Iran Closing the Gap on Banking Innovation

EghtesadOnline: Despite restrictions imposed by sanctions, some of which having outlived the 2015 nuclear accord, the administration of President Hassan Rouhani managed to significantly close the technological gap between the Iranian and global banking systems by focusing on innovative products in the field, a deputy economy minister said.

News ID: ۷۴۰۸۳۷

09 April 2017

“In general, during the past three to four years, the speed of progress in the [Iranian] banking industry and the ease of transactions have been evident,” Hossein Qazavi added.

He said Iran is not the only country growing in terms of technology and innovation, “but the important thing to note is that during the tenure of the current government, in spite of sanctions imposed on the country, it did not lag behind the changes taking place at the international level”.

According to the official, the most important approach of the government in this regard has been to minimize the gap between Iranian and international banking, which has led to a significant decrease in transaction costs for the public, Financial Tribune reported.

Referring to ensuring ease and safety of transactions as one of the government’s duties, he noted that as a result of these actions, “the chances of errors in e-payments have dropped to zero”.

“What is important is that a significant portion of the software currently being used in our banking system has been provided by local experts,” he said.

Even though Iran was cut off from the global financial system for over a decade because of the sanctions, after the implementation of the nuclear accord–formally known as the Joint Comprehensive Plan of Action– “compared to the banks of our neighboring countries, we are at the same level and our banks are not lacking in any area except for the ability of our bank cards to be used internationally”.

Stressing the importance of easing transactions for the Iranian public, Qazavi said the country’s GDP is about 13 quadrillion rials ($346.6 billion) and annually banking transactions throughout the country are about six times this amount.

“Of this number, about 90% of which equal over 70 quadrillion rials ($1.86 trillion) are in the form of e-payments,” he said. “As a result of the expansion of software and hardware infrastructures by the government in the electronic banking sector, the public is now able to engage in banking transactions through the Internet without any restrictions of time or place.”

E-Payment Tools

As another example of advances in the banking sector, Qazavi referred to ATM machines, the total number of which throughout the country stood at 27,000 by the end of the Iranian year ending March 20, 2012.

With an increase of 15,000 machines, there are now 42,000 ATMs in Iran, according to the latest statistics.

On the other hand, 174,000 bank cards existed in the country by 2012, but with more than a twofold increase, the number of bank cards stands at about 350,000 at present.

The deputy minister also said that when foreign exchange is assigned to any commodity or when the commodity enters the customs service, all the relevant data are consecutively saved in a variety of systems that eases data management.

Because of these systems, Qazavi added that importers and related people in various sectors, “including the banking system which need to obtain credits, will be able to receive services electronically.”

According to the latest data released by Shaparak, the body in charge of Iran’s payment network, Iranians made 1.06 billion successful digital payment transactions worth 1.19 quadrillion rials ($30.8 billion) during the month ending December 20.

The report indicated a 31.17% growth in the number of successful digital transactions and 46.7% growth in the value of electronic operations compared with the same period of last year.  According to Shaparak, 253,358 online gateways were active by December 21.