In recent months the Central Bank of Iran has set new boundaries for the banking system, preventing them from further getting mired in the frenzied race to attract deposits.
The CBI measure came after an interest rate war was unleashed by lenders that pushed up interests on deposits to hitherto unseen 28%. In his meetings with bank chiefs, Valiollah Seif, the CBI governor, has often said that banking is not merely about “attracting deposits.” Healthy competition exists when principles, professionalism and risk management norms are upheld.
The CBI has not yet clarified the framework for healthy banking operations; however, big data seems to be a possible solution for the matter.
The banking network conducts close to 200 million transactions every day, 90% electronically. Moreover, about 30-35 million people use e-banking services across the country. This is a great opportunity for banks to improve their risk analysis, quality of their services and give clients a better experience.
“Big data allows bankers to create more value for their costumers as analyzing trends and customers’ behavior helps them plan and offer quality services,” said Nasser Ghanemzadeh, director of Farda Finnova Accelerator, affiliated to Ayandeh Bank.
“All the banks basically use the same business model, therefore they need to create more value if they want more customers,” he said. “They also need to address customers’ needs.”
Using big data is and must be the main concern for banks. “Unfortunately in Iran we do not even use small data. They (banks) are not even aware of the invaluable resources they own i.e. huge amount of data about costumers’ transactions,” way2pay.ir quoted him as saying during the ‘Big Data in Big Companies’ event held last week in Tehran.
He referred to “Drupz”, one the Fintech start-ups developed in Farda Finnova that employs electronic banking users’ behavior and helps them save money.”
“This is a simple case of opportunity created by big data.” It can also help banks make better decisions when they want to lend to costumers.
“Security of data is also important. Banks can either do all the analysis themselves or use third companies.”
Domestic start-ups have high potential for helping banks, but bankers do not trust them, he noted. “Nothing will happen unless mindsets of bankers change.”
Bankers’ Concerns
Ali Rezazadeh, Ansar Bank’s deputy for Information Technology believes that collecting data is a major challenge for using big data in the banking sector. “With the advancement of technology, we also need modern methods for collecting data,” he said.
“Iranian banks did not need big data in the past,” he said, “but now they need to categorize their customers and analyze the future of their operations.”
Banks should first clarify the final goal of using big data, according to the banker. “They should also have a clear understanding of their path and what kind of data they need and are looking for.”
Rezazadeh believes domestic experts have the knowledge for developing the needed platforms.
However, Morteza Boka, Deputy for IT in Melal (formerly Askarieh) Credit Institution, believes that foreign technology is required for promoting the use of big data.
“Imported knowledge would be used as the basis of future developments, and then we can use our young experts,” he told the ‘Big Data in Big Companies’ meeting.
Centralizing scattered databases is another major challenge for employing big data in the banking system. “Currently, various data bases exist in different organizations such as identity data in the National Organization for Civil Registration or those at the Social Security Organization.”
“Banks should bring all these datasets together, instead of developing fragmented databases,” he said, “Banks themselves can also contribute to a nation-wide data network.”
