The Iraqi Banking Sector: Navigating Change and Compliance
Manar Al-Ubaidi, the head of the Iraq Future Studies Center, provides insights into the evolving landscape of the Iraqi banking sector. He emphasizes that the current transformations should not be construed as a collapse, but rather as a necessary restructuring to meet international standards.
Al-Ubaidi remarks, “This compliance signifies a new phase of organization and adaptation to the imperatives of transparency and financial governance.”
He expresses optimism about the potential outcomes of these changes, highlighting that while Iraqi banks are poised for growth, their historical context and the leniency experienced over the past two decades have left them ill-prepared for rapid adjustments. Many institutions have operated under the assumption that existing conditions would persist, which has hindered proactive preparation for upcoming challenges.
“Banks that have effectively organized their operations and adeptly managed their affairs are the ones that have successfully weathered recent turbulence,” Al-Ubaidi states, commending institutions such as the International Development Bank and the Iraqi Islamic Bank. These banks have demonstrated resilience and adaptability, successfully navigating the complexities they have faced over the years.
Al-Ubaidi urges a reassessment within the banking sector, advocating for a commitment to international governance standards and compliance. He emphasizes the importance of enhancing the financial and banking education system to align with these standards, ensuring that educational content cultivates the necessary competencies and skills that can compete with foreign professionals. This approach aims to sustain the sector’s growth through the empowerment of Iraqi talent.
Currently, there are ten Iraqi and foreign banks facilitating external transfer operations in various currencies, particularly the U.S. dollar. It has been reported that two new banks—one Iraqi and one foreign—are set to join the Citi Pilot platform, which is responsible for facilitating dollar transfers.
The ongoing transformation within the Iraqi banking system presents both challenges and opportunities as it strives to align with international financial standards. The successful adaptation of banking practices will be crucial for the future sustainability and competitiveness of this sector in a globalized economy.
