In Iraq, years of economic and political instability have created an environment of mistrust that is leading many to avoid depositing their money in banks. The preference is to store cash at home. This tendency has undermined Iraq’s ability to develop its banking system, which is already hamstrung by insufficient legal and regulatory frameworks and the influence of the country’s oil rentier model.

But even though cash remains king in Iraq, some people are looking beyond the traditional banking system for opportunities in digital banking. They argue that this will expand the Iraqi public’s access to financial services and aid economic development.

Cash remains king

Iraq is home to seven government banks, over 50 local private banks, some 40 commercial banks, and more than a dozen foreign private banks. The majority of these actors rely heavily on the Central Bank of Iraq’s (CBI) foreign currency sales to secure a profitable balance sheet, rather than traditional investments. Corruption is also a major concern. Banks have been accused of...