Regulatory Reform and Modernization in Azerbaijan – Vusal Khalilov – [Episode #31]
In the latest episode of the P.I.T. Exchange, recorded live from Sibos 2024 in Beijing, we had the pleasure of diving deep into the modernization of payment systems and regulatory frameworks with Vusal Khalilov, the Executive Director of the Central Bank of the Republic of Azerbaijan. Hosted by Gonzalo Santamaria, this episode sheds light on the strategic initiatives and technological advancements driving the central bank’s efforts to enhance the payments landscape.
Vusal’s professional journey is a testament to the blend of technical expertise and business acumen required to lead the central bank’s initiatives. With a master’s degree in computer science and an MBA, Vusal previously served as the Chief Technology Officer (CTO) of a leading commercial bank in Azerbaijan. This unique background equips him to spearhead the central bank’s efforts in technology, data management, payments, and fintech innovation.
Modernizing Regulation and Data Transformation
One of the Central Bank of Azerbaijan’s major initiatives is the modernization of its regulatory framework through the introduction of risk-based supervision. This approach aims to enhance decision-making processes, bolstered by advancements in regulatory technology (regtech) that improve governance and oversight. Alongside this, Vusal Khalilov discusses the central bank’s ongoing data transformation efforts, which include rebuilding their neural engineering engine and implementing comprehensive data governance frameworks.
Expanding Digital Payments and Data Governance
A key priority for the central bank is to increase digital payment usage, which currently stands at around 63%. To support this growth, the bank is modernizing its infrastructure to handle rising transaction volumes and improve user experience. This shift towards a more data-driven decision-making culture involves not only internal improvements but also the regulation of data governance practices among payment institutions and banks.
Harnessing AI and Machine Learning for Predictive Insights
Incorporating AI and machine learning (ML) into its operations, the central bank is already utilizing certain AI models to support decision-making. However, Vusal emphasizes a pragmatic approach, focusing on ML-based models that offer predictive insights and operational efficiencies. Part of this transformation includes the development of a new lakehouse system, which will act as a centralized data repository, improving data quality and supporting the creation of predictive models that inform regulatory decisions.
Advancing Instant Payments and Global Collaboration
The Central Bank of Azerbaijan is enhancing its instant payment system, working with commercial banks to develop a roadmap for broader usage and new features. This aligns with global payment trends, particularly the G20’s 2027 goals for cross-border payments. Vusal emphasizes the importance of setting high standards to drive industry innovation. The discussion also covers the need for inclusivity and collaboration, particularly in engaging younger generations.
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Upcoming P.I.T. Exchange Podcast Guests:
- Viktoria Soltesz, Founder & CEO, PSP Angels
- Lonnie Talbert, President, ATMIA
- Victoria Cleland, Chief Cashier and Special Advisor to the Governors, Bank of England
- Sharmyn Powell, Director, Payment System Modernization and Financial Inclusion, Eastern Caribbean Central Bank
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