The National Conference on Digital Transformation in the Banking Industry

The first national conference on digital transformation in the banking industry was held on Tuesday, August 22, 2023, under the supervision of the Iranian Management Association and with the presence of a significant number of specialists and experts in the field of Information Technology (IT) from various banks in the country, hosted by Central Bank at Abbas Abad Conference Center.

According to the website of Khatam University, in the opening of this conference, Reza Bayat Tork, the General Director of Information Technology of the Central Bank, referred to the growth of value creation based on digital developments in the world over the past decade and said: "According to the theory of digital Darwinism, in the near future, survival in the world is only possible for those who have adapted digital developments.

Creating new values for customers; the main change in the digital age

Bayat Tork mentioned that creating new values for customers is the main transformation in the digital age and added: "Connection (to the Internet), interaction, mobility, analysis and recommendations are the main features of the digital age. In the digital transformation, we are faced with a re-creation of our entities.

The first meeting of the national conference on digital transformation in the banking industry, titled "Development of the country's digital economy through the path of digital transformation of banks" was held with the presence of faculty members, including Ali Abdullahi, a member of the facultya faculty member of Shahid Beheshti University, and Shahab Javanmardi, the CEO of Pasargad Arian Information and Communication Technology Company (FANAP) and the members of the meeting including Dr. Majid Ghasemi, the chairman of the Conference Policy Council and CEO of Pasargad Bank, Morteza Tork Tabrizi, the chairman of the Board of Directors of Tejarat Bank, Hadi Sepanlou, the deputy CEO for Planning and Transformation and Senior Director of Digital Transformation of Mellat Bank, and Hossein Aminzadeh, a member of the board of directors and the vice president of Agricultural Bank Technology.

Banks should maintain their lead role in digital transformation in the country

Shahab Javanmardi believed: "The banking sector is one of the pioneers of digital transformation in our country, both in using new technologies and creating new perspectives. This has created expectations both in other industries and among the audience. As a result, banks must maintain their leadership in digital transformation to provide different services.

Dr. Majid Ghasemi, the chairman of the Policy Council of the Conference and CEO of Pasargad Bank, as the first speaker of this panel, in his speech referred to the concept of digital economy and its wide range of activities that include all jobs in the digital sector as well as non-digital sectors. 

The President of Khatam University also pointed to the World Bank's definition of digital economy and said: "According to this definition, digital economy should have inclusive growth, reduce poverty, develop jobs and provide the necessary efficiency. Besides, the main components of inclusive digital economy include skills, innovations, infrastructures and policies and regulations.

Iran is in the category of "digital adopters" countries

Ghasemi went on to discuss the share of the digital economy in Iran's GDP and stated: "The share has increased from 3.8% in 2016 to 6.9% in 2020. Meanwhile, the global average share of the digital economy is 22.5% of the countries' gross product."

Additionally, according to the CEO of Pasargad Bank, in 2020, based on the digital economy index, Iran's rank among countries was 51 which shows that our country is among the "digital adopters" countries.

Ghasemi continued to mention the role of banks in the digital transformation of the country and while explaining the strategies of Pasargad Bank in this area, he mentioned the use of smart banking system in order to create value and improve the digital experience of customers and pointed to the development of the digital economy platform under the Pasargad Bank group. He further pointed to the performance of the Pod Smart Land platform in this regard.

According to Ghasemi, the number of real customers with digital accounts in Pasargad Bank is currently more than one million and 600 thousand people, the turnover of real customers is more than 93 billion Tomans, the number of businesses with digital accounts is more than 2000 businesses and the total number of users of the smart land of Pod is more than 9 million and 600 thousand people.

The CEO of Pasargad Bank emphasized: "Young people are the pioneers of digital transformation, and if it were not for the services of private banks, these developments would not have taken place in the country, and therefore, the country's economic system should look at banks in a revolutionary way, and the government should create new platforms in this regard."

Supervision of banks should change from static to dynamic

Morteza Tork Tabrizi, the chairman of the Board of Directors of Tejarat Bank, said that digital transformation has several bases. One of the basic issues for creating digital transformation is building a digital ecosystem within the bank; so that all the branches of the bank be able to become digital. He believed that we should also know that the upstream elements do not contribute much to the digital transformation of banks.

He emphasized: "We must persuade the supervisors of banks to change their supervision from static to dynamic. Digital transformation requires risk and I believe that despite all the problems, our banks have done well in this area."

Global trends reach Iran with a little delay

Hadi Sepanlou, the deputy CEO for planning and transformation and senior director of digital transformation of Bank Mellat, was another speaker at the first panel of the national conference on digital transformation in the banking industry, who, while pointing out what digital banking and digital transformation was, addressed the current approach of large banks in this regard and said: "The size of the branch, the customer base, the large number of personnel and the size of the structure and organization are among the issues that are considered as values for banks. However, we can safely say that despite all these conditions, digital transformation is not necessarily possible."

While stating the point that global trends usually come to Iran with a little delay, he explained the stages of transition from traditional banking to digital banking, including creating awareness and insight, developing strategy, and creating the necessary infrastructure (technical and non-technical). , piloting and trial implementation, starting product and service development, investing in the development of strategic achievements and integrating the ecosystem and creating superior infrastructure.

Who are the actors of the digital ecosystem?

In this panel, Hossein Aminzadeh, a member of the board of directors and vice president of technology of the Agriculture Bank, introduced the players of the digital economy ecosystem, including the government, the central bank, producers, goods and services companies, suppliers, institutions and financial markets, fintechs, the judiciary, companies ( transportation and...) and listed consumers.

This member of the Board of Technology of the Bank of Agriculture said that one of the goals of his bank is to help farmers and the vulnerable sections of the society, and referred to the plan that has been implemented with the help of non-governmental and welfare organizations in this field. He further said: "Those trained in this plan are known as entrepreneurs and can receive facilities without the need of a financial guarantor."

At the end of the first panel of this conference, Mehran Mehrabian, the vice president of New Technologies of the Central Bank of the Islamic Republic of Iran, who introduced open data as one of the most important areas of digital banking, said: "The Central Bank's approach in this area is a developmental approach and the legal and security issues of open data development in the banking industry are being discussed."

Moharramian considered open banking as another area that the central bank intends to make policies in it and added: "Policy making in this area will be done with a focus on risks in such a way that the least risk is directed at the market and customers. Until the end of 2024, the rules of activity in this area will be compiled systematically and provided to the activists.

Pointing out that Iran has a very favorable situation in the field of payment and we are one of the leading countries in this field, the vice president of new technologies of the central bank continued: "In the field of payment systems, the approach of the central bank is to provide and introduce innovative services to the banking network and customers."

Moharramian listed landtechs as another supervisory area of the central bank in the information technology sector and said: "This area needs regulation and the central bank will enter this field in interaction with activists and organizations related to it. Regulation and policy making in the field of landtechs is considered as the most important program of the central bank and our goal is to make extensive use of the capacities of this area in providing services in the banking network."

The coverage percentage of people in the new validation model has reached more than 87%

The vice president of new technologies of the central bank referred to the measures taken in the field of validation and added: "In recent years, validation has been one of the main priorities of the central bank, and due to the problems in the validation model, which did not include more than 60% of the population, we started a new model of validation and with the changes made, the level of coverage of people in this model has increased to more than 87%. According to the plans made, our goal is to increase the level of coverage of this validation model to 100% , so that every Iranian individual has a validation score in the banking network."

Moharramian considered organizing the cryptocurrency market as one of the other concerns of the Central Bank and said: "According to the regulations, there is no problem in the field of cryptocurrency mining, and cryptocurrency mining helps the discussion of currency creation in the country. In the discussion of exchange, through careful monitoring of cryptocurrency transactions, we are investigating for clarification and regulation in this area."

At the same time, he emphasized: "In the field of payment, like many countries in the world, we do not recognize payment through cryptocurrencies. It means that it is not acceptable for someone to receive cryptocurrency in exchange for services."

In continuation of the programs of the national conference on digital transformation in the banking industry, the second meeting of this conference titled "Presentation of the achievements and experiences of the top banks" was held with the presence of faculty members of the meeting, including Mostafa Amini, the CEO and member of the board of directors of the company for the development of new technologies of the Bank of Agriculture, Reza Tahan, the head of the working group. The digital transformation of the Iran Management Association and the director of the new services of the first company and the members of the meeting including Farhad Inalouee, the vice president of information technology of Iran Zameen Bank, Zahra Mirhosseini, the vice president of information technology and communication of Pasargad Bank, and Hamid Banaiyan, the vice president of electronic banking of Eindho Bank were present at this session.

If the management life in a bank is short, the digital transformation is very difficult to achieve

In a speech, Farhad Inalouee, the vice president of Information Technology of Iran Zameen Bank, spoke about the experience of digital transformation in Iranian banks (case study: Iran Zameen Bank) and while referring to the history of this bank's entry into the issue of digital transformation in 2016, he said: "We soon realized that Transformation does not happen inside the bank, and we found the solution to the problem in creating a small bank outside the bank and slowly transfering the main bank to the digital bank."

He also added: "If the life of management in a bank is short, digital transformation is very difficult to ahieve. Innovation does not occur within the banking system but outside the bank. Such innovations are more successful as they meet customer needs."

The Vice President of Information Technology of the Bank of Iran also announced the simplification of 252 banking processes in his bank in recent years.

Branches should become places where customers are advised

Zahra Mirhosseini, the Vice President of Information and Communication Technology of Pasargad Bank, while emphasizing that the bank is an economic enterprise and in a sense a social enterprise as well, defined the digital economy as an economy that is influenced by digital technologies.

She considered the first phase of the emergence of the digital economy to be platform-based and ecosystem-based platforms, and continued to present Pasargad Bank's technological products and also emphasized: "We need to redefine the role of branches and branch associates and make our branches a place to give advice to customers and to convert customers' needs into our own new services."

In this meeting, Hamid Benayian, the Vice President of E-Banking of Ayandeh Bank, also paid attention to the role of digital transformation in the banking industry and financial inclusion in Iran and said: "The main players in realizing financial inclusion are banks, insurances, and investment institutions."

He added: "According to a study conducted on the first four landtechs in Iran, 80% of people have registered through mobile phones, the average facility paid to each applicant for landtech services was 160 to 200 million rials, 18% of the audience were self-employed, 45% were private sector employees and 10% were public sector employees.

The first national conference on digital transformation in the banking industry ended with the final statement read by Dr. Azar Saemian, the scientific secretary of the conference in 11 paragraphs.