Banking & Financial Networks

The Banking and Financial Networks initiative encourages the development and use of a modern internationally competitive banking sector in Iraq.  This initiative has a four-pronged approach:

1. Reduce physical amount of cash movement in-country through the introduction of intra-bank, inter-bank, and international Electronic Funds Transfers (EFT)
2. Extend and broaden the use of traditional and modern banking products and services such as: deposit accounts, direct deposit, bank transfers, ATM, mobile banking, Debit and Credit Cards, and Point of Sale (POS) products.

3. Increase the availability of lending products and services and access to bank capital
4. Promote a sound regulatory and legal framework

Strong, accountable private banks are a vital part of economic revitalization in Iraq.  Increased lending allows Iraqi companies to have greater access to funds for improvements and expansions.  New and improved companies create more jobs.

Private Bank Systems Support

The Task Force banking and financial networks initiative works to bring together private Iraqi banks and facilitate relationships between these banks, credit card issuers and major credit card companies, such as MasterCard and Visa.  Because companies like MasterCard and Visa have stringent requirements for banks who wish to issue their cards to customers, this initiative focuses on improving the operational readiness of Iraq’s private banks.

Two of Iraq’s private banks, the Bank of Baghdad and Commercial Bank of Iraq are now issuing MasterCard branded debit cards to their customers, with credit cards soon available.  This is the first time in the history of Iraq that an Iraqi bank has been allowed to issue a major brand named debit card in their own name.

Mobile Banking

Iraq has a highly developed and successful mobile network infrastructure, which has given way for an increase mobile banking.  This ability encourages and allows for a reduction in cash dependency amongst the expansive middle class economy in Iraq. This program gives Iraq the opportunity to surpass more established nations in the retail banking space.  Retail purchases made through electronic means results in reduced cash dependency, increased security, and over time, growth of services in the formal banking sector.

Joint Contracting Command-Iraq (JCC-I) Electronic Funds Transfer (EFT) Payment Project

The JCC-I EFT Payment project drives business to private Iraqi banks by leveraging United States Government (USG) spend on mission essential supplies and services.  In September 2007, JCC-I issued an order requiring all contracts with Iraqi contractors worth more than $50,000 USD to be made via EFT.  This amount was lowered to $25,000 by the end of 2007.  To date, this project has driven approximately $500 million USD to private banks, greatly reducing the amount of cash on the battlefield.  Thousands of Iraqi vendors have opened business accounts with these banks and developing customer relationships as a result of this initiative. 

Figure 1: Host Nation EFT Payments - % of Total and Total $

Electronic Funds Transfer Assistance Center

In response to the increased volume of EFT payments in Iraq, TFBSO established the Electronic Funds Transfer Assistance Center (EFTAC) in May 2008 to provide solutions to all stakeholders in the EFT process.

The EFTAC also focuses on the following projects:

• Iraqi Banking Database: Collection and measurement of the EFT process in Iraq is primarily accomplished through a database maintained by the EFTAC.  This online database provides worldwide availability of Iraqi banking data to approved users, and a roster of the EFT-capable Iraqi banks, current points of contact for Iraqi private banks, as well as EFT banking usage statistics. 
• ACH Direct Deposit: As another initiative to increase Iraqi banking deposits, the EFTAC is planning and will soon execute an Automated Clearing House (ACH) pilot program.  This program will measure the viability and will promote a greater confidence in the ACH infrastructure within the Iraqi banking system. The ultimate objective of this EFTAC focus on ACH capability is to move Iraq- businesses toward a program of automated Direct Deposit of their payrolls into banks, especially Iraqi-owned.
• Education & Outreach Programs: There are two foundational assumptions relevant to the usage of Iraqi-owned banks: 1) An Iraqi-Owned bank is more likely to invest in Iraq than a foreign-owned bank; 2) A bank is more likely to loan money to a loan applicant who has money deposited in their institution.  Given these assumptions, the EFTAC is focused on encouraging Iraqi business owners and U.S. Government Contracting Officers to use Iraqi-owned banks for their EFT requirements.