Over 2 million bank cards distributed in recent months

Financial experts optimistic about success of digital banks in Iraq

BAGHDAD, December 26 — Bankers and financial experts say an increasing number of Iraqis have obtained electronic payment cards in recent months, in an encouraging sign for major reforms in the country’s commercial transactions and financial services.

Over the past ten months, more than two million Iraqis have obtained electronic banking cards, according to the Iraqi Bankers Association, fueling optimism for the success of digital banks like First Iraqi Bank (FIB), which received a license from the Central Bank of Iraq (CBI) to promote financial transactions through a mobile application.

Prime Minister Mohammed Shiaa’ Al-Sudani’s government says it is working towards transitioning to digital transactions to combat corruption, money laundering, and to regulate bank operations, replacing the use of paper currency. However, the process is progressing slowly for various reasons, including citizens’ hesitation to adopt the card system and some businesses’ failure to handle electronic point of sale (POS) systems.

Earlier this year, the government mandated commercial centers, restaurants, private schools, universities, private colleges, and gas stations throughout the country to open bank accounts and provide electronic payment POS terminals.

In addition to the challenges at hand, local banks have ventured into introducing a digital bank model, managing all financial operations through mobile applications, following specific criteria.

FIB is the first Iraqi digital bank offering online financial services via the internet without the need to visit the bank’s premises. According to its website, the bank relies more on technical experts than accountants, with a focus on programmers and tech engineers.

In a country accustomed to cash transactions, indicators of success for banks lag behind those of other countries in the region. However, experts speaking with 964 suggest that the experience will represent a qualitative leap in the Iraqi banking sector, despite customers needing to overcome their concerns about relatively new digital transactions in the country.

Mahmoud Dagher, a banker and financial expert said, “Opening accounts and obtaining digital cards is a positive phenomenon, but an Iraqi gap in this field needs addressing. This gap has been exploited to withdraw physical dollars outside Iraq and take advantage of price differences in the parallel market.”

“The move to a digital bank is a success for the banking sector by relying on electronic payments. However, the exchange rates for the dollar have not been affected by this issue so far,” Dagher added.

Aland Saif Al-Din, the Chief Technical Officer at FIB said in addition to its digital services, the bank does have branches in all governorates for customers who prefer in-person transactions.

“Customer rights are preserved because the Central Bank oversees the bank’s operations and monitors the procedures, as it does with other traditional banks,” he shared.

Ali Tariq, Executive Director of the Iraqi Bankers Association, said the use of technology would help to provide banking services to all segments of Iraqi society and inclusion in the country’s financial transformation.

“The private banking sector has significantly worked on developing infrastructure concerning technology, and now many banking services are available through digital applications, such as opening accounts, issuing bank cards, transferring funds, applying for loans, and more,” Tariq said.

According to financial expert Nabeel Jabar Al-Tamimi, Iraqi’s government, in collaboration with the CBI, is attempting to expand the use of electronic cards as as a step towards the localization of funds within both government and private Iraqi banks.

“The primary economic goal of the government is to provide cash liquidity, primarily within banks, to achieve development objectives. Subsequently, other goals contribute to the commercial market, regularization of complexities, and the provision of general facilitations,” Al-Tamimi said.

“Iraqis have rapidly acquired electronic cards following government decisions that emphasized the expansion of card usage. These decisions include restricting payment at fuel stations to electronic payment cards, a measure that may extend to exclusive payment methods for services provided by the government in the near future,” he added.

Despite the government’s efforts thus far, however, Al-Tamimi said more infrastructure provisions are required, such as servers, databases, control and protection software, and electronic payment and ATM outlets.