Central Bank of Iran Announces 4 New Developments in E-Banking

EghtesadOnline: The Eight Conference on Electronic Banking and Payment Systems opened at Tehran’s iconic Milad Tower on Tuesday.

News ID: ۷۴۶۵۹۴

30 January 2019

The two-day event, organized by the Monetary and Banking Research Institute, was attended by high-level banking and technology officials and intends to connect, industry leaders, business owners, and technology innovators and investors.

Abdolnaser Hemmati, governor of the Central Bank of Iran, who was in Syria communicated to the conferees via a video message and talked of four latest achievements in electronic banking and payments.

He pointed to the “direct debit” mechanism as infrastructure for startups and an efficient device for collecting earnings from their businesses, Financial Tribune reported.

“The system is in operation by many banks to address concerns of clients and business owners,” he told the meeting.

Direct debit refers to a type of preauthorized payment mechanism under which an account holder authorizes the bank to pay a sum of money directly to any third party.

As for the second progress, he talked about the CBI’s  “cryptocurrency draft policy” the public can access via the official CBI website that outlines regulations and the CBI view of cryptocurrencies.  According to the senior banker, the document will be finalized after collecting the views of the conferees, experts and stakeholders.

The CBI’s effort to replace the traditional magnetic debit cards with so-called smart cards was the third electronic banking achievement. “The smart cards are important in that they provide a secure payment environment,” Hemmati said.

Finally, creating a platform for launching blockchain technology was the fourth important development, which Hemmati said paves the way for businesses, bankers and innovators to develop their blockchain-based products.

He said the regulator has reached a consensus to stick to its regulatory duties and allow fintechs more maneuvering space to operate in a convenient environment.

‘Blockchain Revolution’ has been chosen as the main theme of the annual conference.

On the Sidelines

Among other speakers of the meeting were Ali Divandari,  director of MBRI, Mohammad-Javad Azari Jahromi, the telecoms minister, Akbar Komijani, deputy CBI governor,  Sohail Nikzad, board member of Iran Association of Blockchain, and Mehdi Ebadim, a member of the Iranian Fintech Association.

The event includes workshops, seminars, and an exhibition where fintechs, banking and payment startups, and tech companies will present their products.

Before broadcasting Hemmati’s message, Divandari addressed the opening ceremony. He pointed to the blockchain revolution saying that given the widespread influence of blockchain technology in recent years, “ pioneers who befitted the most from the rapidly  emerging technology will lead the world.”

He said “trust” is the essence of any traditional banking system and this key concept of trust will be “transformed by blockchain.”

“It allows partners in trade to enter deals only based on mathematical algorithms without the need to trust each other”, he said.

He pointed to the decentralized nature of cryptocurrencies which counterpoint the current highly centralized structure of the banking system.

“Banks and credit institutions that insist on maintaining their hierarchical and centralized base will over time disappear from the electronic banking industry”, he warned.

Komijani, the senior CBI official, focused on the anti-monopoly and customized advantages of fintechs and cryptocurrencies, saying that the new technology will break the monopoly of traditional banks and credit entities and offer quality services in a safer, quicker and customized manner.

Overseer

Referring to the efficiency of CBI regulations in restoring stability to volatile markets in recent months, he said, “subject to the growth of fintechs and blockchain, appropriate rules” must be in place, emphasizing that the regulator should only define the framework and steer clear of details that could limit the functions of businesses.

Regarding the regulator’s supervision over blockchain technology, the CBI deputy pointed to its transparent feature emphasizing that the technology doesn’t pose any challenge.

“If tracing a particular fault or misdemeanor is not possible within traditional tools, then blockchain comes in. The CBI should realize that this technology is part of the solution not the problem.”

Azari Jahromi, pointed to the drastic reduction of costs for services provided by electronic banking compared to traditional banking.

He considered the ID authentication of bank customers as one of the obstacles in the way of digital and electronic banking and spoke about a newly developed online ID system by the Telecoms Ministry designed to serve ID authentication.

The Online Identification System—locally named Shahkar (masterpiece)—monitors the IP address of data senders and recipients.

Jahromi pointed to the direct debit mechanism unveiled by the CBI boss, saying 18 banks provide the DB service. “The service offers businesses ways to monitor their payments at much lower costs,” he said.

Soheil Nikzad, a cryptocurrency specialist, lamented about the myriad restrictions, imposed in and outside the country, on mining and trading digital currencies, claiming that despite the restrictions over 10 million transactions are processed daily in the country via bitcoin.