The Central Bank of Iran deputy governor for innovative technologies says the bank has imposed some restrictions for fintech startups access to API services.
"We have imposed restrictions on API access for high-risk fintechs, but major fintechs have been exempted,” Mehran Mahramian said during a conference.
“In the field of open banking, policymakers in each country have adopted their own approach. The CBI has had the least intervention in the banking sector, while globally there is a firm view of open banking."
"In our country services provided by fintechs are satisfactory, but when it comes to standardization more needs to be done.”
API, or application programming interface, is a technology protocol that allows diverse software components to communicate. More to the point, it allows even non-experts to develop applications that make use of whatever software components a given API taps into.
The official took stock of influential factors in the digital economy saying, "Fintechs, open banking, APIs, and the presence of neobanks are important for growth in the digital economy. Neobanks have managed to enter the Iranian market successfully, although they are not separate from traditional banks – rather they are an offspring of traditional lenders."
According to Mahramian, approximately six percent of the country's population are customers of neobanks. More than 250 fintech apps operate in Iran.
A recent survey by Way2Pay website showed that about one-third of the applications are offering payment services. Personal finance management solutions and cryptocurrency exchanges rank next.
The report said 66% of fintech founders are university grads and 25-35 years old.
As per rules, fintechs can continue to operate as long as they are not involved in money creation, forex deals, offering payment tools (like cards) and accepting deposits.
Neobank is a new type of bank available to customers only through mobile applications and personal computer platforms. These financial institutions are reinventing the practices and processes associated with traditional banking.
10 Neobanks
Currently, about 10 neobanks are operating in Iran, all affiliated to commercial banks. Blu Bank, affiliated with Saman Bank, seems to be the most successful one with about 4 million users. WePod, affiliated with Bank Pasargad Iran and Bankino, owned by Middle East Bank are the other large neobanks in Iran.
Mahramian elaborated on other concerns of policymakers. "Creditworthiness in Iran is a serious issue that needs to be addressed. Currently, only 30 to 40 percent of the people have been credit assessed, and more than 70% of the people have no information about credit assessment."
"In the new credit assessment model, the accuracy of credit assessment is 80 to 89 percent, and the coverage of credit assessment will be close to 100%. We will move closer to global credit assessment models."
Last year, the CBI published rules for setting up credit rating firms. They must scrutinize the financial records of clients and report on the credibility of individuals and corporates by assigning scores on a scale of "very poor", "poor", "average", "good" or "very good".
Ratings are determined after assessing the financial performance of the customer within a fixed period plus solvency, ability and willingness to pay. Scores indicate credibility and discipline in meeting debt obligations.
