Iran’s banking system is being praised because of its strong backbones. But how did the progress happen? What were the milestones? in this post, we are going to answer these questions.

The Origin: IBM and Cobol Era

Before 1995 the dominant platform in the Iranian banking system was IBM mainframes. The architecture was centralized and the main programming language was Cobol and the communication network was all analog. System software installation and hardware support were done by other companies and they would have kept the database in their own location. And the banks were doing the application software development, the maintenance and hosting the computer labs. In this era, companies had nothing to do with the application software. The banking system wasn’t centralized so the end users should have visited the branch that he/she opened up their account to get the services needed.

Development: Unix, MF, C Language and Centralized System

The developments took place from 1995 to 2010. The communication network in this period transformed into digital so you can imagine the impact that it caused on the banking system. Similar to the previous platform, system software installation, maintenance and support were done in other countries as well as keeping the database. Unlike the previous generation, many companies started to take part in the development and maintenance of the application software. But the computer labs still hosted by the banks themselves. In this period of time the end users could get the services from any branch of their bank that was close to them. So the location didn’t matter anymore and the banks started to provide their services outside of their branches. Banks began to be equipped with a centralized system. Electronic payment went under development in terms of quality and quantity and the cyberspace began to enter the mainstream culture.
one of the main characteristics of this time is that some banks tried to keep their decentralized systems while bringing in new services on different channels to compete and keep up with the pioneering banks.

Maturity: Java, IT Companies Stepping in

The third and the current generation started nearly after 2010. The most important characteristics of this period are a standalone platform, an architecture based on the service and Java programming language to name a few. IT companies stepped into almost every aspect of the banking system during this time. Banks (especially private ones) began to migrate to a centralized system. Electronic banking opened up a whole new opportunity in tech and economy. It was in this period that the backbones of the banking system in Iran got developed. Currently, the installation, maintenance of system software and the hardware support are done by IT companies. But the production, maintenance and the application software developments are done by the banks.

Iran has many challenges ahead in terms of the banking system. Banks are somehow dependent on the companies and if they have any weaknesses, the banks would get hurt at the end. Also the delivery time for these software solutions for the banks are sensitive. If an IT support company could not deliver the software in time the bank has to postpone the launching of their new services. Not to mention that some banks prefer to have their own systems that are not compatible with other banks.

The key data for this article was provided by Jean Sayyad, Jean is an IT consultant in Fintech.