Dr. Divandary, the director of the Monetary and Banking Research Institute (MBRI) affiliated to the Central Bank of Iran (CBI), has said in an interview that those seeking investment in a secure market. Having a Ph.D. in strategic management, Divandari has previously served as the managing-director of Mellat Bank and Parsian Bank.
MBRI is a think tank which carries out research in the board area of Monetary Policy and Banking in Iran. It also organizes several conferences during the year including conference on electronic banking and payment systems.
The annual conference on E-banking and Payment Systems (EBPS7) offers participants a unique opportunity to engage with leading banking industry figures, corporations, and academics to debate and collaborate in the areas of payment systems and banking.
EBPS is a leading banking event in Iran where networking and doing business are at the top of the agenda. In addition to the conference, EBPS7 hosts a high-class exhibition, where participants can meet top institutions in e-banking and payment systems. To learn more about EBPS and its mission Iran Economy Magazine had the opportunity to interview Dr. Divandari Secretary of Conference in his office in central Tehran.
Q: What are the goals of Electronic Banking and Payment Systems Conference held by the Monetary and Banking Research Institute?
A: The Monetary and Banking Research Institute and the National Information Corporation, as the main two scientific arms of the Central Bank of Iran in the area of banking and information technology, launched this conference to introduce national achievements of Iran’s banking industry and review the international procedures in this industry. However in the course of time the conference was extended to cover a wider range of objectives, including introducing modern innovations in the world banking industry, the presence of new players in banking businesses as well as examining the rules and regulations governing this area both in Iran and the entire world.
Q: How do you assess the six past editions of the conference?
A: one of the main achievements of the past six editions of the conference was the change in the viewpoint of the policymakers and the senior banking managers to the issue of technology so that it is no longer regarded as an instrument, rather is seen as a propeller of evolution of new models of banking businesses. Creation of such a look was a necessity for institutionalizing new technologies in the banking system and initiating a fundamental change in the way of banking businesses. Also, in order to match with the latest developments and technologies in the area of electronic banking, the past six editions of the conference have sought to make use of the experiences of international experts of electronic banking and copy the successful examples so that the country’s banking system has always remained updated.
In addition, our new generation who is being grown up with technology, has a different mentality from us towards financial and banking services. Therefore, we also attempted to define a new path for banking system so that it moves in line with the development of technology and meets the needs of the new generation.
Q: How do you see Iran’s banking relations with foreign banks now in post-JCOPA era?
A: More than two years past the Iran nuclear deal – known as the Joint Comprehensive Plan Of Action (JCOPA) – today it can be said that the Iranian banks are gradually creating links with international banking system. This is while the hostile measures taken by the United States have made the path unsmooth somewhat. It should be taken into consideration that returning to banking relations Iran had before the adoption to banking relations Iran had before the adoption of sanctions may be very time-consuming and the Iranian banks cannot be expected to swiftly rebuild relations with world banks, particularly with the US propaganda and exerting pressure on European banks. Small –and medium- sized banks as well as those that used to be working with Iran’s banking system, have resumed relations with Iran and we expect that, with the measures Iran has taken and the negotiations it has made and with growing adaptation of the country’s banking and financial systems with the globally accepted regulations, the big banks will also gradually begin relations with Iran.
Q: What measures do you propose to be taken to counter US pressure on foreign banks for presence in Iran?
A: Apart from the measures and activities needed to be done in the area of politics and economic diplomacy to remove political obstacles and reduce political tensions affecting the economic relations, we also need to get prepared within the country for setting up relations with foreign banks which requires, first of all, transparency in financial performance of the banks. To this end, different banking standards have to be upgraded so as to increase the motivation of the foreign banks for further interaction with Iranian banking system. In addition, more serious steps are needed for the fight against money laundering to enhance banking relations, particularly with the European sides.
The expansion of bilateral and multilateral treaties should also pave the way for further curbing the domination of dollar in international interactions and with diversification of network of trade relations between different countries, the risk of focusing on relations with certain few countries will be lowered so that in case of arising any problem, no serious problem would threaten the country’s financial system.
Q: Regardless of the US pressure on Iranian Banks, what are the main problems of Iran’s banking system?
A: the country’s banking system is presently facing some fundamental challenges which require necessary measures to resolve them. The high rate of noncurrent assets, the necessity for the Iranian banks to match their financial bills with globally accepted standards, credit restrictions, high level of the final cost of money and frozen assets are among the challenges of Iran’s banking system. Another challenge is the interest rate that although adoption of policies has temporarily brought it under control, requires structural measures to be solved; otherwise it will emerge as a more serious problem in the future.
Q: How is the condition of e-banking in Iran when compared to other countries and what measures are on the agenda to help promote e-banking in Iran?
A: Fortunately, Iran’s banking system has made significant progress in e-banking over the past two decades and many banking services are today rendered to customers in virtual ways. Over 100 million transactions a day is a very good statistics when compared to other countries and this has added to the attractiveness of the payment market and e-banking for foreign companies waiting for the lifting of sanctions on the country. Anyhow, intensified banking sanctions over the past years have made us to distance from the international sphere and as a result a range of actions are necessary to be taken to fill this gap and arise the standards required for e-banking. Given that modern technologies of e-banking have been highly welcomed by the public over the past years, the related officials need to make every effort to make innovations in the systems and payment ways in order to be able to enter this new era and keep the market at the same time.
Q: As the deadline for Iran to joint FATF treaty has come to an end, what is your opinion about Iran joining this treaty?
A: First of all, I have to let you know that FATF is not a treaty and there is not actually any obligatory treaty in in this regard. Iran has accepted to make efforts, like the other 200 countries across the world, to follow the internationally accepted standards for the fight against money laundering and financial support for terrorism – which is driven out of global experiences – under its own domestic rules and regulations so as to save its financial system from the existing risks and be regarded as a safe and credible financial system by other countries at the same time.
Fight against corruption has been urged by senior Iranian officials and in this line, Iran has always been eager to make use of the experiences of other countries.
Our country has fortunately approved very good regulations in the area of the fight against money laundering and financial support for terrorism and is implementing very good executive orders in this regard.
FATF has set a deadline for Iran to complete this process and Iran has taken different steps which are likely to partly prevent the probable risks in some sectors of the country, Iran will continue with its reforms and negotiations to ensure international bodies about the safety and health of its financial system and will also report the measures it has taken so far.
Q: How do you predict the future of Iran’s banking system? How should be the ideal banking system in Iran from your viewpoint?
A: The future of Iran’s banking system can be discussed both from micro and macro viewpoints. In terms of micro, undertaking the necessary reforms to resolve the current challenges can lead to diversification of products and the change of view in money making by banks. In fact, after the traditional viewpoint passed behind, the banks will be focused on rendering different services and taking commission for these services. This would further improve the competitiveness and increase transparency. In terms of macro, on the other hand, the reform of banking system will lead to redefining the relations between the banking system and the enterprises or the government so that the ground will be prepared for a more transparent and more efficient banking system. Also, with the fundamental reforms in creation of transparency and upgrading the banking standards, the relation between Iran’s banking system with foreign banks is likely to get more promoted and Iran has a more efficient presence in the international arena. So I think that the ideal banking system in Iran should render different banking services to efficiently meet the needs of all the clients and with establishment of proper interaction and making quantitative and qualitative progress in the international arena, can reach a proper status in competition with other countries.
Q: What’s your message to our foreign readers, investors in particular, for presence in the Iranian market?
A: Iran has a huge wealth, big economy and untapped market which besides its political stability enjoys great attractiveness for foreign investors. In addition, Iran has a very good historic record in trade relations with foreign sides, always honoring its commitments. Therefore, foreign investors should not hesitate in making use of such an exceptional opportunity. In fact those seeking investment in a secure market with low risk should not ignore the Iranian market.