to process big volumes of data for short period and provide entire range of services. This is the main condition of reformation of banks in Turkmenistan.

All of these include virtualization of banking business processes, digital transformation in all spheres of banking services, which lead not only to changing of tools but entire process of communication, open new capabilities for both sides, give impulse for development of new and optimization of existing products.

Financial innovations will be the main tools of competition in banking market, important measure for differentiation of product while their active implementation is to support to improvement of competition in this sector and change of its character.

Overdraft, credit in other words, is one of examples of this process in Turkmenistan. The bank grants it on certain terms – maximum credit amount, interest rates, grace period if any, payment overdue fees are agreed in advance.

Introduction of overdraft, which is provided by Altyn Asyr bank card, can be brought as an evidence of successful digitization of provision of innovative banking service provided by the State Commercial Halk Bank. The interest rate on overdraft is 12 percent and can be adjusted based on the decision of credit commission of the bank.

Further development of digital channels of cooperation will allow presenting banking services in the volume and time required by the clients.