Fintech Operations Merit CBI Attention

The Central Bank of Iran should take quick measures for regulating fintech firms to prevent potential problems in future, said the director of IT Center of Export Development Bank of Iran, noting that startups are becoming a key part of Iran’s payment industry.

“Lack of regulations for the operation of fintechs in the country is a major challenge in the banking system. Policymakers are expected to revise their approach to fintechs and see them as an important part of the financial markets,” Habib Ahmadi was also quoted as saying by Monetary and Banking Institute’s website.

Referring to the relationship between banks and fintechs in other countries, he said, “We cannot ignore new players in financial markets, as they will be an inseparable part of the banking system in the coming years.”

There has been much dispute over the operation of non-bank fintech firms in recent months. Fintech-related bodies are reportedly planning to come together to decide about the state of aggregators, probably to shut them down.

Ahmadi admits that fintechs rival the banking sector, although the partnership of banks and fintechs would help enhance Iran’s banking system.

“Banks, as large and sluggish organizations, cannot provide customers with services similar to fintechs,” he said, noting that non-bank startups are creating new opportunities for banks.

“But fintechs might endanger security of banking operations,” he added.

Back in October, Nasser Hakimi, the head of CBI’s IT Department, said the CBI allows fintech firms to continue to operate so long as they are not involved in money creation, currency exchange and offering payment tools (like cards) and  attract deposits.

The official added that fintechs should ensure they are not creating money “by removing one of these features from their services”.

Hakimi added that the current condition of financial markets in Iran is totally different from those of other countries. 

“Fintechs cannot survive unless you operate in close proximity with other market players. You should be cautions enough to keep the partnership beneficial for both sides,” he said.

On the other hand, regulatingthe operation of fintechs is not as easy as it seems. 

Mehrdad Sepahvand, an economist, believes that regulators cannot prescribe comprehensive regulations for innovative industries, unlike what is happening in other sectors. “Regulators should regulate the operation of fintechs case by case,” Way2pay quoted him as saying.

“I think CBI should launch a specific department for fintech firms, to which developers can apply for an operating license,” he said. “CBI experts could review each proposal and make sure that they are in accordance with the central bank’s policies.”

A sum of $50 billion was invested into fintechs during 2010-15 across the world. 

Unofficial reports show that about 50 fintechs are operating in Iran’s financial markets, all of which have developed in the past three years.