EghtesadOnline: No more than just a few years have passed since Iranian fintech companies have entered the country's banking sector, but a closer look at registered startup companies reveals that online fintech firms are already the most exuberant players in the country's financial sector.
The Institute for Trade Studies and Research, affiliated with the Ministry of Industries, Mining and Trade, has published a comprehensive report on Iranian fintech firms on its website.
According to the report, several companies made investments in the fintech industry years ago, but there is no precise figure on the amount of investments.
An assessment by the Industrial Management Institute, which evaluated the top 500 Iranian companies during the year to March 20, 2017, reveals that 24 banking information technology and payment system companies rank among the top Iranian firms, Financial Tribune reported.
This is while fintech companies have also registered a positive trend and are constantly improving, which indicates their high potential in Iran's financial market.
Unofficial reports show that currently 50 fintech firms are operating in the country.
Aptitude, investment, legal framework and demand are known to be the most essential factors to determine a country's vigor for developing fintech companies.
While aptitude is the top requisite for the development of fintech firms, Iran can be considered a rich nation given the high number of college graduates in financial and IT fields, therefore the cost of workforce is low.
The Global Innovation Index 2016, a report that provides detailed metrics about the innovation performance of 127 countries and economies around the world, reveals that in terms of the number of graduates in engineering and science fields, Iran ranks second in the world.
The fact that Iranian universities are not international institutions counts as a negative point for them.
However, investment on new ideas and recapitalization of fintech companies significantly help the maturation of the industry.
A few accelerator companies and risk-adoptable investment funds have been established to nurture new ideas in the fintech industry.
GII's report places Iran as the 82nd country with regard to investment availability.
Despite the fact that the demand for fintechs in Iran has not yet been fully realized, these companies are registering consecutive year-on-year improvements as people are increasingly welcoming their financial management tools.
Policies and regulations for the operation of fintech firms are another important factor for their prosperity.
Unfortunately, Iranian policymakers have not been able to keep up with the pace of progress made by fintechs. A few months ago, operations of a number of fintech firms were stopped by regulators, indicating a lack of transparent regulations in this sector.
Many state entities in Iran can directly affect the regulations of fintech operations. This is while from time to time, the head of these entities make contradictory comments regarding the legal framework of operations, which reveals the need for a specific regulatory body.
The Central Bank of Iran was expected to finalize the legal framework for fintechs in May, but the process has been delayed due to unknown reasons.
In August, CBI sought the help of Iran Fintech Association to make its final decision about the long overdue task of regulating fintech companies and startups.
GII's report has ranked Iran as the 112th country regarding the legal framework and organizational structure, which also highlights the country's lack of a proper legal framework.