June 22, 2004

Semblance of order amid the chaos

Finally, some good news amid the scandals and disasters... The Banker reports that the Bank of England led a project to put in place a new payment system into Iraq [1]. Two companies, Visa and E-Go, were selected by the Old Lady to put in place a network of 80 laptops and Inmarsat satellite linkups. On the laptops were Visa's software, although details are scant as to how that works.

The Bank of England continues to impress in the lacklustre world of central banking.

Semblance of order amid the chaos
Published on: 03 May, 2004

The exchange desk for the new Iraqi currency at a branch of Rafidain Bank

An improbable mix of coincidence, personal ingenuity and innovative technology gave Iraq a sorely needed payments system.

Stabilising the political environment in post-war Iraq is one issue; rebuilding its wrecked financial infrastructure is quite another. Amid the carnage and devastation, a little known tale of extraordinary innovation and ingenuity has defied the logic of logistics and produced a payments system for Iraq which may have provided, in its own way, more stability for the country than much of the military hardware.

In July last year, the embattled Central Bank of Iraq produced an ambitious goal but with little idea how it could be achieved. On October 15 the launch of the new Iraqi dinar (without Saddam Hussein on the note) was planned. Getting the notes printed abroad was not the problem - De La Rue obliged. But to enable the re-emergence of Iraq as a self-supporting economy, a secure currency and trading backbone was essential and far from easy to implement.

Impossible task

With no telecommunications infrastructure, nor a reliable power grid, the Iraqi banks were looking for a solution which would provide them with the ability, reliability and security to network their banks' branches country-wide. A network of 80 sites throughout the country was required. And this was before personal security, attacks and all military aspects were considered.

Solution emerges

The Central Bank of Iraq called on the Bank of England for help last July and through an extraordinary series of coincidences, personal initiatives and creative use of technology, a solution emerged.

Key to putting together the initial core network package was Kathleen Tyson-Quah, who had broad global experience in developing banking systems and who acted as 'solution architect' for the project. Given the unique nature of the Iraqi situation and the extremely tight October deadline, traditional approaches were not possible. A project that could take years under normal conditions was desperately needed in less than three months, and conditions in Iraq were far from normal.

Ms Tyson-Quah needed providers who not only could do the job but were already active in the area; there was no time to acclimatise. Post-war Iraq had no countrywide commercial communications network. What telecoms and IT systems existed had not been updated for years, and relied on DOS-based systems. It was clear that a major technology gap existed. "With the 10-week deadline many people thought I was insane," she noted, but some were willing to rise to the challenge.

In July 2003, a tender from Iraq's three leading banks was issued for a new infrastructure and payments system, and 16 companies responded. In August, in Baghdad, the order was signed for Visa International and E-Go Solutions, a partnership between NSSL and TET Satellite Solutions, to deliver the system.


Visa International and E-Go proposed a network solution based on the regional BGAN system operating via Inmarsat. Each of the 80 bank branches would need nothing more than a safe with cash, a dual language laptop carrying applications based on VISA software and a regional BGAN satellite modem to run operations. High-integrity customised security was built into both hardware and software, as well as over the network via VPN. The UK-based server supplied and maintained by E-Go offered full redundancy, using Cisco and HP systems with uninterrupted power supplies and tape back-up.

Against all odds, the 80-laptop system was up on time and its benefits are now beginning to be felt. Visa's Stuart Brocklehurst, who played a critical role in pulling the project together, says: "The ability to transfer wages and payments electronically gives the banks greater control and security. As more people gain confidence in the banks as a safe place to leave their money, they will be able to save. As a result more money stored in the banks will give the institutions the opportunity to lend money, thus allowing the Iraqi economy to grow more quickly." Since March, Mr Brocklehurst adds, most banks, including the 19 private banks, have come onstream with the payments system.

The new network ensured the smooth introduction of the new currency. The VisaNet/E-Go solution provides not only a viable system for Iraq but also a model for other countries with complicated payments needs.

Posted by iang at June 22, 2004 08:11 AM | TrackBack