an investigation into the hindrances to the development of e-banking in iran
TRANSCRIPT
i
An Investigation Into The Hindrances To The
Development Of E-Banking In Iran
A dissertation submitted in partial fulfilment
of the requirements for the Open University’s
Master of Science Degree
in Computing for Commerce and Industry
Najla Motameni
(U1097647)
06 March 2012
Word Count: 16496
i
Preface
I am heartily thankful to both my supervisors, Dr. Phebe Mann and Dr. Rob Walker, whose encouragements,
guidance and support from the initial to the final level enabled me to develop an understanding of the subject.
I offer my regards and blessings to all of those who supported me in any respect during the completion of this
dissertation.
I am also thankful to all the participants who contributed their time and shared their information for this survey.
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Contents
Preface ........................................................................................................................................................................... i
Table of Figures ........................................................................................................................................................... v
Table of Tables ............................................................................................................................................................ vi
Abstract ......................................................................................................................................................................vii
Chapter 1 ...................................................................................................................................................................... 1
Introduction .................................................................................................................................................................. 1
1.1 Problem domain .................................................................................................................................................. 2
1.2 E-Banking in Iran ............................................................................................................................................... 4
1.3 Aim of research .................................................................................................................................................. 6
1.4 Research question ............................................................................................................................................... 6
1.5 Contribution to knowledge ................................................................................................................................. 7
1.6 Objectives ........................................................................................................................................................... 8
Chapter 2 ...................................................................................................................................................................... 9
E-Banking Literature Review ....................................................................................................................................... 9
2.1 Introduction ...................................................................................................................................................... 10
2.2 Factors affecting e-Banking .............................................................................................................................. 10
2.2.1 Technical factors ........................................................................................................................................ 11
2.2.2 Strategic factors ......................................................................................................................................... 17
2.2.3 Behavioural factors .................................................................................................................................... 19
2.3 Summary ........................................................................................................................................................... 24
Chapter 3 .................................................................................................................................................................... 25
Research Methodology ............................................................................................................................................... 25
3.1 Introduction ...................................................................................................................................................... 26
3.2 Research strategy .............................................................................................................................................. 26
3.2.1 Experiment ................................................................................................................................................. 26
3.2.2 Grounded theory ........................................................................................................................................ 26
3.2.3 Ethnography ............................................................................................................................................... 27
3.2.4 Action research .......................................................................................................................................... 27
3.2.5 Case study .................................................................................................................................................. 27
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3.2.6 Survey ........................................................................................................................................................ 28
3.3 Population and sample ...................................................................................................................................... 29
3.4 Data collection procedure ................................................................................................................................. 30
3.5 Risks ................................................................................................................................................................. 31
3.5.1 Risks to research ........................................................................................................................................ 31
3.5.2 Risks to interview participants ................................................................................................................... 31
3.6 Limitations ........................................................................................................................................................ 31
3.7 Summary ........................................................................................................................................................... 32
Chapter 4 .................................................................................................................................................................... 35
Data Analysis ............................................................................................................................................................. 35
4.1 Introduction ...................................................................................................................................................... 36
4.2 Research instrument ......................................................................................................................................... 37
4.2.1 Interview guide for service providers ........................................................................................................ 37
4.2.2 Interview guide for bank customers ........................................................................................................... 39
4.2.3 Questionnaire ............................................................................................................................................. 40
4.3 Discussion of data gathered from questionnaire ............................................................................................... 41
4.3.1 Telecommunication network ..................................................................................................................... 41
4.3.2 Security ...................................................................................................................................................... 42
4.3.3 Quality of service ....................................................................................................................................... 43
4.3.4 Operating cost ............................................................................................................................................ 44
4.3.5 Customer satisfaction ................................................................................................................................. 45
4.3.6 Customer trust ............................................................................................................................................ 46
4.3.7 Customer training ....................................................................................................................................... 46
4.4 Discussion of data gathered from interview with service providers ................................................................ 47
4.4.1 Hardware .................................................................................................................................................... 47
4.4.2 Software ..................................................................................................................................................... 49
4.4.3 Telecommunication network ..................................................................................................................... 49
4.4.8 Culture ........................................................................................................................................................ 50
4.5 Discussion of data gathered from interview with e-Banking users .................................................................. 50
4.5.1 Security ...................................................................................................................................................... 51
4.5.2 Sanctions against Iran ................................................................................................................................ 51
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4.5.3 Perceived ease of use ................................................................................................................................. 51
4.5.4 Perceived usefulness .................................................................................................................................. 51
4.5.5 Customer satisfaction ................................................................................................................................. 51
4.5.6 Customer training ....................................................................................................................................... 52
4.6 Perspective of e-Banking in Iran ...................................................................................................................... 52
4.7 Effects of e-Banking on customers ................................................................................................................... 54
4.8 Research outcome ............................................................................................................................................. 56
4.9 Summary ........................................................................................................................................................... 57
Chapter 5 .................................................................................................................................................................... 58
Conclusion .................................................................................................................................................................. 58
5.1 Overview .......................................................................................................................................................... 59
5.2 Research review ................................................................................................................................................ 59
5.3 Evaluation ......................................................................................................................................................... 60
5.4 Future work ....................................................................................................................................................... 61
Glossary ...................................................................................................................................................................... 62
Reference List ............................................................................................................................................................ 63
1 English ................................................................................................................................................................. 63
2 Farsi ..................................................................................................................................................................... 66
Appendix A – Extended Abstract ............................................................................................................................... 68
Appendix B - Qur'an Emphasis Against Riba ............................................................................................................ 74
Appendix C - US Sanctions ....................................................................................................................................... 75
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Table of Figures
Figure 1- E-Banking factors ....................................................................................................................................... 10
Figure 2- Core Banking in Iran .................................................................................................................................. 12
Figure 3- Consumer behaviour ................................................................................................................................... 20
Figure 4- Rexha bank marketing ................................................................................................................................ 23
Figure 5- T24 hardware spec ...................................................................................................................................... 48
Figure 6- Components of e-Banking .......................................................................................................................... 53
Figure 7- Effects of e-Banking ................................................................................................................................... 55
Figure 8- Major challenges of e-Banking in Iran ....................................................................................................... 57
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Table of Tables
Table 1- Iran e-Banking services ................................................................................................................................. 5
Table 2- Objectives ...................................................................................................................................................... 8
Table 3- Iran ICT stats (International Telecommunication Union, 2011) ................................................................. 14
Table 4- Research strategy comparison ..................................................................................................................... 33
Table 5- Interview with service providers .................................................................................................................. 38
Table 6- Interview with bank customers .................................................................................................................... 39
Table 7- Questionnaire for e-Banking users............................................................................................................... 40
Table 8- Telecommunication network analysis.......................................................................................................... 41
Table 9- Security analysis .......................................................................................................................................... 42
Table 10- Quality of service analysis ......................................................................................................................... 43
Table 11- Operating cost analysis .............................................................................................................................. 44
Table 12- Customer satisfaction analysis ................................................................................................................... 45
Table 13- Customer trust analysis .............................................................................................................................. 46
Table 14- Customer training analysis ......................................................................................................................... 46
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Abstract
Modern fast-evolving technology is constantly bringing new dimensions to our daily life. Electronic banking
systems provide customers with easy access to banking services. The quality of electronic banking services has
become a major area of attention among researchers and bank managers due to its strong impact on business
performance, lower costs, customer satisfaction, customer loyalty and profitability. ATM, POS, phone banking,
Internet banking, mobile banking and more recently kiosk have considerably improved the interaction between
user and bank but these services are not widely used in Iran as expected. This paper discusses the reasons for this
disinterest. Literature survey shows researchers mostly from other countries have found many factors influencing
the adoption of electronic services. In this study we look at all these factors and other factors specifically regarding
Iran, from a different angle. To investigate all the factors that may hinder the development of e-Banking in Iran
which is the aim of this study, we have categorized the mentioned factors to 3 groups: Technical, Strategic and
Behavioural. Questionnaire and interview with the users of electronic banking services and also interview with
providers of these services have been used as a primary data collection tools. The analysis of the collected data
shows the effect of technical factors is the strongest. To be more specific telecommunication network
infrastructure and hardware inefficiency, software capabilities are shown to be the most serious hindrances to the
development of e-Banking in Iran.
Keywords: Electronic Banking, Strategic Factors, Technical Factors, Behavioural Factors, Iran.
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Chapter 1
Introduction
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1.1 Problem domain
The development of new technologies in communications and information practices and the emergence of new
services and increasing expectations and needs for banking services market caused public and private banks to
compete for providing new-banking services.
E-Banking in recent decade has been carried out with various implementations in Iran by a variety of public and
private banks. Now each bank more or less seeks for efficient use of this new technology. However, it seems the
use of e-Banking is still not institutionalized in the culture of our people, and customers still do not use this
technology with trust for intense financial transactions.
Based on the reports of the Central Bank of Iran (CBI) the penetration rate of e-Banking is still very low, despite
the huge amount of investments made by Iranian banks.
According to BBC news 60% of Iranians go to banks only to receive or pay cash to the banking network
(Engagement Banking, 2011).
Iranian banks talk about the spread of e-Banking while Iranians spend a lot of time in a bank branch to pay the bills
for water, electricity, gas, phone, or transferring money to other accounts and sometimes they stay in line for hours
to receive or pay cash. Paper money, checks and bank documents have important roles to transfer ownership in the
banking system but among all, paper money has a special place and Iranians have a certain confidence towards it.
Cash transfer is almost impossible without going to the bank and filling a variety of forms and in most cases it
takes several days to cash the money order, deposited in another city or even in the same city.
Banks‟ computers play the role of calculators and they cannot place orders or transfer cash via Internet which is
more or less endemic in these days.
Iran's banking system still relies on pen and paper. Computers and ATM are only e-Banking manifestations that
customers may withdraw certain amount of money with their banking cards. Iranians cannot transfer considerable
sums of money through e-Banking.
According to experts the use of electronic cards is not practical without fundamental reform of the banking system
and creating the required infrastructure such as a safe and high-speed communication lines, expansion of various
debit/credit cards and increase EFT-POS devices in shopping malls. And it does not seem people would easily
change colourful money papers with electronic cards.
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Iranian banks have started programs to join a single network that provides communication layer for various banks.
This network is called “Shetab” and is developed by CBI (Mehr News, 2005).
The Mehr News (2005) describes how Shetab Banking System has monopolised the Iranian e-Banking clearance
and automated payment system. It also laments on the low patronage of e-Banking and the need for general
expansion. The system was introduced in 2002 with the intention of creating a uniform backbone for the Iranian
banking system to handle ATM, POS and other card-based transactions.
Prior to its introduction, some Iranian banks were issuing cards that only worked on the issuing banks‟ ATMs and
POS machines. Since the introduction of Shetab, all banks must adhere to its standards and be able to connect to it.
Furthermore, all issued credit or debit cards must be Shetab capable.
But still each bank has its own system, and many banks have no connection to the bank next door. Shetab is like a
motorway that gives access to all banks and cardholders can withdraw money from their account regardless of the
card issuer but this project has its own problems since a bank system may not be compliant with Shetab
requirements from software or hardware point of view. Also bank that installed the ATM charges a fee but the card
issuer receives no interest.
The Department of Labour and Industrial Relations (2010) notes that banking experts say it is not reasonable to
expect banks issue cards with no benefits.
Another problem is to create payment gateway. A permit is given to all banks to establish a company of its own
and reach this goal. Iran‟s banking system is similar to the general trend that is used to define e-Banking, which is
given as “the usage of new tools to provide banking and monetary services.”
In conventional banking, the amount of money accumulated in a period of time is important, but in e-Banking cash
flow is decisive. E-Banking goal is being able to not to refer to bank branches, but in Iran almost nothing is
possible without a visit to the bank.
Iran‟s paper currency barely lasts long at the hands of users due to how users handle the currency. However an
average of 15 million dollars is spent annually on printing banknotes. 1,200 million damaged banknotes are
removed from circulation by the CBI and about 60% of the current banking system is to receive or pay cash.
Iran‟s membership request to WTO is accepted but with this situation it cannot be hopeful to be successful in the
global market which is equipped with e-commerce.
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Cash flow has a special place in Iran‟s banking system and banking cards failed to remove burdens from country‟s
economy and solve money exchange problems. This added a cycle to banking work flow to stuff a device with
banknotes for customers to receive limited amounts of money.
Some banks have installed EFT-POS in some stores and shopping centres but the quantity is quite limited.
According to BIMA (Bank and Insurance Manifest Agency, 2010) latest stats, 17000 ATM and 1 million EFT-
POS are installed. Ebinews, (2011) says 128 million cards are issued; none of them is credit card. And if all
infrastructures are provided, customers cannot purchase more than their account balance. Current cards are only
valid within the country and there is no possibility of using them abroad.
Before Iran‟s revolution in 1979, Iranian banks had contracts with large enterprises such as “Visa” and
“MasterCard” but they terminated after US sanctions were imposed. For example BMI had a contract with Visa to
introduce institutions to accept Visa cards. This bank would guarantee the claims of Iranian customers and at the
end would receive all its payments from Visa.
Now BMI in cooperation with a European bank is implementing a pilot project to accept cards issued abroad
except by US or Israel. This pilot project has run in 20 centres such as hotels so that foreigners can use their
electronic cards. If this project extends, to some extent it will solve the main problem of tourists coming to Iran to
pay certain expenses such as hotel accommodation. And in the second stage, it is predicted that Iranian citizens
demand international credit cards from domestic banks and with guarantee of Iranian banks, international card
would be issued for them. The final stage of this plan is to resolve disputes with the US to eradicate economic
embargo, which with the current status, there is no clear vision to do so. E-Banking has a long way to go for
traditional business governing the country and until groceries, small and large store that have the highest volume of
purchases/sales at their hand, are not convinced to have POS and until interests of banks, customers and service
providers are not ensured, comprehension of e-Banking would remain as a slogan.
Although many studies have been conducted in e-Business matter, unfortunately in Iran not many efforts have
been done on this issue and regarding to Internet usage, Iranian companies have not made great progress.
1.2 E-Banking in Iran
Toward achievement of modern banking and based on academic studies, an automation plan for the country's
banking system was proposed to bank officials and based on Banks General Assembly approval in 92, a
comprehensive automation plan was formed. Executive Advisor of President of Central Bank was put in charge of
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the plan implementation. Subsequently, from the beginning years, Iran Informatics Services Corporation was in
charge of this project with the mission of providing the necessary facilities to implement the automation design in
the country's banks and financial institutions.
During the past years and the gradual development of communications technology and expanding Internet access
and possession of PCs by various sectors of society and companies, and increasing awareness and knowledge of
people, the country's banks moved toward e-Banking and gradually introduced new e-Banking services. The
following table shows the current e-Banking services in the country (CBI, 2011).
Customer No
of banking
system
Penetration rate to
relevant subscribers
ratio
Penetration rate to
population of over 20
years ratio
Penetration rate to
population of over 15
years ratio
Telephone bank
(bill payment)
2,266,866 8.99% 5.15% 4.29%
Internet bank 416,960 1.81% 0.94% 0.78%
Internet bill
payment
708,788 3.08% 1.61% 1.34%
Mobile bank 5,190 0.02% 0.01% 0.01%
SMS bank 1,110,023 4.18% 2.52% 2.10%
Table 1- Iran e-Banking services
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1.3 Aim of research
According to the legal obligation stated in paragraph 4 of Article10-J of Fourth Development Program Action
Economic, Social and Cultural, Iranian government is obliged to establish e-Banking systems and procedures for
money exchange and other e-Banking services on national and international level in all country‟s banks since the
first quarter of the program.
The need for an efficient banking system in the world markets and membership in organizations like WTO requires
e-Banking, not to be considered as an option but a necessity. It is certain, the cost of providing banking services
decreases through e-Banking. (The world of economic, 2007) says the cost of e-Banking in the world is 10 cent
and traditional banking costs 1 Dollar. This means saving 90 percent. The benefits of e-Banking will not only
reduce costs but building its culture, also leads to social and economical benefits. Decreasing printing materials,
health and traffic control will be the affects of this culture.
In the other hand by living in a complicated and competitive world bankers and even authorities need to use
technological facilities to cut cost of money, improvement of services and even in case of authorities finding
solutions for traffic jam and pollution.
While in many countries government is responsible to provide the necessary infrastructure for banks, in Iran many
banks provided themselves their needed satellites. Many laws such as credit card rules still have not been
developed. Non-efficient workforce also contributes to the problem. All these factors along with the state system
have caused our country not to be successful in e-Banking spread. The key of this lock is in our own hands.
Identify factors affecting lack of e-Banking progress, and providing solutions to overcome the obstacles can help
bankers to develop appropriate strategies towards e-Banking development. Learning more about e-Business and e-
Banking are also the prerequisite goals towards identifying the factors avoiding the spread of e-Banking. After
knowing the factors measures will be taken to identify their level of negative effect they have on the progress of e-
Banking also an analysis will be provided alongside with my opinion on solutions.
1.4 Research question
The purpose of this study is to get greater understanding of e-Banking phenomenon and find out its
implementation obstacles in Iran. In the conduct of the collection of data; both primary and secondary data, it is
important that I have a guide on the kind of data to collect and which ones to ignore. In doing this, the following
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research questions have been set to guide me on the exact data to go after. Therefore, I try to reach this goal by
answering the following question.
What are the hindrances to the advancement of e-Banking in Iran?
There have been obstacles to stop or delay the growth of e-Banking in any banking market. Banking services in
countries with more traditional societies face basic resistances and levels of uncertainties toward electronic
transactions. Electronic money has no ground to be compared with physical one when it comes to society‟s
willingness to carry on doing things in traditional ways.
1.5 Contribution to knowledge
From the perspective of some researchers developing a new technology needs providing perfect service with
complete security and this process takes time. However we should not forget that currently there is an intense
competition among country's banks to attract more customers, providing e-Banking services to some extent.
The importance of identifying the factors influencing the spread of e-Banking for managers of the banks now is
more than ever, and experiences obtained from this study will serve as an important academic document for future
referencing by researchers who may want to undertake further studies in e-Banking in Iran.
Other corporations interested to reduce their costs and attract more customers also could benefit from this survey,
changing their technical strategies or adjusting them according to findings of this research.
Government officials also would reach a better understanding of how to build the required infrastructure and also
the necessary culture for e-Banking.
If e-Banking would be deeply accepted in Iran, it leads to worldwide businesses, increase income and in general it
would help to improve economic crises.
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1.6 Objectives
Objective Task Deliverable
Survey the main known
obstacles on the way of
Iranian e-Banking progress
by the experts‟ opinions.
Making questionnaire containing open
questions.
Choosing one bank from each main
banking sector.
Choosing experts from each bank.
Interview the experts to obtain their
opinion, gather information, analysis
and categorization of answers.
Derive main issues from categories
and set them as main factors.
Two leading banks each
from a main banking sector.
Filled questionnaires with
answers to open questions.
Main negative factors
influencing e-Banking
business in Iran.
Gain insights on e-Banking
to have a better
understanding on issues
raised by the experts.
Review the statistics of e-Banking in
Iran.
Statistical data on Iranian e-
Banking.
Categories of e-Banking
services in Iran.
Ranking the severity of
problems. Select interviewees from different
sectors of society.
Make a questionnaire from factors
obtained from experts‟ opinions.
Interview members of society.
Gather data to obtain quantitative
results.
List of interviewees‟
opinions.
List of questionnaires‟ points.
Assessing practical
problems towards e-
Banking expansion.
Graphical analysis of obtained data.
Make a ranking on identified factors.
Reach a conclusion.
Ranking on main negative
factors.
Conclusion.
Table 2- Objectives
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Chapter 2
E-Banking Literature Review
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2.1 Introduction
The evolution that banking industry faced in two past decades caused major changes in the form of money and
funds transferring systems. It initiated notions such as digital money and EFT. These two notions are in fact bases
for a new version of banking called electronic banking.
In other words, e-Banking could be introduced as using advanced networks and communication technology to
transfer funds (cash) within banking system (Sheikhani, 1999).
This part of the research project is aimed at reviewing literature that already exists in the area of e-Banking in Iran.
By review, I shall qualitatively pass analytical views and opinions on the ideas to be reviewed. The review shall also
aim at finding answers to the research question asked early on. This means that the literature review shall be
conducted within a specific scope.
2.2 Factors affecting e-Banking
I have categorized the basic factors affecting e-Banking according to the following figure.
Figure 1- E-Banking factors
Sanctions
against Iran
Operating
cost
Perceived ease of use
Perceived usefulness
Customer satisfaction
Customer trust
Customer training
Culture
E-Banking factors
Technical factors Strategic factors Behavioural factors
Hardware
Telecommunication
Network
Security
Quality of
Service
Islamic
banking
principles Software
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2.2.1 Technical factors
Transaction Technicalities factor appears to be the leading factor to customer satisfaction (Yang et al., 2003).
Deficiencies in technological infrastructure are often the main obstacle in acceptance of e-Banking service channel.
Hardware
Hardware including satellite, optic fibre, ATM, POS, remote controller systems, transaction management
equipments and etc. is important criterion in e-Banking and generally e-Business infrastructure. For example
database servers have key roles to provide e-Banking solutions. They need powerful CPU and extensive memory,
especially for search process. A bank mainframe normally would consist of database servers, application servers,
presentation servers, routers, switches and etc. All these instruments should be robust, secure, powerful and liable.
Hardware Security Management (HSM) also plays a critical role to ensure the security of data flow through
cryptographic protocols. Hardware inefficiency may lead to failure or disruption. A possible system or database
compromise, inadequate system capacity, weak system support could result to service failure in e-Banking.
Conversely, in order to obtain an integrated system, a set of sophisticated standards are necessary to ensure system
consistency. Cost of course is the main drawback of high standard hardware.
Following interview questions from service providers may indicate the hardware status of a bank.
How many transactions per second could your mainframe support?
What is the EAL level of you mainframe?
Have you ever faced a major system failure due to hardware malfunction?
Do you have a backup data-centre in case of emergencies?
Are your issued banking cards ISO 7816/14443 compliant?
Are these issued banking cards EMV compliant?
Do your POS readers comply with ISO 7816/14443?
Do your POS have GPRS capability?
Software
To develop and strengthen the banking system, Iranian government in Article10-J of Fourth Development Program
(2005-2009) Action Economic, Social and Cultural, has forced all banks to:
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Full deployment of centralized banking system (Core Banking) and the conversion of all accounts
whether individual deposits or facilities to centralized accounts focusing on CBI standards and
guidelines.
Establishment and utilization of CA for e-Banking network in cooperation with CA of CBI in order to
increase the security of electronic data interchange.
Use electronic signatures to facilitate their intra bank transactions.
Design, implementation and deployment of all the above are the responsibility of banks‟ board members and
ICT companies.
In order for e-Banking network expansion, all state and private banks have to implement core banking
compliant with CBI standards to maintain the integrity of banking system. The following figure shows what is
generally required from core bank solution in Iran.
Figure 2- Core Banking in Iran
Many parts of software are required for a successful bank to run e-Banking like back-office, front-office, different
channels software, portals, call-centre IVR, CMS and etc. The importance of software application on online
banking is quite emphasized by Southard et al. (2004). An efficient background operation can be conducted only
Corporate Internet Banking
(Web Based)
Corporate Internet Banking
(Service Oriented Architecture)
Personal Internet Banking
Internet Banking
Channel manager
Centralized
depository
system
Centralized loan
system
Card switch
Authenticate &
Authorize
Paya
Satna
Shetab
Taba
Admin and Back
office User office (virtual bank)
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when it is integrated by an electronic system and software is one of the essential elements for this system (Auto,
2010). According to Mermod (2011) buggy software causes a bank reputational risk.
The below questions from service providers indicate the software circumstances.
Does your switch support ISO 8583 or APACS?
Do all your ATMs comply with Payment Card Industry Data Security Standards (PCIDSS)?
Do all your ATMs have audit trail and logs capabilities?
Do you provide mortgage accounting facility on the Internet?
Do you use an integrated system for back-office?
Telecommunication network
Universal access to Internet networks has increased customer expectations for services and supports. Among these
expectations are increased accuracy and broadband services. So to answer the demands for comprehensive and
flexible support, a strong infrastructure is required.
The major inhibiting factors to Internet banking adoption in Nigeria is identified as inadequate operational
facilities including telecommunications facilities and electricity supply (Chiemeke et al., 2006).
Mastoori (2009) analysis also shows one of the main reasons bar customers from using Internet Banking is
limitations of Internet services.
So in general, ICT plays a significant role in increasing efficiency and effectiveness of business. Benefits of ICT
has caused many countries try to implement this technology in their industries. The most important criteria
classification for ICT is presented by (International Telecommunication Union, 2007) and contains a
comprehensive list of key ICT indicators that are defined in the four following areas:
1- Infrastructure and accessibility
2- ICT usage by individuals and families
3- ICT usage by businesses
4- ICT in specific products
International stats and reports shows world countries‟ ranking in terms of ICT indicators, most emphasizes on the
infrastructure and accessibility.
The following table shows Iran current state in ICT (International Telecommunication Union, 2011).
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Number of fixed telephone
lines(per 100 persons)
Number of mobile
subscribers (per 100
persons)
Number of
computers (per
100 persons)
Number of Internet users (per
100 persons)
Iran 27.6 10.5 7.5 10.8
Asia 13.6 69.2 15.8 22.5
World 17.2 78 29.5 29.7
Table 3- Iran ICT stats (International Telecommunication Union, 2011)
As you can see, Iran is behind in all aspects of ICT except the number of fixed telephone lines even in its own
region Asia.
Similarly, Digital Access Identifier (DAI) is the first criterion to rank countries in term of ICT. It has surveyed 178
countries. This ranking is performed by International Telecommunication Union (ITU). Variables such as
education and financial capacity are also considered in this criterion. Iran also reviewed and ranked among these
178 countries and ranked 89th
.
Obviously the limited spread of Telecommunication network (telephone, mobile, PC, Internet) would lead to
customers not using these channels as their primary choice of banking transactions.
Internet speed is a major area of concern for the users of Internet channel (Aliaskari et al., 2011).
In most of the world the standard technologies in most areas are cable servers and the newer technologies in use
include pushing optical fibre connections closer to the subscriber in both telephone and cable plants, this has
played a crucial role in enabling telecommunication access by making transmission of information over larger
distances much more cost-effective than copper wire technology that‟s speed is up to 100Mb/s. But in Iran the
infrastructure still utilizes the copper wire lines that in the best case offers a speed of 512 Kb/s but mostly around
16 Kb/s- 32Kb/s.
Adding some questions to questionnaire, I may assess the telecom network status in Iran. I could seek the users‟
satisfaction level by asking:
The speed of e-Banking services.
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The availability of different service channel in different places like small towns.
Following additional questions from service providers gives us more in-depth view of e-Banking network in Iran:
Are various e-Banking channels such as Mobile, ATM, Kiosk, Telephone and Internet are supported by
your telecom network?
Do you utilize specific network concentrators/aggregators to create and expand the e-Banking networks or
do you use general networking equipments?
Do you utilize specific network management system to monitor e-Banking networks or do you use general
networking management system?
How much your e-Banking operations are affected by network disruptions? Has it ever caused your service
a severe breakdown?
Security
Security is one of the major areas of concerns for e-Banking users (Aliaskari et al., 2011) and (Chiemeke et al.,
2006). Security may include protection of customers‟ personal information and secure transactions to prevent
abuse of the highest growth of any online business, including e-Banking.
Vlad (2010) by making a comparative analysis, on concrete situations, over the four banks taken in his study, states
one of the problems regarding e-Banking is the risk of fraudulent attacks.
Security for transferrable information is considerably emphasized. Many studies have recognized issues related to
security as one of the factors affecting development of electronic commerce and e-Banking. Information such as
credit card number or money order requires additional security.
Perceived security in web environment has a significant and direct effect on the acceptance of e-Banking specially
Internet Banking by customers. Therefore, we suggest that banks attempt more to improve the security qualities of
their system in order to successfully attract their customers trust regarding existence of security within Internet
banking for doing transactions.
Furthermore, Security has the highest importance rate in Poon‟s analysis (2008).
I could find out the severity of this issue by asking both service providers and users of e-Banking if they have
faced any scams? Or if their private data has been used in an unwanted way?
Other following questions may also be performed from service providers:
16
Do you follow any standard security model to ensure information safety?
Do you have SSL certificate for your Internet banking?
Do you use DES/3DES, AES, RSA data encryption standards, Digital signature, PGP, SET, Kerberos?
Do you use Public Key Infrastructure (PKI) to provide digital certificates to verify the digital identity of a
user?
Some written questions will also provide useful information about the level of satisfaction of users regarding
privacy and security of provided services.
Quality of service
Service quality is the ability to deliver what the customer needs and expects (Minocha et al., 2003).
Investigating customer preferences useing the customer decision making process, service quality is one of the
factors customers use in selecting electronic and traditional banking (Gan et al., 2006).
Evidently, the most common factor cited by many in literature, is good customer service (Orr, 2004).
In regards with quality of service, Vlad (2010) states some severe problems opened by e-Banking are:
The diversity of the operations offered by the application.
The rapidity in the information transfer from the payer over the bank.
The transfer rapidity between the banks.
The rapidity to actualize the information after having finished the transfers.
Correction possibility in the case of the introduction of some incorrect information or some possible
mistakes.
The compatibility with financial-bookkeeping systems, those that belong to the banks and also those that
belong to the companies.
The way in which this kind of operations answers or folds on the customers‟ needs.
I could assess the level of user satisfaction from provided services by the following written questions:
The accuracy of e-Banking services.
Presentation of facilities.
The customer service‟s section behaviour.
Quality and speed of digital money orders.
The reliability of different service channels.
17
2.2.2 Strategic factors
CBI has issued an announcement giving e-Banking a priority to reform the banking financial services. According
to this announcement CBI is responsible for policymaking, defining regulations and standards, settlement
management between banks, management and supervision of security on electronic exchanges between banks like
Shetab, Satna, Paya, Taba and etc. (payment system networks in Iran), preparation and deployment of electronic
signature infrastructure, expanding culture of using digital money services.
The new core banking should have been up and running by the end of Fourth Development Program in 2009. To
facilitate the development of e-Banking, CBI even issued licenses to establish virtual banks (only retail services) to
2 volunteers.
But here we are in 2012 and comparing the banking system with the outside world, we could firmly claim there is
no real means of e-Banking in Iran and many bank have not even started implementing core software.
Furthermore, in case Iranian banks want to use other countries successful experiences regarding core banking
software and buy it from foreign companies, there are two set of rules and regulations involved here acting as
hindrances: US sanctions and Iranian Islamic banking rules.
Islamic banking principles
The basis of Islamic Banking is quite different from other countries‟ banking. Islamic banking is known as
interest-free commercial banking. And appendix B will describe the emphasis of Holly Quran on this issue.
After the Islamic Revolution in 1979, CBI was mandated to establish an Islamic banking law which was passed by
the parliament. So, Iran switched to Islamic banking in August 1983 with a three-year transition period.
This law has limited the choice of buying core banking software for Iranian banks, since not all famous branches
of core software support and complies with these Islamic rules. Most core banking software developed by Iranians
are also in their novice stage and could not provide the wide ranges of services to attract the customers.
Performing the following questions from service providers would indicate us how much this issue effects the
spread of e-Banking in Iran.
Do you think Islamic banking rules have limited your choice for core banking software?
Do you think these rules have any effect on the spread of e-Banking?
18
Sanctions against Iran
Sanctions imposed to Iran by OFAC have affected banking industry severely (Appendix C, US sanctions). These
sanctions cover all import/export, international loans/credits and fund transfer. In general any business agreement
between Iranian banks and European/American banks is prohibited. For example buying licenses and servers are
prohibited. Also debit/credit card terminal acceptance is prohibited. Buying any original hardware/software from
US or Europe such as Cisco servers, HP servers, IBM portal and Linux OS would violate this rule. Even if banks
buy required instruments via a third party, they would lose the guarantee, support and related trainings. That led
them to use old stuff for hardware and cracked or trial version for software.
Overall, the sanctions' economic effect on Iran has been significant on e-Banking. This sanction would limit banks
for importing standard hardware or buying core software, therefore receiving a desired after sale services and thus
providing not qualified services for customers.
The following question from e-Banking users will help us assess the amount of effect of the sanction on the
penetration of e-Banking in Iran.
Are all banking services you need available through e-Banking channels like credit card payments while
buying online?
Service providers also would be knowledgeable resources to provide us valuable information in this matter. The
following questions may be asked them in this regards.
Has the sanction affected the e-Banking services you provide in any way?
What would you do differently if there was no sanction?
Operating cost
One of the most important factors of customer preferences in the use of electronic banking is operating cost (Gan
et al., 2006). Commissions and the taxes that banks perceive for e-Banking applications are one of the e-Banking
hindrances for the customers (Vlad, 2010). Fees and charges are thus one of the attributes that determines
consumer‟s decision on using e-Banking system (Poon, 2008).
Regarding telephone banking, we must say since the usage of automatic answering systems, telephone bank lowers
the expenses of banking services and increase of customers‟ deposits leads to high profits of banks. There by,
telephone bank services are provided free of charge in Iran (Allahyarifard, 2005).
19
Also for all banks‟ ATMs, card holders can withdraw money from their account regardless of which bank has
issued the card but this has its own opponents since the bank that installed the ATM may charge a fee and the card
issuer receives no interest.
I may find out if operating cost is an important factor for Iranian users by asking their level of satisfaction about
the current fees. And I would investigate if not receiving a fee for issuing cards effects on service providers‟ choice
of expanding their cards by asking them.
2.2.3 Behavioural factors
Behavioural intention of a person to use a service depends on several factors discussed below.
Culture
While buying a building for opening new branches is not an advantage or capital gain for foreign banks, our banks
found high profitability to buy buildings and open new branches as an investment. This issue is not far from any
economist‟s mind. Iranian bankers believe that they will not get rich if they do not buy the branch. So the
traditional practice in Iran is significant. Iranian consumers have reached a belief on how to invest their money
over one hundred years. High demands, low supply, high inflation and industrial recession have caused the real
estate prices to go higher and higher each year for the past 30 years in Iran. Branch handling is consistent with our
economy and this investment means disregarding benefits of e-Banking. E-Banking is incompatible with the state
economy.
Kutler et al. (2000) believe there are four aspects affecting consumer‟s behaviour: cultural, social, personal and
mental factors.
20
Figure 3- Consumer behaviour
But in this research, I consider all these factors as a hindrance of culture.
Cultural factor is the most important determining factor of demands and personal behaviour, which includes value,
impression, taste and the behaviour a person learns from family or other entities (Kutler et al., 2000). Cultural
subset means “culture within culture” which has specific values and lifestyles and can be based on everything from
age to ethnicity. People with different cultural qualities have different tastes regarding different products and
brands.
Social factors can also affect on purchaser‟s behaviour. Some reference group such as family, friends, specialized
and social organization can affect the choices of a person (Kutler et al., 2000).
Therefore, special needs of each group must be considered in marketing planning.
Personal factors such as age, level of life cycle, profession, economic status, lifestyle and character can also affect
on purchaser‟s decisions. Consumer‟s lifestyle (general pattern of his/her actions and reactions in this world) can
have a significant influence on people‟s decisions regarding purchase (Kutler et al., 2000).
Finally, mental factors including motivation, impression, learning, beliefs and attitudes have an effect on
consumer‟s behaviour (Kutler et al., 2000).
21
Each of above factors provides a different attitude and what is happening in customer‟s “black box” must be
realized this way.
Acceptance process via customers is divided to five levels (Kutler et al., 2000):
1. Knowledge: consumer gets to know a new product but has no information about it.
2. Interest: consumer attempts to obtain some information about new product.
3. Evaluation: consumer considers the point that if testing new product is reasonable or not.
4. Testing: consumer attempts to test new product in small scale in order to be able to judge it.
5. Acceptance: consumer decides to consume the new product completely and all the time.
Asking service providers the following question will indicate if the Iranian culture is ready for e-Banking or it is
still a burden.
Did you face any cultural set back in offering electronic services?
Is electronic money tangible and accepted for your users?
How many percentages of your customers perform their transactions electronically?
Are you satisfied with the way e-Banking services are reached out to users?
Perceived ease of use
Perceived ease of use is one of the most important factors to determine consumer‟s behaviour and decision to
accept a new technology in the field of ICT (Wang et al., 2003) (Pikkarainen et al., 2004) (Yiu et al., 2007) (Cheng
et al., 2006) (Ravi et al., 2006) (Moon et al., 2001) (Davis, 1989).
Perceived ease of use plays a very important role influencing customers‟ adoption of Internet Banking (Naimi,
2008). Actually regarding whole e-Banking services, one of the important problems is comfort in using the
application (Vlad, 2010).
The following question from e-Banking users will show us the importance of this factor.
Do you find it easy to perform all your banking transactions through Internet, Mobile, Telephone, ATM
and POS?
22
Perceived usefulness
Another important factor equally effective to perceived ease of use of a service is perceived usefulness (Wang et
al., 2003) (Pikkarainen et al., 2004) (Yiu et al., 2007) (Cheng et al., 2006) (Ravi et al., 2006) (Moon et al., 2001)
(Davis, 1989).
Perceived usefulness is one of the main factors towards adoption of Internet Banking (Naimi, 2008).
The following questions from the users of e-Banking services will demonstrate the importance of perceived
usefulness.
Comparing traditional banking, do you find Internet banking, mobile banking, telephone banking, ATM,
POS and Kiosk more useful?
Which electronic service would you prefer the most?
Customer satisfaction
Customer satisfaction is very important when establishing new banking services (Rexha et al., 2003). Only by
actively persuading customers to use their services will banks be able to expand their e-services (Venus et al.,
2000). Customer satisfaction, or lack of satisfaction, is thus a key element in the development of e-banking in Iran.
The following questionnaire question from the e-Banking customers enables me to assess their level of
satisfaction.
How satisfied are you using different e-Banking service channels?
Following interview questions from these users also would be helpful in this matter.
Do you ever find it necessary to go to a bank branch?
Would you consider doing all your banking transactions to be done electronically?
Customer trust
Service in banking system could be provided by a machine (ATM), a person (consultant) or a mixture of both
(cashier). Marketing for services is similar to goods marketing process and all implications of modern marketing
could be used to supply services. Moreover, services carry four unique properties, which make them different from
goods: intangibility, inseparability, non-storability and non-similarity. Two other properties are also added for
banking services: trustworthiness and bidirectional information flow (Venus et al., 2000).
23
In e-Banking field where issues like financial resources and transfer of ownership are quite decisive for customer,
study shows customer trust on e-Banking is quite decisive for customer attitude (Rexha et al. 2003).
Trust is a prime factor influencing customers‟ adoption of Internet Banking (Naimi, 2008). One of the main
reasons bar customers from using Internet Banking is lack of trust in the system (Mastoori, 2009). To expand e-
Banking transaction further, secure transactions with the trust of consumers are necessary (Haque et al., 2009).
Moreover Rexha et al. (2003) in terms of relationship marketing factors affecting the acceptance has reached the
conclusion that factors shown in the following figure are effective on acceptance of new provided electronic
services by a financial institution.
Figure 4- Rexha bank marketing
As you see on the above figure, all the factors will lead to “trust” and then willingness to adopt e-Banking.
E-Banking users‟ questionnaire including the following question will enable me to determine the level of
satisfaction of users regarding this factor.
Do you have trust on e-Banking technology?
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Customer training
Amount of knowledge on e-Banking is another decisive factor for customer attitude (Rexha et al. 2003). Lack of
customers' training has the most impact on non-development of electronic banks (Aliaskari et al., 2011). For
customers of Internet Banking lack of knowledge about it works as a barrier (Mastoori, 2009).
The below interview questions from end users of electronic services could show us if they have received enough
information and training about the provided services.
What electronic banking means for you?
Do you know how to pay your bills via phone banking?
Could you tell the main difference of ATM and kiosk?
Following question from e-Banking users will also allow us to find out the level of their satisfaction with the
received trainings.
Have you received enough information about different e-Banking service channels?
Have you received enough information about the advantages of e-Banking?
2.3 Summary
Through the literature review, I was afforded the opportunity to sample data from other reviewers and technical
experts on electronic banking. The secondary data collected helped realizing the factors affecting the development
of e-Banking in Iran.
I have categorized the factors affecting the development of e-Banking services to the following groups:
Technical: hardware, software, telecommunication network, security and quality of service.
Strategic: Islamic banking principles, sanctions against Iran and operating cost.
Behavioural: culture, perceived ease of use, perceived usefulness, customer satisfaction, customer trust and
customer training.
For each factor several questions are derived to enable us understand whether or not it is an important barrier
towards e-Banking spread in Iran and also determine the level of its significance.
25
Chapter 3
Research Methodology
26
3.1 Introduction
In regard to research topic and its nature, in section 3.2 different research techniques are investigated. According to
cons and pros of each technique a justification for choosing or refusing it is provided in this chapter. Choosing
survey strategy, a population and sample volume would be decided. Then in section 3.4 data collection procedure
is discussed. The risks and limitations of this project would be notified in this chapter.
3.2 Research strategy
The research strategy describes the manner in which the researcher is going to go about the data collection process.
Saunders et al (2007) explains that “there are six research strategies which can be identified in the literature, such
as: experiment; grounded theory; ethnography; action research; case study and survey” which can all be used by a
researcher depending on his or her research aim and research questions.
3.2.1 Experiment
An experimental strategy is generally investigates the effect of changing conditions on a subject. It more involves
product or people testing. So it is more suitable to investigate whether certain conditions produce better results. For
example it shows if something is bigger, better, faster, more or less productive, etc.
This strategy is refused here since it is not fit for our purpose since in this study manipulation, control and
randomization of variables, and then measuring the effects are not possible.
3.2.2 Grounded theory
It is a theory resulted inductively from a set of data. Grounded theory takes a case rather than variable perspective.
This means the researcher takes different cases to be wholes, in which the variables interact as a unit to produce
certain outcomes. The grounded theory approach consists of a set of steps whose careful execution is expected to
lead to a theory as the outcome (Borgatti, 2012). Interpreting data gathered is quite a complicated matter and to
reach a correct hypothesis we need a large amount of data. The erroneous belief of this approach is most of the
time “what causes what” will be considered as truth.
This strategy will not be used in this study for the following disadvantages:
Researcher‟s own induction may interfere the outcome.
The highly qualitative nature of the results is difficult to assess and present.
27
3.2.3 Ethnography
Ethnography is “a descriptive account of social life and culture in a particular social system based on detailed
observations of what people actually do” (Johnson, 2000).
In this method observer joins the group or community of interest. By participating in the community, the observer
develops an understanding of how the community functions, who does what and how the goals are achieved. Data
are normally collected via a series of techniques, including interviews and direct observational analysis. Data
collection and analysis often occur simultaneously throughout the process (Johnson, 2000).
This strategy is not suitable for this study for the following reasons:
It is highly dependent on the researcher‟s observations and interpretations.
There is no way to check the validity of the researcher‟s conclusion, since numerical data is rarely
provided.
3.2.4 Action research
This method is simply learning by doing. It aims to contribute both to the practical concerns of people in an
immediate problematic situation and to further the goals of social science simultaneously. Thus, there is a dual
commitment in action research to study a system and concurrently to collaborate with members of the system in
changing it in what is together regarded as a desirable direction (Gilmore et al., 1986).
Action research is used in real situations, rather than in contrived, experimental studies, since its primary focus is
on solving real problems. Research work carried out this way is challenging and difficult (Puskur et al., 2008).
The disadvantages of this strategy include factors of time, problem seeking, self-perception and the highly
dependency on personal knowledge. This method is simply not fit to answer our research question.
3.2.5 Case study
This strategy is useful for trying to test theoretical models by using them in real world situations. Basically, a case study is an
in depth study of a particular situation rather than a sweeping statistical survey (Hafeezrm, 2012).
Its advantage is this method could yield information which people are normally unwilling or unable to provide.
The disadvantages are in regards to generalization and subjectivity.
Since the researcher is studying a limited case or group very deeply, it is hard to apply what is learned to society in
general. Subjectivity has to do with the nature of qualitative research itself. Since it involves observation,
28
interaction, interview, or content analysis of a particular case, most of the interpretations are made based on the
opinion of the individual researcher.
Also, since these types of studies are so random and based on observations of events as they happen, it is very
difficult (if not impossible) to replicate them in a different study. When you can't replicate a study, there is no way
to determine if your findings are accurate.
For the above reasons I have decided not to use this strategy in this research.
3.2.6 Survey
Survey is a method of gathering information from a number of individuals (a sample) in order to learn something
about the larger population from which the sample has been drawn (Ferber et al., 2012). It includes Delphi
method, questionnaires and interviews.
Delphi method: The Delphi method is an iterative process used to collect and distill the judgments of experts
using a series of questionnaires interspersed with feedback. This technique begins with the development of a set of
open-ended questions on a specific issue (Skulmoski et al., 2007). These questions are then distributed to various
experts on the issue. After summarizing and discussing the responses to these questions, a second set of questions
will be designed to clarify areas of agreement and disagreement and distributed to the same group of people. And
this process continues till all subjects of disagreements are agreed. Advantages of this technique are:
It helps generate consensus or identify disagreements among groups hostile to each other.
It allows sharing of information and reasoning among participants.
Disadvantages of Delphi Technique are:
Information comes from a limited group of people and may not be adequate to reach a conclusion.
Forcing to eliminate diversion of ideas.
It is more time-consuming than other methods;
It requires participant commitment.
So for the above disadvantages I chose not to follow this technique.
Questionnaire: It is a written set of questions to gather information from individuals. Its advantages are:
It could be used to collect large amounts of information at a low cost per person.
Nobody is involved to make an effect on the respondent‟s answers.
It is relatively simple to analyze.
29
The important limitation of questionnaires is that they report what people say and not necessarily what they do
(Jefferies, 2012).
Questionnaire conforms to our goal of finding best the hindrances of e-Banking development since quantitative
data can practically answer the research question and enables us to assess the level of importance of each
hindrance.
Best practice on questionnaire development defines 5 steps for writing a survey questionnaire (Premium Survey
Services, 2012):
1. Determine the objective
2. Decide the attributes to measure
3. Identify the audience
4. Choose measurement scales
5. Check reliability
Interview: Contrary to the questionnaire which is a structured survey, interview is an unstructured way to probe
respondents. The advantages are:
It is more flexible as interviewer can explain questions not understood by the respondent.
The interviewer can guide the interview according to respondent‟s answer.
The disadvantage of this method is it is time consuming but I indent to use this strategy to gather required data.
Interview can be performed via the telephone or in person.
I have decided to use this method for this research since face to face interview gives us more in-depth view over
the topic and it is a reliable source of information.
There is a wide variety of literature regarding best practices for user research interviews. Most of them advise
interviewers to avoid asking leading questions, to ask questions that are based on a participant‟s experience, and to
avoid overly complex, lengthy questions (Hackos et al., 1998).
3.3 Population and sample
The population of the research refers to all people within the scope of collection of data. It is not all people in the
population who shall have access to the researcher because the researcher shall build a sample size, out of which
data shall be collected directly. The population for the research shall be made up of two major classes of people
and these are end users of electronic banking and technical stakeholders behind electronic banking who provide e-
Banking services. To achieve valid and reliable result, a service based categorization would be used; people who
30
use the service and people who provide the service. This categorization would enable us to gain views from two
different perspectives. By end users, reference is being made primarily to bank customers in Iran and by technical
stakeholders, reference is being made to software developers and hardware implementer. Out of this large
population, I shall select a sample size. The sample of end users shall be made up of fifty (50) random users of e-
Banking services. The technical stakeholders sample should be selected purposively and shall be made up of
twenty (20) staff from two different banks. This number is chosen since it is not very large and so I could afford
interviewing all of them one after the other. The banks to use are Maskan Bank and Saman Bank. Basically there
are 2 kinds of banks in Iran: state and private. First chosen bank is a state bank which I have access to its entire
staff and may find volunteers to this interview very easily and second one is a premier private bank who presented
Internet banking and mobile banking in Iran in 2001. Among all private banks, their developer may be more
experienced and knowledgeable. This will tell us if both state and private banks have the same views and
strategies. I shall make use of fifty (50) end users from different parts of Iran in order to ensure that data collected
shall become a true reflection of what goes on in the whole of Iran. Two different banks have been selected in
order to ensure fairness in the collection of data. Such fairness and the need to have true representation of what go
on in the whole of Iran rather than just a little portion of Iran will go a long way to influence the reliability and
validity of results to be obtained. In all, there shall be seventy (70) people in the sample size.
3.4 Data collection procedure
Primary data collection involved the use of the research methods as described above. Specifically with the use of
the questionnaire, I selected ten banks from ten different towns spread across the length and breadth of Iran. All
these banks used electronic banking. Five customers who entered the bank at the time of my presence and were
willing to be part of the research were included in the sample size. Questionnaires that contained close ended
questions were distributed to them. The close ended questions are questions that do not demand written
explanation but then demand that respondents select answers from given list. Example Yes, No, True, False,
Agree, Disagree and so on. Here we have used scaled questions (See Chapter 4) to be used to generate statistics in
quantitative manner. The respondents had to answer questions pertaining to the services they received from the
banks through electronic banking. This enabled us to rank the severity of hindrances to the development of e-
Banking services.
With reference to the interview, I scheduled time with the twenty respondents, one at a time. An interview guide is
prepared (See Chapter 4) and so almost all the respondents had to answer the same set of questions. Meanwhile,
31
demanding on answers given by the respondents, I asked leading and following questions. I wanted to gather
information pertaining the challenges and improvement of the electronic banking system.
3.5 Risks
3.5.1 Risks to research
The main risk here would be that we found no candidate interested to meet with us and answer our interview
questions. Therefore we would receive not sufficient data to evaluate and reach an accurate and precise conclusion.
The other risk would be that we receive very different answers from different candidates. And thus we cannot
reach a conclusion. Some candidates may also give invalid answers which again leads us to poor data to evaluate.
Lack of required data to reach a reasonable result due to restricted access to banks data, reports and statistics is
another risk we are faced here.
3.5.2 Risks to interview participants
The privacy issue is very important here. Many individuals are very sensitive to give such information, especially
when they fill they are not beneficiary in this survey. We have to be very careful to protect their privacy from a
third party access, asking them if we could use their name in our survey, asking them to sign an agreement. Some
might consider publishing their name in such a survey, as an incentive and be happy to participate in our interview,
and some might not want their name to be published in a research for another country and might feel this would
violate their privacy. They may even need to get a permit from their boss before any agreement.
3.6 Limitations
Research time and material are limited to the time appointed by the university. As I have limited time, it is
important to find out some parameters by literature review.
Research budget is curbed by my limitation in spending money in terms of printing and publications.
To have the best conclusion coming out of questionnaires they ought not to be too long and time
consuming to read and answer.
In regard to number of banks and people prepared to take their time and answer questions there was a few
number of interviewees.
Some feelings, beliefs and attitudes of customers may not be noticed through questionnaires.
The respondents may not be completely truthful or have forgotten the correct answer. So the accuracy of
the result is limited to respondents‟ answers.
32
Randomization of the sample group may affect the applicability of the result.
Reproducing the result of this survey would be nearly impossible with another sample group or even same
group but in another time. For example some respondent may change their mind over a period of time. And
this issue may affect on the validity of the results.
3.7 Summary
Since the current research intends to use the results of its findings to identify the action needed towards e-Banking
development, therefore, methods of this research based on the objective is of course empirical.
After a critical study through the various research designs, I chose to use the survey research strategy. In this
regards questionnaire and interview were found appropriate. The table below demonstrates the different research
strategies discussed.
33
Research strategy Description Disadvantage
Experiment Investigates the effect of changing
conditions.
It involves product or people testing.
It is not suitable for the purpose
of this study.
Grounded theory It takes a case rather than variable. It is more suitable to show what
causes what.
Researcher‟s own induction may
interfere the outcome.
The data is difficult to assess.
Ethnography It observes social life. It is dependent on the researcher‟s
observations.
Validity of the researcher‟s
conclusion could not be checked.
Action research It focuses on solving real problems.
It is learning by doing.
Time, problem seeking, self-
perception.
Dependency on personal
knowledge.
Case study It tests theoretical models.
It yields information which people are
normally unwilling or unable to
provide.
Generalization is difficult.
It is highly dependent on
individual researcher‟s opinion.
Replication of the situation is
almost impossible.
Survey It is gathering information from a
number of individuals.
It could be used to collect large
amounts of information at a low cost.
Generalization may not be quite
valid.
Table 4- Research strategy comparison
34
Due to the absence of verified factors, I chose to interview chosen group of experts who are main influencers in e-
Banking products. Since there was a necessity to rank the main factors and outline the most severe ones, users of e-
Banking services were the best individuals to indicate the prime issues. Some close questions based on factors
were designed to be asked from members of society. Written responses are likely to entail conscious effort and not
to be repetitive, whilst an interviewer can interactively explore interesting responses in great depth.
With primary data collection, there shall be the use of in-depth interview. The responses given to particular survey
questions during face-to-face interviews may be valid sources of data in survey studies.
35
Chapter 4
Data Analysis
36
4.1 Introduction
This research work was set out to identify the factors affected the development of electronic banking in Iran. In
doing this, I set out a research question that is directed towards finding the right factors, the account for the
progress or otherwise electronic banking in Iran. Review of related literature and data collection were conducted
around the research question. A questionnaire for e-Banking users and two sets of interview questions from e-
Banking service providers and service users are designed and provided below acting as the survey instrument. Now
to make data analysis comprehensive and well organised, I shall group the data analysis into three major themes.
These themes are explained and analysed below.
37
4.2 Research instrument
The questions for this section are derived from literature review in section 2.2 of this study.
4.2.1 Interview guide for service providers
Hard
ware
1. How many transactions per second could your mainframe support?
2. What is the EAL level of you mainframe?
3. Have you ever faced a major system failure due to hardware malfunction?
4. Do you have a backup data-centre in case of emergencies?
5. Are your issued banking cards ISO 7816/14443 compliant?
6. Are these issued banking cards EMV compliant?
7. Do your POS readers comply with ISO 7816/14443?
8. Do your POS have GPRS capability?
Soft
ware
9. Does your switch support ISO 8583 or APACS?
10. Do all your ATMs comply with Payment Card Industry Data Security Standards
(PCIDSS)?
11. Do all your ATMs have audit trail and logs capabilities?
12. Do you provide mortgage accounting facility on the Internet?
13. Do you use an integrated system for back-office?
Tel
ecom
mu
nic
ati
on
net
work
14. Are various e-Banking channels such as Mobile, ATM, Kiosk, Telephone and Internet are
supported by your telecom network?
15. Do you utilize specific network concentrators/aggregators to create and expand the e-
Banking networks or do you use general networking equipments?
16. Do you utilize specific network management system to monitor e-Banking networks or
do you use general networking management system?
17. How much your e-Banking operations are affected by network disruptions? Has it ever
caused your service a severe breakdown?
38
Sec
uri
ty
18. Have you faced any scams?
19. Have ever a private data of a customer been hacked?
20. Do you follow any standard security model to ensure information safety?
21. Do you have SSL certificate for your Internet banking?
22. Do you use DES/3DES, AES, RSA data encryption standards, digital signature, PGP,
SET and Kerberos?
23. Do you use Public Key Infrastructure (PKI) to provide digital certificates to verify the
digital identity of a user?
Isla
mic
ban
kin
g
pri
nci
ple
s
24. Do you think Islamic banking rules have limited your choice for core banking software?
25. Do you think these rules have any effect on the spread of e-Banking?
San
ctio
ns
again
st I
ran
26. Has the sanction affected the e-Banking services you provide in any way?
27. What would you do differently if there was no sanction?
Op
erati
ng
cost
28. Do you have any objection not charging customers as a card issuer per transaction?
Cu
ltu
re 29. Did you face any cultural set back in offering electronic services?
30. Is electronic money tangible and accepted for your users?
31. How many percentages of your customers perform their transactions electronically?
32. Are you satisfied with the way e-Banking services are reached out to users?
Table 5- Interview with service providers
39
4.2.2 Interview guide for bank customers
Sec
uri
ty
1. Have you faced any scams?
2. Have ever your private data been abused?
San
ctio
ns
again
st I
ran
3. Are all banking services you need available through e-Banking channels like credit card
payments while buying online?
Per
cei
ve
d e
ase
of
use
4. Do you find it easy to perform all your banking transactions through Internet banking?
How about other service channels like Mobile, Telephone, ATM and POS?
Per
cei
ved
use
fuln
ess
5. Comparing traditional banking, do you find Internet banking, mobile banking, telephone
banking, ATM, POS and Kiosk more useful?
6. Which electronic service would you prefer the most?
Cu
stom
er
sati
sfact
ion
7. Do you ever find it necessary to go to a bank branch?
8. Would you consider doing all your banking transactions to be done electronically?
Cu
stom
er
train
ing
9. What electronic banking means for you?
10. Do you know how to pay your bills via phone banking?
11. Could you tell the main difference of ATM and kiosk?
Table 6- Interview with bank customers
40
4.2.3 Questionnaire
Please indicate your level of satisfaction or rate the followings. very low low medium High very high
1 2 3 4 5
Tel
eco
m
net
wo
rk 1 The speed of Internet banking
2 The coverage of mobile banking
3 The POS transaction time
Sec
uri
ty
4 The privacy of your information on Internet
5 The security of data using Internet
6 The security of data using mobile
7 The security of data using telephone
8 The security of data using ATM
9 The security of data using POS
10 The security of data using kiosk
Qu
ali
ty o
f se
rvic
e
11 The accuracy of Internet banking services
12 The accuracy of mobile services
13 The accuracy of ATM services
14 The accuracy of POS services
15 The accuracy of kiosk services
16 The customer service‟s section behaviour
17 Presentation of facilities
18 Quality and speed of digital money orders
19 The reliability of Internet service channel
20 The reliability of mobile service channel
21 The reliability of telephone service channel
22 The reliability of ATM service channel
23 The reliability of POS service channel
24 The reliability of kiosk service channel
Co
st
25 The current fee for balance inquiry
26 The current fee for bill payment
27 The current fee for banking statement
28 The current fee for money order
Sa
tisf
act
ion
29 Satisfaction from Internet banking
30 Satisfaction from mobile banking
31 Satisfaction from telephone banking
32 Satisfaction from ATM
33 Satisfaction from POS
34 Satisfaction from kiosk
Tru
st
35 Trust on Internet banking technology
36 Trust on mobile banking technology
37 Trust on telephone banking technology
38 Trust on ATM technology
39 Trust on POS technology
40 Trust on kiosk technology
Tra
ini
ng 41 Information about different e-Banking service channels
42 Information about the advantages of e-Banking
Table 7- Questionnaire for e-Banking users
41
4.3 Discussion of data gathered from questionnaire
Notwithstanding the fact that respondents have said they benefit from the electronic banking system in Iran, there
is no denying the fact that with the large capacity of the electronic banking system in place in Iran, there are
technical, strategic and cultural challenges that hinder the growth of electronic banking in Iran. This data was sort
from 50 random e-Banking users asking them to rate their satisfaction level.
4.3.1 Telecommunication network
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
1 The speed of Internet banking 4 8 6 72 10 50
2 The coverage of mobile banking 63.6 3 33.3 33
3 The POS transaction time 6 20 64 10 50
Table 8- Telecommunication network analysis
As we mentioned in section 2.2.1 of this survey, the telecom network has a very important role to build the
required infrastructure for e-Banking services. Since 82% (72+10) of respondents to question 1 and 74% (64+10)
of respondents to question 3 have selected their satisfaction level “high” or “higher”, we must say the speed of
Internet banking and the POS transaction time are in satisfactory level. On the other hand 63.6% of respondents
were answered their satisfaction level for mobile coverage “very low” and the rest “low” or “medium” . This
shows Network coverage for mobile banking in Iran is poor and needs to be improved.
42
4.3.2 Security
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
4 The privacy of your information on Internet 20 38 30 12 50
5 The security of data using Internet 12.7 17 48.9 19.1 2.1 47
6 The security of data using mobile 60 40 5
7 The security of data using telephone 33.4 16.6 50 6
8 The security of data using ATM 38 62 50
9 The security of data using POS 14 26 48 8 4 50
10 The security of data using kiosk 100 3
Table 9- Security analysis
The importance of security as a technical factor is discussed in section 2.2.1 of this study and here we analyse the
answers to assess the level of its importance. 80% (38+30+12) of the respondents to question 4 selected their
satisfaction level “medium” or higher. This shows the privacy of information on the Internet is not a major concern
for Iranian users and the security of this channel is already assured. The same conclusion applies for question 5
since 70.1% (48.9+19.1+2.1) of users have chosen their satisfaction level “medium” or higher. Mobile banking is
not wildly used since only 5 persons answered the corresponding question and the security of mobile banking is
still under question because 60% of respondents have selected “low” for their satisfaction level. The answers to
question 7 show telephone banking is also not used by the majority since only 6 persons answered the question but
its security is totally acceptable since all the respondents picked their satisfaction level “medium” or higher.
Answers to question 8 show security of ATM is highly accepted since all users selected “high” and “very high”
satisfaction level and we could say this channel is the most secure e-Banking service according to respondents of
this survey. Question 9 assesses the security of POS. If we do not consider 48% which have rated “medium”, we
see that 40% (14+26) of users have picked “low” or “very low” while 12% (8+4) have picked “high” or “very
high”. This indicates POS security has still long way to go and should be improved. Since only 3 persons have
answered the question regarding kiosk (10), we could say this is the least used e-Banking channel in Iran but very
secure since all respondents selected “high” for their satisfaction level.
43
4.3.3 Quality of service
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
11 The accuracy of Internet banking services 14 30 56 50
12 The accuracy of mobile services 66.6 16.7 16.7 6
13 The accuracy of ATM services 20 80 50
14 The accuracy of POS services 24 34 42 50
15 The accuracy of kiosk services 66.7 33.3 3
16 The customer service‟s section behaviour 10 46 44 50
17 Presentation of facilities 2.2 74 19.5 4.3 46
18 Quality and speed of digital money orders 10 90 30
19 The reliability of Internet service channel 24 58 18 50
20 The reliability of mobile service channel 100 5
21 The reliability of telephone service channel 50 50 6
22 The reliability of ATM service channel 64 6 30 50
23 The reliability of POS service channel 4 42 54 50
24 The reliability of kiosk service channel 33.3 33.3 33.4 3
Table 10- Quality of service analysis
Quality of service is another technical factor declared in section 2.2.1. The above table show the questions derived
to help us explore this factor through the respondents‟ answers.
Users believe in accuracy of ATM (question 11) more than other service channels since they have chosen 86%
(30+56) “high” and “very high”. The accuracy of mobile services (question 12) is also satisfactory since all
respondents have picked „medium” or higher but this result is not quite trustable since there were few respondents.
Accuracy of ATM (question 13) is the most satisfying one comparing to other channels since all the respondents
have picked “high” or “very high”. The accuracy of POS (question 14) on the other hand has gained the lowest
satisfaction level since all users have selected “medium” or lower. The accuracy of kiosk (question 15) is rated
“high” or “very high” by all respondents. Regarding question 17, if we do not consider the 46% rated “medium”,
the level of satisfaction of those answered “very high” is 44% and those answered “very low” is 10%. So in
general customer service‟s section behavior is quite acceptable. The answers to question 17 show we could say the
44
same for presentation of facilities since 97.8% (74+19.5+4.3) have selected “medium” or higher. Only 30 persons
have answered question 18 but 90% of them picked “medium” satisfaction level and this indicates not many users
have tested money order facility but there is no objection to its quality and speed for its users. In question 19 all
users picked “medium” or lower which shows the reliability of Internet channel needs to be improved. In question
20 the reliability of mobile services is heavily criticized by all 5 respondents. The answers to question 21 on the
other hand show telephone banking is not commonly used but it is quite reliable for its users since all chose “high”
or “very high”. All respondents to question 22 have selected “medium” or higher showing ATM reliability is
already met. The answers to question 23 on the other hand reveals POS reliability is not good enough and all
respondents have picked “medium “ or lower. The answers to question 24 show kiosk is not quite known and used
by customers but the satisfaction towards its reliability is rated “medium‟ or higher by all 3 respondents.
4.3.4 Operating cost
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
25 The current fee for balance inquiry 24 34 40 2 50
26 The current fee for bill payment 20 38 10 8 50
27 The current fee for banking statement 57.4 2.1 27.6 47
28 The current fee for money order 81.8 18.2 11
Table 11- Operating cost analysis
Operating cost has been introduced in section 2.2.2 as a strategic factor that may bar the customers to use a service.
From the answers given to the above questions we see only 2% of respondents to question 25 and 8% of
respondents to question 26 have chosen “high‟ for their satisfaction level and in general customers have objections
towards services‟ costs. Among all fees, cost of money orders and then banking statements is better to be adjusted
since the first one has got 81.8% “low” satisfaction(question 28) and the second one 57.4% “very low”(question
27).
45
4.3.5 Customer satisfaction
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
29 Satisfaction from Internet banking 8 16 28 48 50
30 Satisfaction from mobile banking 20 40 20 20 5
31 Satisfaction from telephone banking 33.3 66.6 6
32 Satisfaction from ATM 4 22 24 50 50
33 Satisfaction from POS 26 28 46 50
34 Satisfaction from kiosk 33.3 66.6 3
Table 12- Customer satisfaction analysis
Customer satisfaction is a behavioural factor introduced in section 2.2.3. The above questions enable us to assess
the seriousness of this factor.
92% (16+28+48) of respondents of question 29 have picked the satisfaction level of “medium‟ or higher. This
shows users are satisfied with the Internet channel. From the 5 respondents to question 30, 80% (20+40+20)
picked “medium” or lower which again shows dissatisfaction of users from mobile channel. All 6 respondents to
question 31 have selected “medium” or higher showing their satisfaction using this channel. ATM has gained the
highest satisfaction level (question 32) with 96% (22+24+50) choosing “medium” or “higher. All the respondents
to question 33 on the other hand picked “medium” or lower confirming their serious dissatisfaction towards POS e-
Banking channel. Few (3) respondents of question 34 selected “medium” or “high” satisfaction level. In general
POS and mobile services are still need to be improved to gain the higher satisfaction level.
46
4.3.6 Customer trust
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
35 Trust on Internet banking technology 44 50 6 50
36 Trust on mobile banking technology 36 24 40 50
37 Trust on telephone banking technology 11.1 66.7 22.2 9
38 Trust on ATM technology 2 50 48 50
39 Trust on POS technology 52 28 6 14 50
40 Trust on kiosk technology 100 3
Table 13- Customer trust analysis
Customer trust is another behavioural factor introduced in section 2.2.3. The above questions derived from
literature review in section 2.2.3 enable us to investigate the level of gravity of this factor acting as a barrier to the
development of e-Banking in Iran.
All respondents of question 35 selected “medium” or higher satisfaction rate. Same applies for question 37, 38 and
40. This shows users have complete trust towards Internet banking, telephone banking, ATM and kiosk
technology. But all respondents of question 36 chose “medium” or lower showing their weak trust to mobile
banking. After mobile POS technology has gained the lowest trust. If we do not consider the 28% “medium” for
question 39, 20% (6+14) have rated “high” and “very high” but the majority of 52% rated “low” specifying their
mistrust towards this technology.
4.3.7 Customer training
Very low
(%)
Low
(%)
Medium
(%)
High
(%)
Very high
(%)
No of
Respondents
41 Information about different e-Banking service
channels
64 18 18 50
42 Information about the advantages of e-Banking 42 24 34 50
Table 14- Customer training analysis
47
Customer training is also a behavioural factor pointed in section 2.2.3. From the above answers we realize 64%
respondents to questions 41 and 42% respondents to questions 42 believe they approximately know the different e-
Banking service channels and their benefits which need to be improved.
4.4 Discussion of data gathered from interview with service providers
To investigate the purpose of this study and see the challenges of providing e-Banking services, this data was sort
from 20 interviewees from Maskan bank (state) and Saman bank (private) authorities. Both of these banks provide
e-Banking services through ATM, POS, kiosk, Internet, mobile and telephone channels. Here is a list of their
notes.
4.4.1 Hardware
Questions 1-8 of table 5 in section 4.2.1 of this document address the hardware status of both state and private
banks.
The answers to question 1 determine switch of Saman bank could handle to 500 TPS, but for Maskan bank this
number lowers to 320. It was determined switch TPS directly relates to switch hardware and software capability.
Here is a provided example:
Temenos core banking software (T24) with the following specification could support up to 3000 TPS.
48
Chipset CPU (Cores) Memory (Gbyte) Network Bandwidth
(Mbitsper sec)
Presentation
Tier IBM Power 24 * P7 3.7 Ghz 48 451
Application
Tier IBM Power 140 * P7 3.7 Ghz 420 4093
Data Tier IBM Power 72 * P7 3.7 Ghz 288 4408
STORAGE REQUIREMENTS
IOPS (i/o per second) 222,000
Recommended Stripe Size 1 MB
RAID 0+1
Oracle Block Size 8k
Disk space estimation Current 10,080 Gigabytes (growth)
Disk Requirements
# of Years Size in GB
1 10,080
Figure 5- T24 hardware spec
The answers to question 2 show both mainframes have EAL 4 which is acceptable for the current amount of
transactions. Reponses of question 3 confirm a network malfunction almost happen every month during the time
government deposits money subsidies to people. The number of TPS goes beyond the capability of their switch
and transactions fail for both banks. Question 4 responses explore Saman bank does not have a backup data-centre
and Maskan bank is developing one but it is still not functional. The answers to question 5 and 6 determine all
issued banking cards are ISO 7816 or 14443(contactless cards) and EMV compliant. The answers to question 7
indicate all POS readers are industry standard and comply with ISO 7816/14443 since all have been imported from
famous brands. But contactless technology is in its early stages of development and still not functional. The
answers to question 8 say GPRS POS are limited to taxi services only in few touristic islands.
49
A very important note illuminated during interview was that sometimes they use different hardware instruments
from different brands and when these instruments are not compliant, a programming code is required to make them
compliant.
4.4.2 Software
Questions 9-13 of table 5 discuss the software standing of banks in Iran. Answers to questions 9, 10 and 11 were
positive and confirm they have implemented all the industry protocols and standards to provide the maximum
security. The answers to question 12 also show both Saman and Maskan banks provide mortgage accounting
through Internet. The responses to question 13 explain Saman bank is equipped with an integrated core banking
software developed locally but tellers of Maskan bank operate with more than 40 software in their daily activities
since this bank does not have an in integrated core software. The level of human mistake is very high and they
constantly deal with financial conflict between different databases. But the financial conflicts resulting from high
quantity of software on Maskan bank would be paled once they implement standard core software.
4.4.3 Telecommunication network
Questions 14-17 of table 5 investigate the telecom network status. The answers to question 14 were positive. But
the answers to question 15 indicate routers, switches and other network instruments are not banking specific due to
their high cost and also sanctions towards Iran. Question 16 responses specify Network connectors and network
monitoring system are banking specific although very old. Question 17 responses were quite disappointing, saying
network disruption happens more than once a day but they have managed to solve it very fast. For example
Internet disconnections, mobile coverage being out of reach, busy telephone lines for POS network are a routine.
4.4.4 Security
Questions 18-23 of table 5 in section 4.2.1 refer to security. The majority of answers to questions 18 and 19 were
negative and the answers to questions 20, 22 and 23 were positive. Regarding question 21 unlike Saman bank,
Maskan bank do not have SSL certificate for their Internet services.
4.4.5 Islamic banking principles
This issue is being addressed by questions 24 and 25 of table 5. The answers to question 24 show Islamic banking
rules are not a major concern to all interviewees‟ view since there are still a variety of reliable and famous brands
of core banking software companies that support these rules. And the answers to question 25 were either “No” or
“a little”.
50
4.4.6 Sanctions against Iran
Questions 26 and 27 of table 5 assess the seriousness of this factor. Question 26 responses confirm sanctions act as
a severe barrier by the majority of interviewees. In response to question 27, 3 respondents have pointed even if
there were no sanctions they would prefer to develop core software internally to reduce the cost.
4.4.7 Operating cost
Operating cost factor is investigated by question 28 of table 5 in section 4.2.1. Charging customers per transaction
for issuing cards is suggested only by 2 interviewees. The rest agreed the fee they charge the customers once at
issuing/reissuing time not only covers the issuing cost but they will gain a benefit.
4.4.8 Culture
Question 29-32 of table 5 is designed to find out if this factor hinders the development of e-Banking in Iran. The
answers to question 29 were half and half, yes and no depending on the interpretation of each person from the
cultural set back. The answers to question 30 outlined the concept is mostly acceptable for e-Banking users but not
the majority of people. The answers to question 31 were very different and nobody could surely give a number.
Answers to question 32 show Saman bank is more successful to attract customer comparing to other banks.
Considering Saman bank is now providing trade finance services like swift, LC, facilities in different currencies,
buy/sell stocks, currency remittance and etc. their number of customers is rapidly increasing. On the contrary
Maskan bank services are quite limited and most of its customers do not trust to use its Internet banking since they
do not have SSL certificate.
Another important note discovered during the interview is that cultural changes toward understanding the benefits
of e-Banking services and introducing these services is started mostly with TV commercials and bank‟s brochures
were the second help in this regards. But most effective way of increasing customers‟ knowledge is considered
mouth by mouth.
4.5 Discussion of data gathered from interview with e-Banking users
50 bank customers in 10 different towns from different banks were selected for interview. Interview took an
average time of 10 min for each person and here are the findings for each factor introduced in section 2.2. The
interview questions are explained in table 6 section 4.2.2 of this survey.
51
4.5.1 Security
Most answers to question 1 and 2 of table 6 regarding the security were negative. So, scams and data privacy are
not major concerns for Iranian users.
4.5.2 Sanctions against Iran
Question 3 of table 6 is derived to assess the level of importance of this factor according to users‟ view. Sending
money orders abroad and procurement of credit cards which work outside the country were the two major services,
users were mentioned they need and do not receive but they did not know if this is due to the lack of knowledge of
system developers or due to the sanctions against Iran.
4.5.3 Perceived ease of use
The answers to question 4 indicate the level of effects of this factor in spread of e-Banking in Iran. According to
younger users (before 50 years) channels are user friendly and easy to perform a desired task but older users do not
agree. They prefer to go to a bank branch and ask a teller to perform their desired task.
In general, most users are satisfied with the service they receive via different channels of e-Banking since they
have used no better service and they do not compare the service they receive with another one.
4.5.4 Perceived usefulness
Questions 5 and 6 of table 6 are meant to assess perceived usefulness of different e-banking service channel
through users‟ opinions. The result show they believe all these channels are useful to them allowing them to save
their time not going to the bank branch but services provided via kiosk are the least known. And Internet disruption
is the most severe issue for the users of this channel. Internet disruption for both Internet and mobile channel is
caused by the copper wire lines used for the telecommunication infrastructure in Iran.
Answers to question 6 show ATM is the most desirable channel since it is the only channel that gives users money
and after that Internet channel gets the highest rate.
4.5.5 Customer satisfaction
The answers to questions 7 and 8 indicate the level of customer satisfaction with the current services. The
responses show people still need to go to bank branches especially to cash a check, order/renew banknote, open an
account, transfer money from a bank to a different bank and etc. But all users unanimously said they would do all
their banking transactions electronically if it was possible. Some interviewees pointed the following notes
regarding satisfaction.
52
Financial conflicts often created via POS network make users lose their trust toward the system. In some
cases the financial conflicts were lead to customer closing his/her account. Call-centre behaviour is quite
critical in these situations.
Mellat bank has provided immediate settlement facility on its POS and now this is been looked as a
necessary requirement and when a bank does not provide this facility, merchants do not use its POS.
although this issue is heavily mentioned, it is not difficult to implement and most banks have already
started to implement it. They could easily add this functionality changing their POS software.
Mobile banking cost is high according to the majority of the interviewees and the mobile coverage of
Internet is very poor and most of users have tried this channel once or twice and stopped using it due to
these disruptions.
4.5.6 Customer training
Question 9, 10 and 11 are designed to assess the level of customer training and information they have received.
The outlines from question 9 will be discussed in details in section 4.6. Paying bills by telephone banking
(question 10) is found easy by the majority since the IVR talks you through it. The answers to question 11
regarding the main difference of kiosk and ATM which is of course the inability of paying cash by kiosk is merely
known (only 3 out of 50 interviewees). Some even asked “what is kiosk”.
4.6 Perspective of e-Banking in Iran
I wanted readers to have a very deep understanding of the subject under discussion, which was electronic banking.
For this reason, data was sought from all seventy (70) respondents on what in their opinion constituted electronic
banking or what the structure of electronic banking in Iran was. The data below represents results that were
received from respondents when they were given the opportunity to define what electronic banking in Iran was.
53
Figure 6- Components of e-Banking
The seventy (70) respondents were asked what their view of the component of electronic banking was. From the
data above, it can be seen that twenty-two (22) of the respondents pointed out that they see electronic banking as
the availability of online services. This means that in the view of these respondents, a bank is said to be practicing
electronic banking if the bank is able to make room for their customers to transact business with them via the
Internet. This means they do not have enough knowledge about other e-Banking channels such as mobile banking,
telephone banking, kiosk and they do not consider ATM and POS as part of e-Banking services which is lack of
information. Twenty-three (23) of the respondents on the other hand associated electronic banking with the
networking of all bank branches of a particular branch. This way, a customer can receive banking services from
any bank of the origin of his or her bank even if that bank is not his parent bank. This was different from online
banking though they all involve the use of the Internet. In the latter, the Internet service is available only for the
use of bank operators and not end users. Finally, twenty-five (25) respondents pointed that any bank that used
information technology and tools associated with information technology in their transactions is practicing
electronic banking. In the view of these respondents, though the use of Internet or networking may constitute
electronic banking, banks may still be regarded practicing electronic banking in the absence of these: provided that
use any features of information technology.
23
25
22
0
Components of E-Banking
Networking Bank Branches
Using IT in Banking
Banking Online
54
Interpreting the data above, I can conclude that all three components outlined to respondents are very vital in
electronic banking. It is indeed for this reason that no one component out rightly outscored the others. The
difference between the highest scoring component and the least scoring component for instance was a difference of
only three persons. Again, it is important to note that the collection of this data is very vital for this research work
and the problem under study because it is only when the actual components of electronic banking is defined and
identified that the factors associated with it can be established. Presently, the results show that in considering the
technical factors that constitute electronic banking, things such as the presence, functions and expansion of
computers should be used. This is because all three components reviewed by respondents have direct bearing with
computers. Going further from the presence of computers, the technical factors that affect electronic banking in
Iran can be seen to include sophisticated hardware and software as well as advanced modernity with computers
including the use of the Internet. With reference to the literature review, much can be agreed with Allahyarifard
(2005) who argues that the major technical factor that could be associated with electronic banking in Iran is the
Internet. For this reason, any condition that affects the Internet affects electronic banking in Iran.
4.7 Effects of e-Banking on customers
It will be incomplete to discuss factors that affect electronic banking in Iran without looking at the effects of
electronic banking on the customer, who happens to be the end users. This is so said because the effect and
transformation of any system is seen in the impact that the system creates on its supposed beneficiaries.
Respondents were therefore asked to choose among three factors, the one they believed was the best effect they
derived from electronic banking in Iran. The data below represents the answers that were received from
respondents.
55
Figure 7- Effects of e-Banking
The responses from respondents reveal very interesting facts. From the data collected, thirty (30) out of seventy
respondents were more enthused about the fact with the coming of electronic banking, banking has become more
accessible to them. Clearly such people benefit from the fact that for the sake of features of electronic banking
such as networking of branches and the use of online banking services, they do not always have to be in their
parent banking halls before they can access banking services. Banking has become accessible because banking can
be done on the go. The presence of automated teller machines (ATMs) was indicated as one of the aspects of
electronic banking that has made electronic banking has the feature of easy accessibility. With the automated teller
machines, banking can go on even outside normal banking hours. Twenty-five (25) of the seventy respondents
pointed to the fact that with the coming of electronic banking among as many banks in Iran as possible, there has
been positive and healthy competition among the banks to give customers the best of banking services. Out of this
competition, customers and end users of electronic banking has had the opportunity to choose between banks
whose services will give them the best value for their monies. Another fifteen (15) respondents said that the best
effect of electronic banking to them was the fact that it made banking really fast and happy they do not have to
take turn in waiting hall of bank branches.
Statistically, all three benefits or effects pointed out are highly instrumental in the electronic banking service given
in Iran‟s banking industry. Data collected points to the fact that it is not just customers who benefit from Iran‟s
0
5
10
15
20
25
30
Accessibility
to Banking
Services
Expanded
competition
and value for
money
Faster services
30
25
15
Effects of E-Banking
56
electronic banking system but operators as well. For example the operators said that electronic system of banking
makes work load less tedious and less stressing though they admit workload has increased.
4.8 Research outcome
By researching through a questionnaire for e-Banking users, an interview with these users and an interview with e-
Banking service providers, we reach the following outcomes about the factors affecting the development of e-
Banking in Iran introduced in section 2.2 of this survey.
From the technical group, hardware inefficiency, software incapability and telecom infrastructure limitation are the
most important ones. Security and quality of service are quite acceptable and all required industry standard are
met.
From the strategic group, Islamic rules almost has no effect on e-Banking but sanctions against Iran is a critical
hindrance affecting both hardware and software choices to provide high quality services. Operating cost is also
slightly objected and could be justified to attract more customers.
And finally from the behavioural group, people‟s level of information about the e-Banking services and their
benefits play the key role. Customer perceived ease of use, perceived usefulness, satisfaction and trust are
relatively tolerable.
The level of importance and seriousness of each factor is scaled from 0 to 5. This level is deduced from both
quantitative data gathered through the questionnaire and qualitative data gathered through interview with e-
Banking users and service providers.
The figure below gives a reflection of the major challenges pointed out by participants in this research.
57
Figure 8- Major challenges of e-Banking in Iran
4.9 Summary
In this chapter research instruments including a questionnaire for bank customers, an interview guide for these
customers and an interview guide for banking service providers are developed. The questionnaire containing 42
questions took about 25 minutes, the interview containing 11 questions about 10 minutes and the interview with
service providers containing 32 questions about 30 minutes per person. Data gathered through these tools is
analysed and major factors acting as hindrances to the development of e-Banking in Iran are distinguished and
presented. The structure of e-Banking in Iran and its effects on customers is also investigated.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Technical factors Strategic factors Behavioural factors
Hardware inefficiency
Hardware being incompliant
Software capabilities
Telecom copper wires
Security
Service quality
Islamic rules
Sanction
Cost of service
Ease of use
Usefulness
Satisfaction
Trust
Knowledge level
58
Chapter 5
Conclusion
59
5.1 Overview
The main objective of this study was to investigate into the hindrances of e-Banking development in Iran. So in
this regards results obtained from researches previously done on e-Banking area were analyzed. More
comprehensively other factors like perceived satisfaction of a person with quality, speed and accuracy of
performing operations by banks, variety and desirability of banking services and way to behaviour, and trust to the
performance of bank and technology used in electronic banking as well as trust to financial security and respect to
privacy by bank in electronic banking are investigated and rated by e-Banking users through questionnaires and
interviews. Technical factors were also discussed in more depth through interview with service providers.
5.2 Research review
Most barriers on the way of establishment or prerequisites of implementing or supplying electronic banking
services stated in previous studies plus the ones I have faced is categorized to 3 groups: technical, strategic and
behavioural factors explained in section 2.2.
Since the nature of the study is in fact applied empirical and descriptive, the survey strategy of questionnaire and
interviews were used to gather data. The sample volume has chosen 50 for the bank customers and 20 for system
developers due to the time limitation (refer to section 3.3).
The outcome in section 4.8 shows that electronic banking widely spread in Iran, cannot be easily expanded and
promoted since the few highlighted problems are quite fundamental. The results show technical factors are the
most important factors building the e-Banking infrastructure. From these factors the research shows security risk is
something that can be paled but not illuminated, to reduce this risk financial associations ought to form a
professional legal entity to set industry standards like what exists in advanced countries, then standards should be
taken to legislators and be introduced to follow, otherwise because of number of providers lack of funds and
investment in security any of providers are able to ruin the trust of consumers.
The quality of services is reasonably acceptable. The areas needed immediate attention are adding immediate
settlement feature to POS system and increasing Internet reliability, speed and coverage by improving the
telecommunication infrastructure. Hardware and telecommunication infrastructure are in critical situations and
need to be addressed by banker if they want to expand their e-Banking services.
60
Strategic factors stands after technical issues in importance degree, since Islamic rules is not considered a barrier to
e-Banking development and cost of services is not objected by all the respondents and could be easily justified by
bankers. So the main hindrance in this group is the sanctions against Iran which has a severe effect on both
hardware and software regarding banking industry. In Iran for the sanctions most of the hardware are out of date or
second handed, the same thing goes among the computer hardware‟s of the banks. And we hope in the near future this
issue is solved through political discussions.
Behavioural factors are the least important but still very effective. Culture and training are the most important
hindrances of this group since perceived ease of use, perceived usefulness, customer satisfaction and customer trust
are relatively tolerable. The culture and training for example intention of public can be improved by putting
financial interest, loyalty (incentive) programs, or even public advertising in place. Although banker should keep
in mind that consumers trust and satisfaction could be jeopardised more by the lack in transaction accuracy and
availability rather than fraud and exposure.
5.3 Evaluation
According to the ascending trend of electronic banking and advantages resulting from that, which can be
summarizes as well–being, convenience and reduction of costs, the use of it in Asia and Europe will be more than
U.S.A and will turn in to a global phenomenon.
From the managerial perspective, the findings of this research will be very helpful to the bankers and policy
makers as a tool to investigate the hindrances to the development of e-Banking in Iran and determine the level of
its success. Step by step movement of electronic banking, viewing accessible bases is as though bankers from
every level have to enhance their customer's satisfaction and decrease costs.
The findings of this study suggest that in order to attract more users towards electronic banking, it is not going to
be sufficient to merely introduce e-Banking services. They need to develop a system with a robust infrastructure to
gain the customers‟ trust and build the belief of usefulness of the system as well. Moreover, it is of prime
importance for banks to develop e-Banking systems, which are easy to use, secure, and private for their users.
Firstly the findings of this study have to be interpreted considering the limitations of the study. And secondly, there
may be many other factors which influence customer adaptation towards e-Banking. It is not practically possible to
incorporate all the variables in a single study.
61
Research instrument questions discussed in sections 4.2.1, 4.2.2 and 4.2.3 are derived from the literature review in
chapter 2. From overall 85 questions, few added very little to our knowledge like questions 5 and 6 of table 6 and
also questions 7 and 29 of table 5.
5.4 Future work
Literature review in chapter 2 illustrates most studies have investigated the hindrances to the development from
one angle either technical (Auto, 2010) (Mermod, 2011) (Yang et al., 2003) (Vlad, 2010) (Chiemeke et al., 2006)
or customer behaviour (Mastoori, 2009) (Venus et al., 2000) (Aliaskari et al., 2011) (Naimi, 2008). Thus, going by
the findings of most studies, we can argue that the literature on the impact of e-Banking is unconvincing especially
in developing economies and serve as an open ground for more research in the area of e-Banking. In this survey I
have investigated both of the above factors, plus strategic factors which are particular to Iran.
The result of this survey is more consistent with Yang et al. (2003) research comparing to other papers discussed in
literature review confirming transaction technicalities appears to be the leading factor to success of e-Banking
services and finally customer satisfaction.
Future research should consider experimental or longitudinal studies so that the causal inferences could be made
more confidently and safely.
It could make several extensions of the current study. The future researchers could also investigate whether adding
new services would affect customer adaptation and loyalty or if it would help to reabsorb a lost customer; whether
government pay for the banking infrastructure or subsidies it would have any effect on the quality of the service or
not.
Future research can also examine whether promotional and communicational issues have any influence on the
acceptance of e-Banking service. It could use alternative research methods to capture and analyze a more
qualitative or quantitative form of data.
Particularly this study designed its questions considering the response time for the respondents but in future
researches the number of questions could be increased. For example, how many banking cards do you have? This
question will indicate the extent of e-Banking usage.
62
Glossary
APACS Standard of Association for Payment Clearing Services
ATM Automated Teller Machine
BIMA Bank and Insurance Manifest Agency
BIS Bank for International Settlement
BMI Bank Melli of Iran
CA Certification Authority
CMS Customer Management System
CBI Central Bank of Iran
DAI Digital Access Identifier
DES Data Encryption Standard
e-Business Electronic Business
e-Banking Electronic Banking
e-Commerce Electronic Commerce
EDBI Export Development Bank of Iran
EDI Electronic Data Interchange
EFT Electronic Funds Transfer
EFT-POS Electronic Funds Transfer at Point of Sale
EAL Evaluation Assurance Level (1-7)
EMV Europay, MasterCard, Visa is the global standard that is helping ensure smart
(Chip-and-PIN) cards, terminals and other systems can interoperate.
GPRS General Packet Radio Service
ICT Information and Communications Technology
IT Information Technology
ITU International Telecommunication Union
IVR Interactive Voice Responce
Kerberos A private-key encryption technology
Mainframe Powerful computer used for financial transaction processing
OFAC Office of Foreign Assets Control
PC Personal Computer
PCI DSS Payment Card Industry Data Security Standard
PGP Pretty Good Privacy
RSA Rivest , Shamir and Adelman key encryption technology
SET Secure Electronic Transaction
Shetab Interbank Information Transfer Network
Teller Bank clerk who deals directly with customer
TPS Transactions Per Second
WTO World Trade Organization
63
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68
Appendix A – Extended Abstract
69
An investigation into the hindrances to the development of e-Banking in Iran
Najla Motameni
Extended Abstract of Open University MSc Dissertation Submitted 6 March 2012
1. Introduction
Undoubtedly at the beginning of the third millennium contents being raised such as global village,
communications, globalization and etc. forces all countries and governments to go with the wave and significantly
change their traditional ways. In this pathway, the establishment of e-Banking is a necessity.
According to the legal obligation stated in paragraph 4 of Article10-J of Fourth Development Program Action
Economic, Social and Cultural, Iranian government is also obliged to establish e-Banking systems and procedures
for money exchange and other e-Banking services on national and international level in all country‟s banks since
the first quarter of the program. This project should have been functional by 2009. But adoption of a new
technology has always been a challenge particularly when it comes as a new way of life and tries to confront
traditional lifestyle of a society. Banking services are dealt with by every member of a society; obviously they are
done in a very traditional way so changing those ways instantly would be a big job.
Obviously majority of society like to live in their old ways and bankers and authorities try to get what they want
faster, these would take them to collision course unless hindrances to the development of e-
Banking solutions are known and then appropriate solutions are deployed. This paper particularly inspects the
obstacles of e-banking spread and acceptance in Iran.
2. Method
In this study a simple but effective survey approach is chosen to identify hindrances. The approach is choosing
influencers and architectures of e-banking services from two leading bank from two banking sector, then taking
their opinions by the use of open questions. After analysis and categorization of the answers, main issues are
picked and then are asked from members of society through a questionnaire then I have assessed the answers to
make a ranking on hindrances.
70
Overall 85 questions are asked from 70 respondents (50 users and 20 service providers) through both questionnaire
and interviews. All questions were designed to assess the level of seriousness of each factor to the best of
capability except 4 of them.
3. Results
The following figure shows the basic factors affecting e-Banking according to this survey.
E-Banking factors
The result of the survey shows technical factors of hardware inefficiency, software capabilities and telecom
infrastructure, then the strategic factor of sanctions against Iran and finally the behavioral factor of people‟s level
of information about the e-Banking services and their benefits play the key roles.
The following chart shows the level of and seriousness of each factor scaled from 0 to 5. This level is deduced
from both quantitative data gathered through the questionnaire and qualitative data gathered through interview
with e-Banking users and service providers.
Perceived ease of use
Perceived usefulness
Customer satisfaction
Customer trust
Customer training
Culture
E-Banking factors
Technical factors Strategic factors Behavioural factors
Hardware
Telecommunication
Network
Security
Quality of
Service
Islamic
banking
principles
Sanctions
against Iran
Software
Operating
cost
71
Major challenges of e-Banking in Iran
4. Analysis
The following figure indicates the perspective of electronic banking in Iran which is discovered through the survey questions.
25 from 70 respondents believe e-Banking means using IT in banking industry, 22 counted only Internet banking as e-
Banking and the rest said e-Banking is networking of bank branches. This statistics tells the knowledge level of people about
banking services and their benefits are low.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Technical factors Strategic factors Behavioural factors
Hardware inefficiency
Hardware being incompliant
Software capabilities
Telecom copper wires
Security
Service quality
Islamic rules
Sanction
Cost of service
Ease of use
Usefulness
Satisfaction
Trust
Knowledge level
72
Components of e-Banking
The effect of e-Banking on people‟s life could not be ignored since the 70 respondents of this survey were asked to choose
one of the 3 benefits of e-Banking services and this is how they answered.
Effects of e-Banking
23
25
22
0
Components of E-Banking
Networking Bank Branches
Using IT in Banking
Banking Online
0
5
10
15
20
25
30
Accessibility
to Banking
Services
Expanded
competition
and value for
money
Faster services
30
25
15
Effects of E-Banking
73
5. Discussion
According to my interpretation, the knowledge of the majority of bank customer needs to be approved about electronic
services. In this regards TV commercials and video clips are more effective than written catalogue or website “how to”.
Technical infrastructure of e-Banking should be more robust and need to be improved, considering the fact that attracting a
new customer is difficult but absorbing a lost customer (due to a system malfunction) is nearly impossible.
The importance of identifying the factors influencing the spread of e-Banking for bankers and providers of these
services now is more than ever, and experiences obtained from this study will serve as an important academic
document for future referencing by researchers who may want to undertake further studies in e-Banking in Iran.
Considering research time and material are limited to the time appointed by the university and research budget is
also limited by my constraint, in the future researchers could investigate whether adding new services or
promotional issues would affect customer adaptation.
74
Appendix B - Qur'an Emphasis Against Riba
“The Noble Qur'an - Al-Baqarah 275-281
275. Those who eat Ribâ (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by
Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (usury)," whereas Allâh has
permitted trading and forbidden Ribâ (usury). So whosoever receives an admonition from his Lord and stops eating Ribâ
(usury) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns [to Ribâ (usury)], such are the
dwellers of the Fire - they will abide therein.
276. Allâh will destroy Ribâ (usury) and will give increase for Sadaqât (deeds of charity, alms, etc.) And Allâh likes not the
disbelievers, sinners.
277. Truly those who believe, and do deeds of righteousness, and perform As-Salât (Iqâmat-as-Salât), and give Zakât, they
will have their reward with their Lord. On them shall be no fear, nor shall they grieve.
278. O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if
you are (really) believers.
279. And if you do not do it, then take a notice of war from Allâh and His Messenger but if you repent, you shall have your
capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by
receiving less than your capital sums).
280. And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if you remit it
by way of charity, that is better for you if you did but know.
281. And be afraid of the Day when you shall be brought back to Allâh. Then every person shall be paid what he earned, and
they shall not be dealt with unjustly.
The Noble Qur'an - Al-Imran 3:130
O you who believe! Eat not Ribâ (usury) doubled and multiplied, but fear Allâh that you may be successful.”
75
Appendix C - US Sanctions
An overview of O.F.A.C. Regulations involving Sanctions against Iran
This fact sheet provides general information about the Iranian sanctions programs under the Iranian Transactions Regulations, 31 C.F.R. Part 560, and the Iranian Assets
Control Regulations, 31 C.F.R. Part 535. These sanctions are administered by the US Treasury Department‟s Office of Foreign Assets Control (“OFAC”).
Iranian Transactions Regulations - 31 C.F.R. Part 560
As a result of Iran‟s support for international terrorism and its aggressive actions against non-belligerent shipping in the Persian Gulf, President Reagan, on October 29,
1987, issued Executive Order 12613 imposing a new import embargo on Iranian-origin goods and services. Section 505 of the International Security and Development
Cooperation Act of 1985 (“ISDCA”) was utilized as the statutory authority for the embargo, which gave rise to the Iranian Transactions Regulations, Title 31, Part 560 of
the US Code of Federal Regulations (the “ITR”).
Effective March 16, 1995, as a result of Iranian support of international terrorism and Iran‟s active pursuit of weapons of mass destruction, President Clinton issued
Executive Order 12957 prohibiting US involvement with petroleum development in Iran. On May 6, 1995, he signed Executive Order 12959, pursuant to the International
Emergency Economic Powers Act (“IEEPA”) as well as the ISDCA, substantially tightening sanctions against Iran.
On August 19, 1997, the President signed Executive Order 13059 clarifying Executive Orders 12957 and 12959 and confirming that virtually all trade and investment
activities with Iran by US persons, wherever located, are prohibited.
Effective November 10, 2008, the authorization for “U-turn” transfers involving Iran was revoked. As of that date, US depository institutions are no longer authorized to
process transfers involving Iran that originate and end with non-Iranian foreign banks. Details concerning the revocation of the U-turn authorization and a description of
currently permissible funds transfers can be found in the Financial Dealings with Iran section of this document.
Effective September 29, 2010, the authorization to import into the United States, and deal in, certain foodstuffs and carpets of Iranian origin was revoked pursuant to section
103 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. The exceptions to the prohibition on importing goods and services are listed in the
IMPORTS FROM IRAN section of this document.
Criminal penalties for violations of the Iranian Transactions Regulations may result in a fine up to $1,000,000, and natural persons may be imprisoned for up to 20 years.
Civil penalties, which are not to exceed the greater of $250,000 or an amount that is twice the amount of the transaction that is the basis of the violation with respect to
which the penalty is imposed may also be imposed administratively.
76
OFAC will provide additional guidance on the implementation of sections 104 and 105 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010
soon.
• IMPORTS FROM IRAN - Goods or services of Iranian origin may not be imported into the United States, either directly or through third countries, with the following
exceptions:
Gifts valued at $100 or less;
Information and informational materials;
Household and personal effects, of persons arriving in the United States, that were actually used abroad by the importer or by other family members arriving
from the same foreign household, that are not intended for any other person or for sale, and that are not otherwise prohibited from importation; and
Accompanied baggage for personal use normally incident to travel.
US persons are prohibited from providing financing for prohibited import transactions. There are restrictions on letter of credit transactions involving the Government of
Iran (see FINANCIAL DEALINGS WITH IRAN below).
• EXPORTS TO IRAN - In general, unless licensed by OFAC, goods, technology, or services may not be exported, reexported, sold or supplied, directly or indirectly, from
the United States or by a US person, wherever located, to Iran or the Government of Iran. The ban on providing services includes any brokering function from the United
States or by US persons, wherever located. For example, a US person, wherever located, or any person acting within the United States, may not broker offshore transactions
that benefit Iran or the Government of Iran, including sales of foreign goods or arranging for third-country financing or guarantees.
In general, a person may not export from the US any goods, technology or services, if that person knows or has reason to know such items are intended specifically for
supply, transshipment or reexportation to Iran. Further, such exportation is prohibited if the exporter knows or has reason to know the US items are intended specifically for
use in the production of, for commingling with, or for incorporation into goods, technology or services to be directly or indirectly supplied, transshipped or reexported
exclusively or predominately to Iran or the Government of Iran. A narrow exception is
77
created for the exportation from the United States or by US persons wherever located of low-level goods or technology to third countries for incorporation or substantial
transformation into foreign-made end products, provided the US content is insubstantial, as defined in the regulations, and certain other conditions are met.
Donations of articles intended to relieve human suffering (such as food, clothing, and medicine), gifts valued at $100 or less, licensed exports of agricultural commodities,
medicine, and medical devices, and trade in “information and informational materials” are permitted. “Information and informational materials” are defined to include
publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds, although certain
Commerce Department restrictions still apply to some of those materials. To be considered informational material, artworks must be classified under chapter subheadings
9701, 9702, or 9703 of the Harmonized Tariff Schedule of the United States.
With certain exceptions, foreign persons who are not US persons are prohibited from reexporting sensitive US-origin goods, technology or services to Iran or the
Government of Iran. Foreign persons involved in such reexports may be placed on the US Commerce Department‟s “Export Denial Orders” list.
US persons may not approve, finance, facilitate or guarantee any transaction by a foreign person where that transaction by a foreign person would be prohibited if performed
by a US person or from the United States.
• DEALING IN IRANIAN-ORIGIN GOODS OR SERVICES - US persons, including foreign branches of US depository institutions and trading companies, are
prohibited from engaging in any transactions, including purchase, sale, transportation, swap, financing, or brokering transactions related to goods or services of Iranian
origin or goods or services owned or controlled by the Government of Iran.
Services provided in the United States by an Iranian national already resident in the United States are not considered services of Iranian origin.
These prohibitions apply to transactions by United States persons in locations outside the United States with respect to goods or services which are of Iranian origin or are
owned or controlled by the Government of Iran. US persons may not import such goods or services into or export them from foreign locations. A US person may, however,
engage in transactions in third countries necessary to sell, dispose of, store, or maintain goods located in a third country which were legally acquired by that US person prior
to May 7, 1995 on the condition that the transactions do not result in an importation into the United States of goods of Iranian origin.
• FINANCIAL DEALINGS WITH IRAN - New investments by US persons, including commitments of funds or other assets, loans or any other extensions of credit, in
Iran or in property (including entities) owned or controlled by the Government of Iran are prohibited. While US persons may continue to charge fees and accrue interest on
existing Iranian loans, a specific license must be obtained to reschedule or otherwise extend the maturities of existing loans.
Payments for licensed sales of agricultural commodities, medicine and medical devices must reference an appropriate OFAC license and may not involve a debit or credit to
an account of a person in Iran or the Government of Iran maintained on the books of either a US depository institution or a US registered broker or dealer in securities.
Payments for and financing of such licensed sales may be accomplished by cash in advance, sales on open account (provided the account receivable is not transferred by the
person extending the credit), or by third-country financial institutions that are neither US persons nor government of Iran entities. Any other arrangements must be
specifically authorized by OFAC. US depository institutions may advise and confirm letters of credit issued by third-country banks covering licensed sales of agricultural
commodities, medicine and medical devices.
Effective November 10, 2008, the authorization for “U-turn” transfers involving Iran was revoked. As of that date, US depository institutions are no longer authorized to
process such transfers, thereby precluding transfers designed to dollarize transactions through the US financial system for the direct or indirect benefit of Iranian banks or
other persons in Iran or the Government of Iran. However, US depository institutions are permitted to handle funds transfers, through intermediary third-country banks, to or
from Iran or for the direct or indirect benefit of the Government of Iran or a person in Iran, arising from several types of underlying transactions, including:
a noncommercial family remittance;
an exportation to Iran or importation from Iran of information and informational materials;
a travel-related remittance;
a payment for the shipment of a donation of articles to relieve human suffering; or
a transaction authorized by OFAC through a specific or general license.
While the Iranian Transactions Regulations do not contain any blocking provisions, several Iranian banks have been separately designated under the Nonproliferation of
Weapons of Mass Destruction (“NPWMD”) or Specially Designated Global Terrorist (“SDGT”) programs for their involvement in the financing of either WMD or ballistic
missile proliferation or of terrorism, respectively. Such banks‟ property and interests in property that are in the United States or in the possession or control of US persons,
78
wherever located, are blocked. US persons are prohibited from engaging in any transaction or dealing in property or interests in property of these designated Iranian banks.
Please see the brochures on Nonproliferation and Terrorism for further information on these programs.
• "PRE-ZERO CONTRACTS" - Letters of credit and other financing arrangements with respect to trade contracts in force as of May 6, 1995, may be performed pursuant
to their terms provided that the underlying trade transaction was completed prior to June 6, 1995 (February 2, 1996 for “agricultural commodities”), or as specifically
licensed by OFAC. Standby letters of credit that serve as performance guarantees for services to be rendered after June 6, 1995, cannot be renewed and payment may not be
made after that date without authorization by OFAC.
• OTHER BANKING SERVICES - US depository institutions, including foreign branches, are prohibited from servicing accounts of the Government of Iran, including
banks owned or controlled by the Government of Iran or persons in Iran. However, they are authorized to pay interest, deduct reasonable and customary service charges,
process transfers related to exempt transactions, such as the exportation of information or informational material, a travel-related remittance, or a payment for the shipment
of a donation of articles to relieve human suffering or, at the request of an account holder, effect a lump sum closure of an account by payment to its owner. They may not
otherwise directly credit or debit Iranian accounts.
US depository institutions and US registered brokers or dealers in securities initiating or receiving payment orders involving Iran on behalf of customers must determine
prior to processing such payments that they do not involve transactions prohibited by the Iranian Transactions Regulations.
• TRAVEL - All transactions ordinarily incident to travel to or from Iran, including the importation of accompanied baggage for personal use, payment of maintenance and
living expenses and acquisition of goods or services for personal use are permitted.
• INTERNATIONAL ORGANIZATIONS – Under a general license issued by OFAC, effective August 22, 2006, US persons that are employees or contractors for the
following international organizations - the United Nations, the World Bank, the International Monetary Fund, the International Atomic Energy Agency, the International
Labor Organization or the World Health Organization - are authorized to engage in transactions for the conduct of official business in or involving Iran. Authorized
transactions may include leasing office space or purchasing Iranian-origin goods necessary to carry out official
79
business, provided that the funds transfers to and from Iran do not involve a
debit or credit on the books of a US financial institution. The exportation or
the re-exportation of US-origin or non- US-origin goods or technology listed
on the Commerce Control List in the Export Administration Regulations is
not authorized.
• OVERFLIGHT PAYMENTS - Payments to Iran for services rendered by
the Government of Iran in connection with the overflight of Iran or
emergency landing in Iran of aircraft owned by United States persons or
registered in the US are authorized.
• PERSONAL COMMUNICATIONS, INFORMATION AND
INFORMATIONAL MATERIALS - The receipt or transmission of postal,
telegraphic, telephonic or other personal communications that does not
involve the transfer of anything of value between the United States and Iran is
permitted. The importation into the United States from Iran and the
exportation from the United States to Iran of information and informational
materials, whether commercial or otherwise, regardless of format or medium
of transmission, and any transaction incident to such importation or
exportation is permitted.
• TRANSACTIONS INVOLVING US AFFILIATES - No US person may
approve or facilitate the entry into or performance of transactions or contracts
with Iran by a foreign subsidiary of a US firm that the US person is precluded
from performing directly. Similarly, no US person may facilitate such
transactions by unaffiliated foreign persons.
• IRANIAN PETROLEUM INDUSTRY - US persons may not trade in
Iranian oil or petroleum products refined in Iran, nor may they finance such
trading. Similarly, US persons may not perform services, including financing
services, or supply goods or technology that would benefit the Iranian oil
industry.
PERSONS DETERMINED TO BE THE GOVERNMENT OF IRAN, AS
DEFINED IN § 560.304 OF THIS PART
AGRICULTURAL COOPERATIVE BANK OF IRAN (a.k.a. BANK TAAVON KESHAVARZI IRAN), No. 129 Patrice
Lumumba Street, Jalal-Al-Ahmad Expressway, P.O. Box 14155/6395, Tehran, Iran [IRAN]
ASCOTEC HOLDING GMBH (f.k.a. AHWAZ STEEL COMMERCIAL & TECHNICAL SERVICE GMBH ASCOTEC;
a.k.a. ASCOTEC GMBH), TersteegenStrasse 10, Dusseldorf 40474, Germany; Registration ID HRB 26136 (Germany); all
offices worldwide [IRAN]
ASCOTEC JAPAN K.K., 8th Floor, Shiba East Building, 2-3-9 Shiba, Minato-ku, Tokyo 105-0014, Japan; all offices
worldwide [IRAN]
ASCOTEC MINERAL & MACHINERY GMBH (f.k.a. BREYELLER KALTBAND GMBH), Tersteegenstr. 10, Dusseldorf
40474, Germany; Registration ID HRB 55668 (Germany); all offices worldwide [IRAN]
ASCOTEC SCIENCE & TECHNOLOGY GMBH, Tersteegenstrasse 10, Dusseldorf D 40474, Germany; Registration ID
HRB 58745 (Germany); all offices worldwide [IRAN]
ASCOTEC STEEL TRADING GMBH (a.k.a. ASCOTEC STEEL), Tersteegenstr. 10, Dusseldorf 40474, Germany; Georg-
Glock-Str. 3, Dusseldorf 40474, Germany; Registration ID HRB 48319 (Germany); all offices worldwide [IRAN]
BANK KESHAVARZI IRAN (a.k.a. AGRICULTURAL BANK OF IRAN; a.k.a. BANK KESHAVARZI), PO Box 14155-
6395, 129 Patrice Lumumba St, Jalal-al-Ahmad Expressway, Tehran 14454, Iran; all offices worldwide [IRAN]
BANK MARKAZI JOMHOURI ISLAMI IRAN (a.k.a. BANK MARKAZI IRAN; a.k.a. CENTRAL BANK OF IRAN;
a.k.a. CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN), 213 Ferdowsi Avenue, Tehran 11365, Iran; PO Box
15875/7177, 144 Mirdamad Blvd, Tehran, Iran [IRAN]
BANK MASKAN (a.k.a. HOUSING BANK (OF IRAN)), PO Box 11365/5699, No 247 3rd Floor Fedowsi Ave, Cross
SarhangSakhaei St, Tehran, Iran; all offices worldwide [IRAN]
BANK MELLAT, Head Office Bldg, 327 Taleghani Ave, Tehran 15817, Iran; 327 Forsat and Taleghani Avenue, Tehran
15817, Iran; PO Box 375010, AmiryanStr #6, P/N-24, Yerevan, Armenia; Keumkang Tower - 13th & 14th Floor, 889-13
Daechi-Dong, Gangnam-Ku, Seoul 135-280, Korea, South; PO Box 79106425, ZiyaGokalpBulvari No 12, Kizilay, Ankara,
Ankara, Turkey; CumhuriyetBulvari No 88/A, PK 7103521, Konak, Izmir, Turkey; Buyukdere Cad, CicekSokak No 1 - 1
Levent, Levent, Istanbul, Turkey; all offices worldwide [IRAN] [NPWMD] [IFSR]
BANK MELLI IRAN (a.k.a. BANK MELLI; a.k.a. NATIONAL BANK OF IRAN), PO Box 11365-171, Ferdowsi Avenue, Tehran,
Iran; 43 Avenue Montaigne, Paris 75008, France; Room 704-6, Wheelock Hse, 20 Pedder St, Central, Hong Kong; Bank Melli Iran
Bldg, 111 St 24, 929 Arasat, Baghdad, Iraq; PO Box 2643, Ruwi, Muscat 112, Oman; PO Box 2656, Liva Street, Abu Dhabi, United
Arab Emirates; PO Box 248, Hamad Bin Abdulla St, Fujairah, United Arab Emirates; PO Box 1888, Clock Tower, Industrial Rd, Al
Ain Club Bldg, Al Ain, Abu Dhabi, United Arab Emirates; PO Box 1894, Baniyas St, Deira, Dubai City, United Arab Emirates; PO
Box 5270, Oman Street Al Nakheel, Ras Al-Khaimah, United Arab Emirates; PO Box 459, Al Borj St, Sharjah, United Arab
Emirates; PO Box 3093, Ahmed SeddiquiBldg, Khalid Bin El-Walid St, Bur-Dubai, Dubai City 3093, United Arab Emirates; PO Box
1894, Al Wasl Rd, Jumeirah, Dubai, United Arab Emirates; Postfach 112 129, Holzbruecke 2, D-20459, Hamburg, Germany; Nobel
Ave. 14, Baku, Azerbaijan; Unit 1703-4, 17th Floor, Hong Kong Club Building, 3 A Chater Road Central, Hong Kong; all offices
worldwide [IRAN] [NPWMD] [IFSR]
BANK OF INDUSTRY AND MINE (OF IRAN) (a.k.a. BANK SANAD VA MADAN; a.k.a. "BIM"), PO Box 15875-4456,
Firouzeh Tower, No 1655 Vali-Asr Ave after Chamran Crossroads, Tehran 1965643511, Iran; No 1655, Firouzeh Building,
Mahmoudiye Street, Valiasr Ave, Tehran, Iran; all offices worldwide [IRAN] [NPWMD] [IFSR]
BANK REFAH KARGARAN (a.k.a. BANK REFAH; a.k.a. WORKERS' WELFARE BANK (OF IRAN)), No. 40 North Shiraz
Street, Mollasadra Ave, VanakSq, Tehran 19917, Iran; all offices worldwide [IRAN] [NPWMD] [IFSR]
BANK SADERAT IRAN (a.k.a. IRAN EXPORT BANK), Ground Floor Business Room, Building BankeKhoon Road, Harat,
Afghanistan; No. 56, Opposite of Security Department, Toraboz Khan Str., Kabul, Afghanistan; 5 Lothbury, London EC2R 7HD,
United Kingdom; Postfach 112227, Deichstrasse 11, 20459, Hamburg, Germany; PO Box 4308, 25-29 Venizelou St, Athens, Attica
GR 105 64, Greece; PO Box 15745-631, Bank Saderat Tower, 43 Somayeh Avenue, Tehran, Iran; 16 rue de la Paix, Paris 75002,
France; Postfach 160151, Friedenstr 4, D-60311, Frankfurt am Main, Germany; 3rd Floor, AliktisadBldg, Ras El Ein Street Baalbak,
Baalbak, Lebanon; Saida Branch, SidaRiadElsoleh St, Martyrs Sq, Saida, Lebanon; BorjAlbarajneh Branch - 20 AlholomBldg,
SahatMreijeh, Kafaat St, Beirut, Lebanon; 1st Floor, AlroseBldg, Verdun - Rashid Karame St, Beirut, Lebanon; PO Box 5126,
Beirut, Lebanon; 3rd Floor, Mteco Centre, Mar Elias, Facing Al HellowBarrak, POB 5126, Beirut, Lebanon; Alghobeiri Branch -
AljawharaBldg, Ghobeiry Blvd, Beirut, Lebanon; PO Box 1269, Muscat 112, Oman; PO Box 4425, Salwa Rd, Doha, Qatar; PO Box
2256, Doha, Qatar; 2nd Floor, No 181 Makhtoomgholi Ave, Ashgabat, Turkmenistan; PO Box 700, Abu Dhabi, United Arab
Emirates; PO Box 16, Liwara Street, Ajman, United Arab Emirates; PO Box 1140, Al-Am Road, Al-Ein, Al Ain, Abu Dhabi, United
Arab Emirates; Bur Dubai, Khaled Bin Al Walid St, Dubai City, United Arab Emirates; Sheikh Zayed Rd, Dubai City, United Arab
Emirates; PO Box 4182, Almaktoum Rd, Dubai City, United Arab Emirates; PO Box 4182, Murshid Bazar Branch, Dubai City,
United Arab Emirates; PO Box 316, Bank SaderatBldg, Alaroda St, Borj Ave, Sharjah, United Arab Emirates; all offices worldwide
[IRAN] [SDGT] [IFSR]
BANK SADERAT PLC (f.k.a. IRAN OVERSEAS INVESTMENT BANK LIMITED; f.k.a. IRAN OVERSEAS INVESTMENT
BANK PLC; f.k.a. IRAN OVERSEAS INVESTMENT CORPORATION LIMITED), 5 Lothbury, London EC2R 7HD, United
Kingdom; PO Box 15175/584, 6th Floor, SadafBldg, 1137 ValiAsr Ave, Tehran 15119-43885, Iran; UK Company Number
01126618 (United Kingdom); all offices worldwide [IRAN] [SDGT]
BANK SEPAH, Imam Khomeini Square, Tehran 1136953412, Iran; 64 Rue de Miromesnil, Paris 75008, France; Hafenstrasse 54, D-
60327, Frankfurt am Main, Germany; Via Barberini 50, Rome, RM 00187, Italy; 17 Place Vendome, Paris 75008, France; all offices
worldwide [IRAN] [NPWMD] [IFSR]
BANK TEJARAT, PO Box 11365-5416, 152 Taleghani Avenue, Tehran 15994, Iran; 130, Zandi Alley, Taleghani Avenue, No 152,
OstadNejatOllahi Cross, Tehran 14567, Iran; 124-126 Rue de Provence, Angle 76 bdHaussman, Paris 75008, France; PO Box
734001, Rudaki Ave 88, Dushanbe 734001, Tajikistan; Office C208, Beijing Lufthansa Centre No 50, Liangmaqiao Rd, Chaoyang
District, Beijing 100016, China; c/o Europaisch-IranischeHandelsbank AG, Depenau 2, D-20095, Hamburg, Germany; PO Box
119871, 4th Floor, c/o Persia International Bank PLC, The Gate Bldg, Dubai City, United Arab Emirates; c/o Persia International
Bank, 6 Lothbury, London EC2R 7HH, United Kingdom; all offices worldwide [IRAN]
BANK TORGOVOY KAPITAL ZAO (a.k.a. TC BANK; a.k.a. TK BANK; a.k.a. TK BANK ZAO; a.k.a. TORGOVY KAPITAL
(TK BANK); a.k.a. TRADE CAPITAL BANK; a.k.a. TRADE CAPITAL BANK (TC BANK); a.k.a. ZAO BANK TORGOVY
KAPITAL), 3 Kozlova Street, Minsk 220005, Belarus; Registration ID 30 (Belarus); all offices worldwide [IRAN]
BIMEH IRAN INSURANCE COMPANY (U.K.) LIMITED (a.k.a. BIUK), 4/5 Fenchurch Buildings, London EC3M 5HN, United
Kingdom; UK Company Number 01223433 (United Kingdom); all offices worldwide [IRAN]
BREYELLER STAHL TECHNOLOGY GMBH & CO. KG (f.k.a. ROETZEL-STAHL GMBH & CO. KG), Josefstrasse 82, Nettetal
41334, Germany; Registration ID HRA 4528 (Germany); all offices worldwide [IRAN]
EUROPAISCH-IRANISCHE HANDELSBANK AG (f.k.a. DEUTSCH-IRANISCHE HANDELSBANK AG; a.k.a.
EUROPAEISCH-IRANISCHE HANDELSBANK; a.k.a. EUROPAESCH-IRANISCHE HANDELSBANK
AKTIENGESELLSCHAFT; a.k.a. GERMAN-IRANIAN TRADE BANK), Hamburg Head Office, Depenau 2, D-20095 Hamburg,
P.O. Box 101304, D-20008 Hamburg, Hamburg , Germany; Kish Branch, Sanaee Avenue, PO Box 79415/148, Kish Island 79415,
Iran; Tehran Branch, No. 1655/1, Valiasr Avenue, PO Box 19656 43 511, Tehran, Iran; all offices worldwide [IRAN] [NPWMD]
[IFSR]
EXPORT DEVELOPMENT BANK OF IRAN (a.k.a. BANK TOSEH SADERAT IRAN; a.k.a. BANK TOWSEEH SADERAT
IRAN; a.k.a. BANK TOWSEH SADERAT IRAN; a.k.a. EDBI), Export Development Building, Next to the 15th Alley, Bokharest
Street, Argentina Square, Tehran, Iran; Tose'e Tower, Corner of 15th St., Ahmad Qasir Ave., Argentine Square, Tehran, Iran; No.
129, 21's KhaledEslamboli, No. 1 Building, Tehran, Iran; No. 26, Tosee Tower, Arzhantine Square, P.O. Box 15875-5964, Tehran
15139, Iran; No. 4, Gandi Ave., Tehran 1516747913, Iran; C.R. No. 86936 (Iran) issued 10 Jul 1991; all offices worldwide [IRAN]
[NPWMD] [IFSR]
IFIC HOLDING AG (a.k.a. IHAG), Koenigsallee 60 D, Dusseldorf 40212, Germany; Registration ID HRB 48032 (Germany); all
offices worldwide [IRAN]
IHAG TRADING GMBH, Koenigsallee 60 D, Dusseldorf 40212, Germany; Registration ID HRB 37918 (Germany); all offices
worldwide [IRAN]
INDUSTRIAL DEVELOPMENT AND RENOVATION ORGANIZATION OF IRAN (a.k.a. IDRO; a.k.a. IRAN DEVELOPMENT
& RENOVATION ORGANIZATION COMPANY; a.k.a. SAWZEMANE GOSTARESH VA NOWSAZI SANAYE IRAN),
ValiAsr Building, Jam e Jam Street, ValiAsr Avenue, Tehran 15815-3377, Iran; all offices worldwide [IRAN]
INTRA CHEM TRADING GMBH (a.k.a. INTRA-CHEM TRADING CO. (GMBH)), Schottweg 3, Hamburg 22087, Germany;
Registration ID HRB48416 (Germany); all offices worldwide [IRAN]
IRAN FOREIGN INVESTMENT COMPANY (a.k.a. IFIC), No. 4, Saba Blvd., Africa Blvd., Tehran 19177, Iran; P.O. Box 19395-
6947, Tehran, Iran; all offices worldwide [IRAN]
80
IRAN INSURANCE COMPANY (a.k.a. BIMEH IRAN), Abdolaziz-Al-Masaeed Building, Sheikh Maktoom St., Deira, P.O.
Box 2004, Dubai, United Arab Emirates; P.O. Box 1867, Al Ain, Abu Dhabi, United Arab Emirates; 107 Dr Fatemi Avenue,
Tehran 14155/6363, Iran; P.O. Box 3281, Abu Dhabi, United Arab Emirates; P.O. Box 1666, Sharjah, United Arab Emirates;
P.O. Box 849, Ras-Al-Khaimah, United Arab Emirates; P.O. Box 417, Muscat 113, Oman; P.O. Box 676, Salalah 211,
Oman; P.O. Box 995, Manama, Bahrain; Al-LamiCentre, Ali-Bin-AbiTaleb St. Sharafia, P.O. Box 11210, Jeddah 21453,
Saudi Arabia; Al Alia Centre, Salaheddine Rd., Al Malaz, P.O. Box 21944, Riyadh 11485, Saudi Arabia; Al Rajhi Bldg., 3rd
Floor, Suite 23, Dhahran St., P.O. Box 1305, Dammam 31431, Saudi Arabia; all offices worldwide [IRAN]
IRAN PETROCHEMICAL COMMERCIAL COMPANY (a.k.a. PETROCHEMICAL COMMERCIAL COMPANY; a.k.a.
SHERKATE BASARGANI PETROCHEMIE (SAHAMI KHASS); a.k.a. SHERKATE BAZARGANI PETRCHEMIE;
a.k.a. "IPCC"; a.k.a. "PCC"), INONU CAD. SUMER Sok., ZitasBloklari C.2 Bloc D.H, Kozyatagi, Kadikoy, Istanbul,
Turkey; Topcu Ibrahim Sokak No: 13 D: 7 Icerenkoy-Kadikoy, Istanbul, Turkey; No. 1339, ValiNejad Alley, Vali-e-Asr St.,
Vanak Sq., Tehran, Iran; 99-A, Maker Tower F, 9th Floor, Cuffe Parade, Colabe, Mumbai 400 005, India; No. 1014, Doosan
We've Pavilion, 58, Soosong-Dong, Jongno-Gu, Seoul, Korea, South; Office No. 707, No. 10, Chao Waidajie, Chao Tang
District, Beijing 100020, China; all offices worldwide [IRAN]
IRANIAN MINES AND MINING INDUSTRIES DEVELOPMENT AND RENOVATION ORGANIZATION (a.k.a.
IMIDRO; a.k.a. IRAN MINING INDUSTRIES DEVELOPMENT AND RENOVATION ORGANIZATION; a.k.a.
IRANIAN MINES AND MINERAL INDUSTRIES DEVELOPMENT AND RENOVATION), No. 39, SepahbodGharani
Avenue, Ferdousi Square, Tehran, Iran; all offices worldwide [IRAN]
IRANIAN OIL COMPANY (U.K.) LIMITED (a.k.a. IOC UK LTD), Riverside House, Riverside Drive, Aberdeen AB11
7LH, United Kingdom; UK Company Number 01019769 (United Kingdom); all offices worldwide [IRAN]
IRASCO S.R.L. (a.k.a. IRASCO ITALY), Via Di Francia 3, Genoa 16149, Italy; Registration ID GE 348075 (Italy); all
offices worldwide [IRAN]
KALA LIMITED (a.k.a. KALA NAFT LONDON LTD), NIOC House, 4 Victoria Street, Westminster, London SW1H 0NE,
United Kingdom; UK Company Number 01517853 (United Kingdom); all offices worldwide [IRAN]
KALA PENSION TRUST LIMITED, C/O Kala Limited, N.I.O.C. House, 4 Victoria Street, London SW1H 0NE, United
Kingdom; UK Company Number 01573317 (United Kingdom); all offices worldwide [IRAN]
MACHINE SAZI ARAK CO. LTD. (a.k.a. MACHINE SAZI ARAK COMPANY P J S C; a.k.a. MACHINE SAZI ARAK
SSA; a.k.a. MASHIN SAZI ARAK; a.k.a. "MSA"), Arak, Km 4 Tehran Road, Arak, Markazi Province, Iran; No. 1, Northern
Kargar Street, Tehran 14136, Iran; P.O. Box 148, Arak 351138, Iran; all offices worldwide [IRAN]
MAHAB GHODSS CONSULTING ENGINEERING COMPANY (a.k.a. MAHAB GHODSS CONSULTING
ENGINEERING CO.; a.k.a. MAHAB GHODSS CONSULTING ENGINEERS SSK; a.k.a. MAHAB QODS
ENGINEERING CONSULTING CO.), 16 Takharestal Alley, Dastgerdy Avenue, P.O. Box 19395-6875, Tehran 19187
81185, Iran; No. 17, Dastgerdy Avenue, Takharestan Alley, 19395-6875, Tehran 1918781185, Iran; Registration ID 48962
(Iran) issued 1983; all offices worldwide [IRAN]
METAL & MINERAL TRADE S.A.R.L. (a.k.a. METAL & MINERAL TRADE (MMT); a.k.a. MMT LUXEMBURG;
a.k.a. MMT SARL), 11b, Boulevard Joseph II L-1840, Luxembourg; Registration ID B 59411 (Luxembourg); all offices
worldwide [IRAN]
MINES AND METALS ENGINEERING GMBH (M.M.E.), Georg-Glock-Str. 3, Dusseldorf 40474, Germany; Registration
ID HRB 34095 (Germany); all offices worldwide [IRAN]
MSP KALA NAFT CO. TEHRAN (a.k.a. KALA NAFT CO SSK; a.k.a. KALA NAFT COMPANY LTD; a.k.a. KALA
NAFT TEHRAN; a.k.a. KALA NAFT TEHRAN COMPANY; a.k.a. KALAYEH NAFT CO; a.k.a. M.S.P.-KALA; a.k.a.
MANUFACTURING SUPPORT & PROCUREMENT CO.-KALA NAFT; a.k.a. MANUFACTURING SUPPORT AND
PROCUREMENT (M.S.P.) KALA NAFT CO. TEHRAN; a.k.a. MANUFACTURING, SUPPORT AND PROCUREMENT
KALA NAFT COMPANY; a.k.a. MSP KALA NAFT TEHRAN COMPANY; a.k.a. MSP KALANAFT; a.k.a. MSP-
KALANAFT COMPANY; a.k.a. SHERKAT SAHAMI KHASS KALA NAFT; a.k.a. SHERKAT SAHAMI KHASS
POSHTIBANI VA TEHIYEH KALAYE NAFT TEHRAN; a.k.a. SHERKATE POSHTIBANI SAKHT VA TAHEIH
KALAIE NAFTE TEHRAN), 242 SepahbodGharani Street, Karim Khan Zand Bridge, Corner Kalantari Street, 8th Floor,
P.O. Box 15815-1775/15815-3446, Tehran 15988, Iran; Building No. 226, Corner of ShahidKalantari Street,
SepahbodGharani Avenue, Karimkhan Avenue, Tehran 1598844815, Iran; No. 242, ShahidKalantari St., Near Karimkhan
Bridge, SepahbodGharani Avenue, Tehran, Iran; Head Office Tehran, SepahbodGharani Ave., P.O. Box 15815/1775
15815/3446, Tehran, Iran; P.O. Box 2965, Sharjah, United Arab Emirates; 333 7th Ave SW #1102, Calgary, AB T2P 2Z1,
Canada; Chekhov St., 24.2 , AP 57, Moscow, Russia; Room No. 704 - No. 10 Chao Waidajie Chao Yang District , Beijing
10020, China; Sanaee Ave., P.O. Box 79417-76349, N.I.O.C., Kish, Iran; 10th Floor, Sadaf Tower, Kish Island, Iran; all
offices worldwide [IRAN]
NAFTIRAN INTERTRADE CO. (NICO) LIMITED (a.k.a. NAFT IRAN INTERTRADE COMPANY LTD; a.k.a.
NAFTIRAN INTERTRADE COMPANY (NICO); a.k.a. NAFTIRAN INTERTRADE COMPANY LTD; a.k.a. NICO), |41,
1st Floor, International House, The Parade, St Helier JE2 3QQ, Jersey; Petro Pars Building, Saadat Abad Ave, No 35,
Farhang Blvd, Tehran, Iran; all offices worldwide| [IRAN]
NAFTIRAN INTERTRADE CO. (NICO) SARL (a.k.a. NICO), 6, Avenue de la Tour-Haldimand, Pully, VD 1009,
Switzerland; all offices worldwide [IRAN]
NAFTIRAN TRADING SERVICES CO. (NTS) LIMITED, 47 Queen Anne Street, London W1G 9JG, United Kingdom; 6th
Floor NIOC Ho, 4 Victoria St, London SW1H 0NE, United Kingdom; UK Company Number 02600121 (United Kingdom);
all offices worldwide [IRAN]
NATIONAL IRANIAN OIL COMPANY (a.k.a. NIOC), Hafez Crossing, Taleghani Avenue, P.O. Box 1863 and 2501,
Tehran, Iran; all offices worldwide [IRAN]
NATIONAL IRANIAN OIL COMPANY PTE LTD, 7 Temasek Boulevard #07-02, Suntec Tower One 038987, Singapore;
Registration ID 199004388C (Singapore); all offices worldwide [IRAN]
NATIONAL PETROCHEMICAL COMPANY (a.k.a. "NPC"), No. 104, North Sheikh Bahaei Blvd., MollaSadra Ave.,
Tehran, Iran; all offices worldwide [IRAN]
NICO ENGINEERING LIMITED, 41, 1st Floor, International House, The Parade, St. Helier JE2 3QQ, Jersey; Registration
ID 75797 (Jersey); all offices worldwide [IRAN]
NIOC INTERNATIONAL AFFAIRS (LONDON) LIMITED, NIOC House, 4 Victoria Street, London SW1H 0NE, United
Kingdom; UK Company Number 02772297 (United Kingdom); all offices worldwide [IRAN]
NPC INTERNATIONAL LIMITED (a.k.a. N P C INTERNATIONAL LTD; a.k.a. NPC INTERNATIONAL COMPANY), 5th
Floor NIOC House, 4 Victoria Street, London SW1H 0NE, United Kingdom; UK Company Number 02696754 (United Kingdom);
all offices worldwide [IRAN]
ONERBANK ZAO (a.k.a. EFTEKHAR BANK; a.k.a. HONOR BANK; a.k.a. HONORBANK; a.k.a. HONORBANK ZAO; a.k.a.
ONER BANK; a.k.a. ONERBANK; a.k.a. ONER-BANK), UlitsaKlaryTsetkin 51, Minsk 220004, Belarus; Registration ID
807000227 (Belarus) issued 16 Oct 2009; SWIFT/BIC HNRBBY2X (Belarus); all offices worldwide [IRAN]
81
PARS OIL AND GAS COMPANY (a.k.a. POGC), No. 133, Side of ParvinEtesami Alley, opposite SazmanAb - Dr.Fatemi
Avenue, Tehran, Iran; No. 1 ParvinEtesami Street, Fatemi Avenue, Tehran, Iran [IRAN]
P.C.C. (SINGAPORE) PRIVATE LIMITED (a.k.a. P.C.C. SINGAPORE BRANCH; a.k.a. PCC SINGAPORE PTE LTD),
78 Shenton Way, #08-02 079120, Singapore; 78 Shenton Way, 26-02A Lippo Centre 079120, Singapore; Registration ID
199708410K (Singapore); all offices worldwide [IRAN]
PETROCHEMICAL COMMERCIAL COMPANY (U.K.) LIMITED (a.k.a. PCC (UK); a.k.a. PCC UK; a.k.a. PCC UK
LTD), 4 Victoria Street, London SW1H 0NE, United Kingdom; UK Company Number 02647333 (United Kingdom); all
offices worldwide [IRAN]
PETROCHEMICAL COMMERCIAL COMPANY FZE (a.k.a. PCC FZE), 1703, 17th Floor, Dubai World Trade Centre
Tower, Sheikh Zayed Road, Dubai, United Arab Emirates; Office No. 99-A, Maker Tower "F" 9th Floor CuttePavade,
Colabe, Bumbai 700005, India; all offices worldwide [IRAN]
PETROCHEMICAL COMMERCIAL COMPANY INTERNATIONAL LIMITED (a.k.a. PETROCHEMICAL
COMMERCIAL COMPANY INTERNATIONAL LTD; a.k.a. PETROCHEMICAL TRADING COMPANY LIMITED;
a.k.a. "PCCI"), P.O. Box 261539, Jebel Ali, Dubai, United Arab Emirates; 41, 1st Floor, International House, The Parade, St.
Helier JE2 3QQ, Jersey; Ave. 54, Yimpash Business Centre, No. 506, 507, Ashkhabad 744036, Turkmenistan; No. 21 End of
9th St, Gandi Ave, Tehran, Iran; 21, Africa Boulevard, Tehran, Iran; Registration ID 77283 (Jersey); all offices worldwide
[IRAN] [ISA]
PETROIRAN DEVELOPMENT COMPANY (PEDCO) LIMITED (a.k.a. PETRO IRAN DEVELOPMENT COMPANY;
a.k.a. "PEDCO"), National Iranian Oil Company - PEDCO, P.O. Box 2965, Al Bathaa Tower, 9th Floor, Apt. 905, Al
BuhairaCorniche, Sharjah, United Arab Emirates; P.O. Box 15875-6731, Tehran, Iran; 41, 1st Floor, International House,
The Parade, St. Helier JE2 3QQ, Jersey; No. 22, 7th Lane, Khalid Eslamboli Street, ShahidBeheshti Avenue, Tehran, Iran;
No. 102, Next to Shahid Amir SoheilTabrizian Alley, ShahidDastgerdi (Ex Zafar) Street, Shariati Street, Tehran
19199/45111, Iran; Kish Harbour, BazarganFerdos Warehouses, Kish Island, Iran; Registration ID 67493 (Jersey); all offices
worldwide [IRAN]
PETROPARS INTERNATIONAL FZE (a.k.a. PPI FZE), P.O. Box 72146, Dubai, United Arab Emirates; all offices
worldwide [IRAN]
PETROPARS LTD. (a.k.a. PETROPARS LIMITED; a.k.a. "PPL"), Calle La Guairita, Centro ProfesionalEurobuilding, Piso
8, Oficina 8E, Chuao, Caracas 1060, Venezuela; No. 35, Farhang Blvd., Saadat Abad, Tehran, Iran; P.O. Box 3136, Road
Town, Tortola, Virgin Islands, British; all offices worldwide [IRAN]
PETROPARS UK LIMITED, 47 Queen Anne Street, London W1G 9JG, United Kingdom; UK Company Number 03503060
(United Kingdom); all offices worldwide [IRAN]
SINA BANK (f.k.a. BFCC; f.k.a. BONYAD FINANCE AND CREDIT COMPANY; f.k.a. SINA FINANCE AND CREDIT
COMPANY), 187 Motahhari Avenue, P.O. Box 1587998477, Tehran, Iran, Iran; Kish Financial Centre, Kish Island, Iran;
SWIFT/BIC SINAIRTH (Iran); alt. SWIFT/BIC SINAIRTH418 (Iran); all offices worldwide [IRAN]
WEST SUN TRADE GMBH (a.k.a. WEST SUN TRADE), WinterhuderWeg 8, Hamburg 22085, Germany; Arak Machine
Mfg. Bldg., 2nd Floor, opp. of College Economy, Northern Kargar Ave., Tehran 14136, Iran; MundsburgerDamm 16,
Hamburg 22087, Germany; Registration ID HRB 45757 (Germany); all offices worldwide [IRAN]
Iranian Assets Control Regulations - 31 C.F.R Part 535
Separate Iranian sanctions regulations appear at 31 C.F.R. Part 535. On November 14,
1979, the assets of the Government of Iran in the United States were blocked in
accordance with IEEPA following the seizure of the American Embassy in Teheran and
the taking of US diplomats as hostages. Under the Iranian Assets Control Regulations
(Title 31, Part 535 of the US Code of Federal Regulations), some US$12 billion in
Iranian Government bank deposits, gold, and other properties were frozen, including $5.6
billion in deposits and securities held by overseas branches of US banks. The assets
freeze was eventually expanded to a full trade embargo, which remained in effect until
the Algiers Accords were signed with Iran on January 19, 1981. Pursuant to the Accords,
most Iranian assets in the United States were unblocked and the trade embargo was
lifted. The US Government also canceled any attachments that US parties had secured
against Iranian assets in the United States, so that the assets could be returned to Iran or
transferred to escrow accounts in third countries pursuant to the Accords. This action was
upheld by the Supreme Court in 1981 in Dames & Moore v. Regan. Although greatly
modified in scope, the old Iranian Assets Control Regulations remain in effect. Many US
nationals have claims against Iran or Iranian entities for products shipped or services
rendered before the onset of the 1979 embargo or for losses sustained in Iran due to
expropriation during that time. These claims are still being litigated in the Iran-United
States Claims Tribunal at The Hague established under the Algiers Accords. Certain
assets related to these claims remain blocked in the United States and consist mainly of
military and dual-use property.
82
This document is explanatory only and does not have the force of law. The Executive Orders and implementing regulations dealing with Iran contain the legally binding provisions governing the
sanctions. This document does not supplement or modify those Executive Orders or regulations.
The Treasury Department‟s Office of Foreign Assets Control also administers sanctions programs involving the Balkans, Burma (Myanmar), Cuba, Diamond Trading, Iran, Iraq, Lebanon, Liberia,
North Korea, Somalia, Sudan, Syria, Zimbabwe as well as highly enriched uranium, designated Terrorists and international Narcotics Traffickers, Foreign Terrorist Organizations and designated
foreign persons who have engaged in activities relating to the proliferation of weapons of mass destruction. For additional information about these programs or about sanctions involving Iran, please
contact the:
OFFICE OF FOREIGN ASSETS CONTROL
US Department of the Treasury
1500 Pennsylvania Avenue, N.W. - Annex
Washington, D.C. 20220
http://www.treas.gov/ofac
202/622-2490
5-24-11