Banks in Kurdistan want people’s money, people want government assurance

ERBIL, Kurdistan Region—Bank managers in the Kurdistan Region paint an optimistic picture of the banking system despite a continued financial crisis and lack of a banking culture among people.

“As IBL bank have never experienced a case where a client has come and asked for money and we did not have enough money to deliver,” says Ishtar Zulfa, manager of the Erbil branch of the International Bank of Lebanon (IBL).

Zulfa says that people still trust the bank but taking into account the financial crisis, they need a little assurance that their money will stay and can withdraw when they want.

“People do have trust in banks but at this sensitive time they are worried,” she told Rudaw English. “They think about what happens after putting their money in their account.”

Zulfa explained that for transactions within the Kurdistan Region it is business as usual. The only challenge is dealing with outside the region, including Iraq.

“We do have money in the bank but it has become difficult to transfer money to Baghdad and other countries due to the instability of the region and the tension between the two regions,” she said.

She pointed the finger of blame at the central banks in Baghdad and Erbil: “The central bank in Kurdistan is not very responsive to our requests to transfer money to Baghdad and Baghdad is not transferring money to Kurdistan. There is no cooperation between the two.”

In addition to financial crisis and government regulations to stop capital flight, security is another reason for the slowdown in wire transfers.

“There are some people who refuse to deal with a bank when it comes to transfer huge amounts of money due to regulations which requires many proofs such as the source of the money, where it is sent to,” Zulfa explained. “It is just a routine but some people prefer transferring it through some offices and that is a huge risk because if the money is not delivered you cannot do anything.”

Nevertheless, she believes that locals have more trust in international than national banks. “There are still people who come and open accounts because it is an international bank, because they trust the international banks than the Iraqi ones.”

The Kurdish government decided earlier this year to boost the banking sector as part of wide ranging reforms of the financial system, and the branch manager of IBL says that people’s understanding of banks have changed compared to when she started in Erbil.

“Based on my experience I can say there has been a huge development in people’s knowledge about banks,” said Zulfa, who has worked in the sector in Erbil for a decade. “Every year it improves. Before, when we were talking about master cards, only few had any idea what we were talking and now I have dozens of requests for master cards.”

The IBL employees have played their own role in educating people about the benefits of having bank accounts and offering them a variety of services such as online banking and different account options. “How we treat our customers is crucial and also speed and accuracy.”


Hardi Newzad, 35, a company owner who deals with banks for his business, agrees that it is the best place to keep your money.

“Your money in a bank is always safe even if bankruptcy happens,” he told Rudaw English. He believes that keeping one's money in the bank would also help the country’s economy. “Those people who don’t need the money it is better for them to save it at the bank because this is good for the banking system and the economic sector.”

Newzad says that there is a poor banking culture in the Kurdistan Region because people don’t understand the importance of banks. He has started to change the perception in his own family.

“I have two kids and I have opened a bank account for them because I think it is important to teach them about the banking culture from a young age.”

Bustam Aboud al-Janabi, managing director of Kurdistan International Bank (KIB) agrees that there isn’t a tradition of banking among people, but, he says, his bank has adopted strategies to attract clients by introducing technology and incentives.

“People who keep their money at home are sticking to the old tradition and are not knowledgeable enough about banking business,” al-Janabi told Rudaw English. “We have a good amount of interest that we pay our clients. This has encouraged many to join the banking system.”

He has noticed a flow of cash from homes into banks. “People have transferred from saving money at home to banks. This depends on the strategies you follow to attract clients and KIB has relied on technology. The more the system is secure and easy the more people build their trust in the bank.”

Al-Janabi believes that banking creates a dynamic society and discovers trading skills and talent in people.

The KIB managing director recalled how it took some time for foreign investors to realize “that Kurdistan is a safe place for investment,” and how his bank has now managed to gain the trust of companies and investors alike.

One success the KIB has recorded is managing monthly paychecks of government and private sector employees through direct deposit. Their new plans include: “Working on electronic bank accounts through mobile where you can check your account, withdraw money and make transactions.”

Bankers and people alike are on the same page on the importance of banking for savings and the lifeblood of the economy. The government too hopes to create a culture where cash flows through the wires and computers than locked up in homes.

But there is still more to be done and the government may have to step in more vigorously and give banks and people the assurance and support they need.

“The Kurdistan region government has never announced to guarantee the international banks,” says Zardasht Aziz, a shopkeeper in downtown Erbil. “No one has ever encouraged us or gained our trust to go and put all our money in the bank.”

“We do not know what would happen to a bank if the situation of the region worsens,” Aziz remarked. “We do not know who will give us back our money if there is bankruptcy. There are many question marks.”

Aziz, one of many potential but undecided clients concluded: “I will put all my savings in the bank when the government will announce the trusted banks and will provide insurance.”