Implementation of Technical and Banking Solutions
in Iraqi Banks
through Partnership with Leading Solution
Providers
Duha Abdul Kareem
Head of Payments Department
Iraq Finance 2014, Dubai
Central Bank of Iraq
Technology Vision
The Central Bank of Iraq has been working since
2004 to develop and integrate its technology
infrastructure through:
• Legal and regulatory frameworks
• Communication network
• Modern systems
• Global standards
• Capacity building
The CBI approach and vision is becoming a role
model for other Iraqi government institutions on
how to cooperate to integrate e-governance
components
Central Bank of Iraq
Objectives
The CBI has five key primary objectives:
• Stabilise the exchange rate
• Implement the monetary policy
efficiently
• Manage foreign reserves
• Issue and manage the currency
• Control the banking sector to promote a
competitive and stable financial system.
Central Bank of Iraq
Objectives
In its quest to achieve its primary goals, the CBI has taken
on several projects, including:
• Establishing an efficient and effective Payments
System.
• Achieving the requirements for automation of currency
counting, sorting and classification.
• Usage of the international payment techniques SWIFT.
• Implement modern infrastructure, including:
– acquiring modern banking systems and networks
– encouraging and compelling banks to implement
banking technology and core banking systems.
• Modernization of the banking operations according to
international standards in the practices of electronic
banking through the acquisition of the National Switch
and Mobile Payments.
Bank
Bank
Iraqi
Payment
Systems
Customer
Individuals
Businesses
Government
Customer
Individuals
Businesses
Government
Iraq Payment System
Wholesale and inter-bank payment systems
Creation
Electronic wholesale and inter-bank payment systems
implemented components in Iraq:
Inter-bank clearing and settlement
• RTGS – Real Time Gross Settlement for high value and
urgent payments in real-time - implemented in 2006
RTGS
• CACH – Cheque Enabled Automated Clearing House for
lower value, bulk payments and cheques – implemented in
PKI
2008
• Electronic Check Clearing system – implemented by
CSD
CACH
private banks in 2011 and by State-owned banks in 2013
• CSD – Central Securities Depository registration of the
Payment systems are integrated
securities issued by CBI and MoF implemented in 2008
using PKI (Public Key Infrastructure)
• RPSI – Retail Payment System Infrastructure – currently in
encryption
progress
Central Bank of Iraq
Benefits of the Payment Systems
The Iraqi payment systems provide major benefits
to the banks, businesses and people of Iraq
• Holistic information about cash management
• Maintain the confidentiality of the information
and reduce the risks of the paperwork
• High value transactions and low value
transactions processed quickly, securely and
transparently
• Connects all banks directly to CBI
• Reduces dependency on banknotes and
instruments
• Improves the climate for investment in Iraq.
Wholesale and inter-bank payment systems
Efficiency and impact
• The wholesale and inter-bank payment
systems are critical enablers which
underpin the whole banking and
economic system in Iraq
• Low payment volumes are indicate low
banking and economic activity–Iraq
remains a ‘cash economy’
• Volume will increase by:
– Mandating migration from cheques to
electronic payments
– implementing retail payment systems
and making them universally available
Wholesale payment volumes
Transactions
per year
RTGS
90,000
80,000
70,000
60,000
50,000
CACH cheques
CACH electronic
payments
40,000
30,000
20,000
10,000
0
2011
2012
2013
Integrated Iraq Payment System
Retail Payment Systems Infrastructure
Creation
Pilots of the RPSI will start in Summer
2014:
• INRS – Iraqi National Retail Switch will
support EMV smart card transactions
via ATMs, POS and the Internet
• IIMPS – Iraqi Interoperable Mobile
Payment System will support mobile
payments without depending on
conventional banks accounts
• The RPSI will be interoperable with
mandatory national standards
• All transactions cleared and settled in
Iraq
• Participation will be universal after the
pilots
Acquiring
banks
Card
transactions
INRS
Net
Settlement
Authorization
and clearing
PKI
CACH
Issuing
banks
Mobile
Networks
RTGS
IIMPs
CSD
Retail Payment Systems Infrastructure
Core banking systems
50
Number of Banks have CBS
• The development of
banking services, and
the implementation of
the RPSI, are
dependent on the
implementation of
core banking systems
by Iraqi banks
• Almost all private
sector banks now
have core banking
systems
43
45
40
37
35
32
30
26
25
18
20
15
9
10
5
18
11
5
1
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
years
Retail Payment Systems Infrastructure
Vendor support and partnership with participants
• The CBI is consider as first Iraqi governmental
institutions which is adopting the suppliers services
continuously to maintain what have been achieved
• Almost all Iraqi private banks now have core banking
systems, although state-owned banks are still in the
process of implementing it
• The CBI and Iraqi banks are using the support of
major technology partners or software of 3rd party or
equipments to implement effective and universal
payment and banking systems
• CBI is committed to respect the intellectual property
rights by owning and renew different software
licenses.
Main Suppliers
Infrastructure
Retail Payment Systems Infrastructure
Vendor support and partnership with participants
• Central Bank urges and encourages all
financial and banking institutions to own
technology and in accordance with
international standards and the continuing
work on the maintenance and perpetuation of
its work and developing it so as to ensure the
development of banking work to reach the
universal banking
• The CBI is depending on the services of
experienced and reputable vendors headed
by BPC Russian Company to supply the
Retail Payment Project
• The USAID has supported the implementation
of the Retail Payment Project the beginning
Main Suppliers
Infrastructure
Retail Payment Systems Infrastructure
The Iraqi Inter-Bank Network
• The CBI built the IIBN in partnership with the
World Bank, the Ministry of Communications
and the Media and Communications
commission
• The IIBN uses Wi-MAX which is one of the
modern generations of communications and
high bandwidth technology to transmit high
volume data in between digital devices and
computers and to control the banks data since
2008
• The number of the main branches of the banks
connected to the IIBN were 25 banks in 2008
and it has increased to 48 banks until now( the
network also connect the Ministry of Finance,
the General Commission of Taxes and The
General Commission of Customs)
• Preparations are underway to contract to
develop the plans and designs for the future of
banking network, which will use fiber-optic
technologies instead of wireless technologies
Future Development For Central
Bank Of Iraq
Central Bank of Iraq
Future development of the payment systems
Development of the payment systems is continuing with:
• Preparation of legislation and regulations for
electronic payment systems.
• Modernize and sustain the Iraqi payments system and
the banking system of the Central Bank of Iraq.
• The use of a securities trading system (related to the
CSD).
• The establishment and management of a National
Retail Switch (INRS) for card based payments.
• Payments by mobile phone supported by the Iraqi
Interoperable Mobile payment System (IIMPS)
• Development of automated clearing system to
facilitate processing transactions between ministries
and institutions.
• Participation in the Arab regional payment system
CBI information technology infrastructure
Future plans
• Future CBI projects will continue the development of the
banking sector in Iraq:
– Development of a Credit Information Bureau and
system.
– Introduction of the financial electronic reporting
using the XBRL standards
– Adopting the International Bank Account Number
IBAN
– Unify checks security features
• The systems are resilient and use backup technologies
main sites and disaster recovery alternative sites in
compliance with international standards .
CBI information technology infrastructure
Future plans
• Keep pace with technological developments in the field
of Anti laundering and prevent the financing of terrorism
in accordance with the standards and multiple lists
universally adopted, and work on integrate it with
operating systems which are planned to be owned.
• Systems are reliable and comply with the international
principles and standards
• The systems are characterized by being capable of
endurance and continuity in the work and the use of
technology backups and alternative sites.
• New cultures are being established in banks based on
new technologies and associated data.
Summary
•
•
•
•
•
The successful implementation of wholesale and interbank systems, and the installation of core banking
systems, has laid the foundation for the introduction and
growth of modern banking services in Iraq
The RPSI will bring electronic payments to consumers
and businesses, leading the migration from cash and
driving economic growth
Effective partnership with leading technology vendors
and strong project management will be used to ensure
success in Iraq’s challenging operating environment
Continue to cooperate with everyone through studying
the experiences of other countries and international
organizations and this will contribute in reducing
differences and take advantage of the accumulated
experiences in order to avoid obstacles.
Share the acquired experiences and the ongoing training
and the active and continues follow-up with the banks to
help them , step by step and provide the advice .
Open Discussion