How First Iraqi Bank is Transforming Iraq's Cash-Driven Economy Through Digital Banking

When Kawa Junad began building Iraq's first digital bank, the biggest challenge was not technology. It was persuading Iraqis of the value of banking itself when most of them had never needed one. For Mr Junad, the founder of First Iraqi Bank, that meant tackling what he calls a “chicken and egg” problem: customers needed merchants to accept digital payments, but merchants needed customers before they had a reason to make the switch.

“It was a rough first six months or so as we pushed against all those elements, going door to door with both merchants and consumers,” Mr Junad told The National. Eventually, he built a base of about 3,000 small and medium-sized businesses able to trade through the app by late 2021, several months after FIB launched its digital application in April that year. “That proved to be the tipping point, and it’s been steady growth from there,” he said.

FIB’s rise from a digital banking start-up to more than a million customers indicates how Iraq’s traditionally cash-based economy is changing as younger consumers and SMEs increasingly embrace digital payments. The bank's journey from the early challenge of building a customer and merchant ecosystem to expanding into financial services also reflects a broader transformation in Iraq’s banking sector as regulators push for stronger compliance, greater financial inclusion and modern services.

FIB is a privately held Iraqi Islamic bank, which has been licensed by the Central Bank of Iraq since 2020, and operates primarily through a digital and mobile banking model. It initially built its presence in the Kurdistan region after launching its digital application in April 2021, before widening its focus to other major population centres, including Baghdad, Basra, Najaf and Nineveh. Despite being a digital-only institution, the bank is using physical branches as part of that expansion strategy.

"I enjoy the irony here," Mr Junad said. “Having that anchor, that physical presence you can look at, see, go into and touch, if need be, opens many people’s willingness to give us a try – and once they do, they’re hooked.”

FIB was built to eliminate obstacles to formal banking by offering streamlined onboarding, digital ID solutions, and payment tools. Using automated account opening, customers can establish a live account using a mobile phone and one or two identification documents in about five minutes.

It now has about 1.3 million registered customers, 90 per cent of whom had not previously held a bank account and instead relied mainly on cash, he said. Around 30,000 merchants are using its services, allowing businesses to accept payments through smartphones without investing in additional point-of-sale equipment, he added. “This shows how hungry the market is for technologies that actually make life easier,” Mr Junad said.

This growth has increasingly been driven by one of the simplest digital tools: QR payments, he added. To illustrate that hunger, he said digital payment transactions through FIB had increased by more than 85 per cent from 2024 to 2025 and by more than 70 per cent in the first half of 2026.

The bank’s evolution has gone beyond payments. Mr Junad added that about 30 per cent of its customer base now uses services such as savings, credit and salary accounts. The next step, he says, is to turn that digital relationship into access to credit, with digital lending expected to become a meaningful part of FIB's business by late 2026 or early 2027.

The change is particularly visible among younger Iraqis, with most new customers aged between 18 and 35. As part of broader reforms, the Central Bank of Iraq issued new digital banking regulations in 2024 to provide the necessary structure for a rapidly growing marketplace.