Iranian Banks Have Developed Despite Sanctions
Iranian banks has been isolated from the global financial system for the better part of a decade. But that has not prevented development of the country’s banking system. Despite challenges, Iranian business and consumers are today increasingly reliant on digital banking technologies that have enabled the rise of new habits, such as a move to cashless transactions, and new business models, such as the rise of e-commerce.
One common measure of the development of a country’s banking infrastructure is the ATM coverage ratio. Since 2005, the number of ATMs per 100,000 people in Iran has grown by just over 25% per year, rising from 4.5 to 88.6. The coverage ratio of Iran’s ATM network is slightly higher than that in Turkey, which has 84 ATMs per 100,000 people. It is also higher than the ratio in Poland, which is 68 per 100,000 people. Poland is widely seen as a success story in economic liberalisation, including in the development of modern banking infrastructure. The development of Iran’s banking network should also not be taken for granted considering that in neighboring Iraq, the ATM coverage ratio remains below 5. The Iranian banks with the five largest ATM networks are Bank Melli, Bank Saderat, Bank Mellat, Bank Sepah, and Tejarat Bank.
The development of Iran’s ATM network is even remarkable considering that Iran was largely unable to institute off-the-shelf bank technologies due to international sanctions. Iran’s ATM network is part of SHETAB, a domestically developed clearing and payments system. First launched in 2002, the development of the SHETAB system began in earnest in 2005 when the Central Bank of Iran mandated that Iranian banks institute modern electronic banking systems. While Iranian companies were poised to introduce Visa and Mastercard payment solutions around 2007, the imposition of international sanctions on Iran prevented the entry of these global players. For this reason, SHETAB was expanded to become a full stack banking system. Today, SHETAB enables a wide range of transactions, including cash withdrawals, electronic payments, transfers, bill payments, and balance inquiries. The system is integrated with infrastructure including ATMs, point-of-sale systems, mobile phones, and online platforms.
According to data from the Central Bank of Iran, there are currently 255 million debit cards in Iran and 6.3 million credit cards (the use of consumer credit in Iran remains limited). In addition to Bank Melli, Bank Saderat, Bank Mellat, Bank Tejarat, and Bank Sepah, the banks with the largest number of issued cards include Bank Keshavarzi, Parsian Bank, Post Bank, Bank Maskan, and Ansar Bank.
Iranian bank cards are used to make about 480 million transactions at ATMs each month, with a total transaction value of IRR 3 quadrillion, or about USD 10 billion. Not only do these transactions point to the significant purchasing power of Iranian consumers, but the fact that such large sums of money are being withdrawn, deposited, and transferred using ATMs underlines the significant development of Iran’s banking infrastructure.
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