growing sector

Iran, How CBI Fintech Investments Are Promoting Financial Inclusion

Investments in fintech CBI

Despite US sanctions and geopolitical turmoil, fintech is gaining momentum in Iran. Neobanks, crypto assets, smart payments, and the Digital Rial are all growing, pushing Tehran to invest in the entire sector. The country's central bank, financial institutions, and government agencies are taking steps to make Iran's capital city a regional hub for financial innovation.

The main goal is to boost financial inclusion in the country. The Central Bank of Iran (CBI) has expressed its commitment to advancing smart banking services, emphasizing collaboration with fintechs in this endeavor. Over the past five years, the CBI has actively worked on fostering digital innovation, unveiling the initial draft of fintech regulations.

The bank has seen significant progress in the country's electronic payment and e-banking sectors over the past decade, creating a conducive environment for the adoption of technologies such as blockchain and artificial intelligence (AI).

Peyman Qorbani, head of the Monetary and Banking Research Institution, has argued that smart banking services will greatly enhance the quality and scope of financial services while simultaneously improving transparency in financial markets.

The CBI reports that 44.2% of Iranian households (64% of individuals) have no savings in banks, other financial institutes, or local “Qard Hasan” funds. According to Global Findex, less than half of the loans that Iranian adults received were provided by supervised financial institutes.

The percentage of individuals who obtained loans from family or friends and the percentage for loans through store credit are each higher than the percentage for loans from banks and other financial institutes. This has led the CBI to be optimistic about the positive impact of smart solutions in addressing these challenges.

The CBI has already implemented smart solutions in the credit rating system, interbank check network, and microlending services, achieving successful outcomes. It is also actively working on integrating AI into digital banking platforms for personalized services, identifying suspicious transactions, and ensuring compliance with anti-money laundering regulations.

Kashef Company, a CBI-affiliate overseeing an anti-fraud platform, reported that AI detected 29,000 cases of illegal financial activities, mainly related to online betting and casinos, conducted by 330,000 individuals since March 2022. The CBI is set to launch its smart platform for assessing customers' creditworthiness in the coming months.

The CBI's current strategy underscores a notable shift, with a focus on the influential role of Generation Z in shaping Iran's economic future. Fintechs are expected to play a pivotal role in developing and regulating these innovative platforms.

Three FinTech companies are making an impact on Iran's financial services:

1. Bahamta: This payment service provider facilitates both paying and receiving money for businesses and individuals, offering a mobile application for Android and iOS platforms as well as an API payment gateway for payment processing.

2. Jibimo: Jibimo is a peer-to-peer mobile payment application for consumers and businesses that allows instant payments and refunds at no cost. It provides an API gateway for businesses for payment processing.

3. Lendo: As one of the largest LendTech start-ups in Iran, Lendo's online platform provides the opportunity to invest and pay in installments simultaneously by empowering individuals and businesses to join the sharing economy. It offers solutions in the installment purchase and payment industry through the integration of information technology and financial innovations, such as credit ratings based on artificial intelligence.