The Iraqi banking sector faces structural challenges hindering development and investment efforts, as citizens continue to keep their funds outside the formal financial system. Economic experts emphasize that successful banking reform requires transitioning from traditional methods to a modern digital ecosystem, alongside updating the legislative, regulatory, and technological infrastructure of both public and private banks. Specialists point out that the crisis regarding loans and advances stems from the absence of modern credit assessment mechanisms, stressing the need to establish unified databases for borrowers to reduce default rates and ensure funds are directed to eligible individuals. Furthermore, the shift towards electronic payment and digital systems is a crucial step to minimize bureaucracy, combat corruption, and enhance transparency, thereby supporting the national economy and attracting sustainable investments.