Freedom Bank has become the third-largest bank in Kazakhstan by transaction volume and the number of active clients, according to Timur Turlov, CEO and majority shareholder of Freedom Holding Corp., who took part in the Global Banking Summit in London. He made this statement during the panel discussion called «The Future of Banking Infrastructure – Can Classic Systems Survive?»
Responding to a question from Financial Times Projects Editor Oliver Ralph, the panel’s moderator, about engineers and a culture of changing quickly, Timur Turlov said that Freedom Holding launched its banking platform five years ago, highlighting the importance of changing old patterns.
«If we do what everyone else does, it will be very difficult to compete with much larger players that benefit from scale, efficiency, and customer trust. In this case, everything that helps us achieve this ambitious goal is valuable,» he emphasized.
Freedom Holding Corp. CEO Timur Turlov explained that the holding’s corporate culture is built on the idea of delivering more and delivering faster, not being afraid of making small mistakes, doing something, testing, releasing, adjusting and then releasing improved versions of a product.
According to Turlov, the holding achieved rapid growth largely because, from the very beginning, it focused on changing key processes despite limited capital and resources, while competing with global players and well-capitalized banks.
«There is very little internal resistance within our team. During the first two years, when we began developing the platform, we changed people’s mindset toward digitalization and their approach to business processes. For example, we started thinking about how to automate management. We asked ourselves whether it was possible to fully implement the mortgage lending process without human intervention. Once the team truly believed that this was technically and legally feasible, the project began to develop rapidly and achieved great success. The market appreciated it. As a result, implementing the next project became much easier. People realized that the sky was the limit and that they could try something completely new, as long as it stayed in line with regulations,» he said.
What is Freedom Holding Corp.’s approach to infrastructure building?
Timur Turlov believes that in the future, it’s crucial for the banking sector to focus on infrastructure building. This is a key competency for any bank and something difficult to outsource. For the holding, this is the core business.
«We continue to use platforms from various vendors, but each year we aim to gain control over as many technologies as possible, because we truly believe that they are a key business advantage. That is, the key quality of a product lies in its technological effectiveness,» said Timur Turlov.
Freedom Holding Corp. CEO Timur Turlov underscored that it’s difficult to imagine a digital bank that doesn’t possess its own technologies and can’t manage them properly.
«On the one hand, we can’t completely rely on partners to develop our core systems. On the other hand, developing such complex products is also a very challenging task, which is why we still need partners. However, every year we collaborate less and less with third-party organizations and develop everything ourselves. In fact, we now have far larger technology teams than most of our suppliers,» he said.
Timur Turlov added that the company started acquiring products from several suppliers, including card processing, core banking systems and business process management systems. The company then began redesigning and adjusting them. Today, the bank aims to control its card processing fully.
«We are trying to embrace the latest technologies while we’re still a relatively young company, because we understand that the more mature the processes, the higher the cost of such a transition. And this is our core competency,» he said.
About the most important asset for the bank
Responding to the moderator’s question about talent, Timur Turlov explained that over the past ten years, most people in the industry have realized that the most important asset for a bank is talent.
«It’s definitely not our capital, not our financial assets, not our technology. This is our ability to retain talent. And to get new talent from the market, we are trying to build a brand of a tech-savvy and advanced company. We’ve built a very successful digital bank in Kazakhstan and we did that because we created a dream team — large enough and talented enough in our country. And I think it is the most talented in the industry,» he said.
Managing risk and being willing to take risks
According to Turlov, there needs to be a certain tolerance for risk, but not for gambling.
«We definitely need to hire competent people willing to take risks. From a management perspective, developing quickly today is essential simply to survive. It’s not a question of efficiency. It’s a matter of survival, and of course, in this situation, we must tolerate certain risks, but we mustn’t tolerate incompetence. I mean, if we’re constantly making small mistakes and not learning from them, that’s unacceptable. (…) The financial sector itself is full of risk management. This is actually our key job — to manage risks and take risks. This is why our customers pay us,» he said.
Then host Oliver Ralph asked Timur Turlov about how his bank prioritizes AI, core infrastructure and digital products.
«Concerning AI, I personally realized that it is just one layer of technology, because you can’t refocus a team on AI alone and ignore other tasks. If you don’t have sufficient infrastructure, it’s hard to run a business. In other words, any AI application is just another layer. You can’t significantly change priorities because even AI won’t work properly if your other processes aren’t in place,» he said.
A joke from Timur Turlov
Business demands more and more from its development team every year, according to Timur Turlov.
«We joke at the company that what one developer can do in a month, three developers can do in three. The larger the team, the less effective it is, and sometimes effectiveness declines faster than the team grows. That is, productivity can decline as the team grows. Therefore, I try to split teams. For example, if we need more products and have sufficient financial resources, I prefer to create a microservices architecture, not only in terms of code but also in terms of management, to create as many independent teams as possible, capable of working independently. At the holding level, we are trying to create the necessary infrastructure for maintaining standards, final testing, etc. However, it’s difficult to say which area is more important for us, since all tasks must be accomplished simultaneously,» the businessman highlighted.
From Dec. 2 to 4, the Global Banking Summit, organized by the Financial Times, is taking place in London with Freedom Holding Corp. serving as the lead sponsor. The conference is addressing the industry’s most pressing issues, including the impact of geopolitics on the financial market, technological transformation, competition between traditional banks and fintech companies, the outlook for investment businesses and international competitiveness.
