The digital economy and the challenges of financial technology development in Iraq

The digital economy and the challenges of financial technology development in Iraq

 The digital economy and the challenges of financial technology development in Iraq



the introduction

The rapid development of digital technologies has led to the emergence of the phenomenon of "digital economy" and the latter is an economy based on digital, information and communication technologies, as digital transformations affect all areas of production as well as economic and social activity, logistics, marketing, public administration services. The digital economy provides interaction Between business enterprises in many areas such as the creation and use of new technologies and products, communication services, e-business, e-commerce, e-markets, and remote services. Therefore, the digital economy is one of the main reasons for the transition to the fourth industrial revolution. Statistics show that productivity rose to 30 times between 1760 AD and the present time. The main reason is the rapid technological development in the field of communications and the financial industry (FinTech or fintech). The volume of investments in the financial technology sector for the year 2020 will amount to approximately $1216 billion worldwide.

Virtual Finance and Money Technology

Due to the virtualization of modern finance, financial technology companies are constantly developing their activities, and the virtual nature of finance contributes to the acceleration of digitization of various financial operations and the activation of modern financial innovations and innovation, which accelerates the development of the financial sector in the digital economy, so new digital financial technologies are used in various Economic sectors, as by owning a mobile phone, various financial operations can be conducted from them; non-bank lending and microfinance; money transfer and online trading; Applications that help manage personal finances and conduct electronic accounting in the field of small business; Sales management using digital marketing, digital insurance and crowdfunding services; e-wallets, debit and credit cards; Scoring platforms used to assess investment risk; Thanks to which transactions are made more transparent, they are carried out instantly, shortening the time and covering any distance. Blockchain technology is also used for transfers, payments, cybersecurity, and to ensure the high liquidity of assets.

FinTech Challenges on Financial Stability Fintech plays a special role in the modern transformation of the financial system, as it helps improve financial activity and increase its profitability, and the main feature of financial technologies is their ability to create innovations in the financial system. It also increases the financial globalization of economic systems, and the increase in the number of participants in the global financial market and their rapid interaction affected by the development of modern technologies has led to an increase in the institutional complexity of the global financial system, and thus more opportunities are created for the development of the financial system. However, the increasing complexity of the system leads to increased synchronization between its various parts that may lead to unforeseen consequences and the accumulation of economic imbalances, leading to a potentially highly unstable and uncertain environment. Financial technology may threaten the sustainability of the entire global system, because the use of traditional financial supervisory systems may become ineffective in keeping pace with new financial technologies, leading to unexpected and destabilizing consequences for financial stability. Which may make central banks and related international institutions unable to withstand the new challenges, which is an additional factor in increasing uncertainty and turbulence in the financial system.

Financial technology in Iraq

At the local level, Iraq suffers from a weakness in the use of financial technology, and despite the widespread use of the mobile phone, as the percentage of mobile phone users reached more than 96%, for the year 2019, while the percentage of Internet users reached nearly 50% of the total population, but the use of the mobile phone is still Financial technology is limited in comparison to the number of mobile phone users, and according to statistics in 2018, the volume of remittances amounted to approximately 400 million Iraqi dinars only through the mobile phone, which is a small amount, reflecting the weakness of government policies in the deployment and provision of infrastructure, whether laws or institutions specialized in Enhancing inclusion and financial development, and then promoting financial technology, so there is an urgent need to support financial literacy policies and spread financial knowledge through the Ministry of Finance, the Central Bank of Iraq, civil society organizations and related institutions, which contributes to the dissemination of financial services to all segments of society, and this will contribute to confronting Unemployment, supporting economic growth and development, and raising the standard of living for all members of society.

Conclusion

In the era of the digital revolution and the fourth industrial revolution, the development of the fintech industry is a priority. This industry is of great importance because it contributes to the growth of welfare and social and economic progress. Therefore, comprehensive support is needed for the development of new digital financial technologies. The tools of this support are supporting the creation and implementation of digital financial innovations, stimulating digital start-ups, supporting companies in implementing digital financial technologies, and shaping a digital market. From the point of view of the private sector, the use and development of digital technologies reduce costs, increase profitability and better adapt to market requirements. It is expected that by accelerating applications of artificial intelligence, as well as other digital technologies, which, along with big data, will be used to predict consumer preferences, enhance cybersecurity, and improve the efficiency of both traditional and digital financial companies.

 

 

 

 

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