In a number of different aspects, Iranian banking society reminds me on Germany some years ago. In the age before opening the market to new financial products and deregulation of stock exchanges we can find a similar picture as today in Iran.
How astonishing banks in Germany and Iran look alike
There is surely a difference coming from the rules of Islamic banking. But that does not necessarily prevent from converging the banking products to well known instruments, but this and the legal framework have their part in the current landscape.
But what really reminds me on Germany is the small willingness for inventions and further development – strongly along the motto “never puzzle the client with new things”. Yes there may some obstacles coming from the sanctions, but this is not the whole story. Even if you cannot import the necessary machines from outside, one can launch ideas for the domestic market. This we have seen in Africa, where the people have not sufficient teller machines around them, they use their mobile phone for payment. And here we see Iran today a closed shop, where it is no necessity for any domestic player to increase competition. There are simply enough people for all the banks.
So this leads now to the question, what will happen after the day of liberalization. Given the possibilities that a market for 70 million people gives, I assume the competitors from abroad can’t wait to jump in. And having all the good ideas from all over the world in one market, a completely new awareness of banking will arise. As well as an increasing demand from the clients to have solutions that fit. This will not only meet areas like the world of insurance, or the question how banking in a mobile world will be but really challenge the current practice of financing private and institutional assets.
Home loan - the most promising bank export
And in the current situation of the market, essential need of Iranians for a home and the given distribution of wealth, I really feel confident, that a home loan bank following the pattern of German Bausparkasse will be really successful. And there are some more ideas like easy-to-get consumer loans for TV, furniture or even the most important part of an Iranian live – the wedding .
We will see, where this leads, but I am pretty sure, that the development of German banking since the mid 80es gives a good outlook, what will happen in Iran after the day one…..
Your K-Street6 team