Fintech is Reshaping Middle Eastern Banking: Here’s Why

“Why resist change when it’s the main source of your growth?” The Middle East’s banking sector is embracing this mantra as it undergoes a transformative shift towards fintech-driven solutions. With a young, tech-savvy population and a surge in venture capital investments, the region is poised to redefine financial services. But what are the driving forces behind this fintech revolution, and how is it reshaping Middle Eastern banking?

Open Banking: A Catalyst for Innovation

At the forefront of this transformation is Open Banking, which is expected to grow by a staggering 25 percent annually in Arab countries, with projections indicating a valuation of $1.17 billion (Binding Partnerships). Open Banking serves as a gateway to financial innovation, allowing third-party developers to build applications and services around the financial institutions. This fosters a more competitive environment, driving banks to improve their offerings and customer experience.

Venture Capital Fuelling Growth

The fintech ecosystem in the Middle East has witnessed an explosive increase in venture capital funding, from $80 million in 2017 to a forecasted $2 billion in 2022. This influx of capital has enabled the emergence of approximately 465 fintech firms, signalling a robust growth trajectory and a significant shift in investor confidence in the sector (Xebia Articles).

Digital Banks Gaining Traction

Neobanks, or digital banks, are gaining a foothold in the Middle Eastern market, providing streamlined online and mobile banking services. However, these disruptors are challenged to access stable and low-cost sources of deposits in developed markets, necessitating strategic moves such as acquiring banking licenses to reduce their cost of capital (Boston Consulting Group).

Youth Demographics Driving Demand

With nearly half of the Middle East’s 400 million population under the age of 25, there is a significant push for digital-first solutions across various sectors, including payments and banking. This demographic is not only tech-savvy but also more open to adopting innovative financial solutions, further propelling the fintech agenda (Middle East Institute).

A Spectrum of Financial Solutions

The Middle East’s fintech scene is a melting pot of startups and established financial institutions, offering a spectrum of solutions from payment services to crowdfunding platforms. This breadth of services is indicative of the region’s rapid growth and diversification within the fintech sector (JOH Partners).

Conclusion

The Middle Eastern banking sector is on the cusp of a fintech revolution, driven by the adoption of Open Banking, an influx of venture capital, the rise of digital banks, a youthful demographic hungry for innovation, and a wide array of financial services. This transformation is not just reshaping how banks operate but also how they engage with their customers, who now demand more personalized, efficient, and accessible financial services. As the region continues to evolve, the intersection of finance and technology will undoubtedly be a fertile ground for disruption and growth.

About

Headquartered in London and Dubai, Warner Scott is a distinguished global executive recruitment specialist in Banking & Investments, Accounting & Finance, and Digital & Fintech. With over 18 years of industry experience, they have established strong relationships with top-tier banks, financial institutions, and accountancies. Their unique edge lies in these longstanding relationships with hiring managers and internal recruiters, a vast candidate network, and constant candidate engagement. This combination places them in a trusted position with both talent and hiring managers. Their deep understanding of recruitment needs allows them to uncover senior C-suite, EVP, SVP, and MD-level hidden, ready-to-move talent that others cannot access.

With tailor-made recruitment solutions for international and regional clients, Warner Scott works as dedicated business partners. Their services include retained, exclusive, and contingency searches, alongside permanent, contract, and interim staffing options.

In Banking and Investments, they excel with international and regional banks and investment houses in London and the Middle East, including conventional and Islamic banks. They cover areas such as Private Equity, Asset Management, Investment Banking, Treasury & Global Markets, Wholesale Banking, Digital & Technology, Risk Management & Compliance, and C-Suite Appointments.

In Accounting and Finance, Warner Scott collaborates with The Big 4 and Top 50 accounting firms, along with globally recognized consultancies. They specialize in Audit, Risk & Compliance, Tax (Private Client, Expatriate, and Corporate Tax), Corporate Finance, Transaction Advisory, Restructuring, Turnaround, Insolvency, Forensic Accounting, Disputes & Investigations, Forensic Technology, eDiscovery, Cyber Security, and Management Consultancy.

In Digital & Fintech, they support large banks, digital startups, and innovative Fintechs in areas such as FinTech (AI, Blockchain, Cloud Computing, Big Data), InfoSec/Cybersecurity (Application, Infrastructure, Network, Cloud, IoT securities), Digital Leadership, Digital Transformation, Software Development, IT Project/Program management, Data Science & Analytics, Data Privacy, and Data Architecture.

Read more

References

– “Top Fintech Trends Reshaping the Middle East’s Financial Landscape in 2024.” Binding Partnerships, https://www.bindingpartnerships.com/blog/2024/01/top-fintech-trends-reshaping-the-middle-easts-financial-landscape-in-2024.

– “Neo-Banks Rising: How Digital Banks Are Shaping the Middle East.” Xebia Articles, https://articles.xebia.com/neo-banks-rising-how-digital-banks-are-shaping-the-middle-east.

– “Global Fintech 2023: Reimagining the Future of Finance.” Boston Consulting Group, https://www.bcg.com/publications/2023/future-of-fintech-and-banking.

– Netzer, Nir. “The Future of FinTech in the Middle East: Trends That Are Here to Stay.” Middle East Institute, https://www.mei.edu/sites/default/files/2021-10/11.%20The%20Future%20of%20FinTech%20in%20the%20Middle%20East-%20Trends%20That%20Are%20Here%20to%20Stay%20.pdf.

– “Fintech Revolution in the Middle East: Key Trends.” JOH Partners, https://johpartners.com/fintech-revolution-in-the-middle-east-key-trends/.