Financial Crime World

Challenges Facing the FinTech Industry in Iraq

The FinTech industry in Iraq is facing numerous challenges that hinder its growth and adoption. In this article, we will discuss some of the key issues affecting the sector.

Security and Trust: A Major Concern

  • The Iraqi population has a lack of trust towards traditional financial systems due to past experiences with instability, corruption, and mismanagement.
  • This mistrust makes it challenging for FinTech companies to gain customer trust and establish themselves in the market.

Financial Literacy: A Low-Hanging Fruit

  • Financial literacy rates are low in Iraq, with only 27% of adults having basic knowledge of financial management.
  • This limited understanding of personal finance hinders the growth of FinTech companies, as customers may not be aware of or understand the benefits of digital financial services.

Digital Literacy: A Significant Gap

  • Despite the growing demand for digital payments and services, there is a significant gap in digital literacy among the Iraqi population.
  • This lack of digital skills makes it difficult for FinTech companies to penetrate the market effectively and provide seamless user experiences.

Infrastructure Challenges

  • Iraq’s infrastructure, including internet penetration and mobile phone coverage, is underdeveloped compared to other countries in the region.
  • This limited access to basic technology hampers the growth of the FinTech industry, making it harder for companies to operate efficiently and reach a wider audience.

The Impact of Financial Literacy on Fintech Adoption

A study conducted by Farida et al. found that financial literacy has a strong positive effect on people’s awareness of financial technology products (Farida et al., 2021). Furthermore, individuals with higher financial literacy have a better chance to benefit from fintech services and achieve financial well-being.

In conclusion, the FinTech industry in Iraq faces significant challenges related to security and trust, financial and digital literacy, and infrastructure. Addressing these issues is crucial for the growth and adoption of FinTech services in the country.