Why are banking players flocking to Middle Eastern digital banks?

By Puja Sharma

To compete in a traditionally strong banking market such as in the Middle East, new entrants are urged to differentiate and address the needs of a certain demographic segment

1. A compelling and digital customer experience has shifted from being a luxury to being necessary to satisfy customers;
2. Strong employer branding or employee value proposition is imperative to attracting talented staff;
3. Key government priorities are digital transformation and sector diversification, including financial services and technology.

Global payment leader BPC and strategy consultancy firm Fincog in a new report on the digital banking market of the Middle East, with a particular focus on the countries of the Gulf Cooperation Council (GCC). Taking into account the existing banking infrastructure, cultural observations, and emerging trends, the report analyses the specific characteristics of successful newcomers to the region.

“We’re pleased to share the valuable insights of this research, designed to help those who are interested in this exciting space,” said Hany Al Deeb, Managing Director – GCC & Iraq, BPC. “As digital banking continues to expand rapidly across the Middle East, propelled by a youthful population driving a transition from internet banking to mobile, we are seeing an array of potential new avenues available. This sector is poised to continue growing at an accelerating pace and represents a huge opportunity for dynamic and visionary players.”

“Digital Banking in The Middle East” provides a holistic overview of the Middle Eastern digital banking market and a sharp understanding of the current competitive landscape. It outlines how technological advancements in finance plus various economic development and diversification strategies across the GCC mean that the Middle East presents many opportunities for newcomers as well as established financial and non-financial institutions.

Islamic finance has become a growing area of interest around the globe, with an estimated 1.9 billion Muslims internationally. The estimated Islamic Fintech market size for the OIC (Organization of Islamic Cooperation) with 57 member countries was roughly $49 billion, set to rise to $128 billion by 2025. While Saudi Arabia’s fintech market is currently worth approximately $17.8bn, it may reach $47.5 billion in four years.

“Our report highlights the factors that new entrants to the Middle Eastern digital banking market need to consider,” said Jeroen de Bel, Founder, of Fincog “There is an underlying growth potential for digital banking players as consumers grow increasingly familiar with compelling digital-only offers for financial products and services. We hope our findings will benefit those interested in the many opportunities being presented in this part of the world.”

Key findings:

• To be able to compete in a traditionally strong banking market such as in the Middle East and acquire sufficient market share, new entrants are urged to differentiate and address the needs of a certain demographic segment of the population;
• With modern technology and sophisticated UX design becoming deeply ingrained in almost all digital products across various industries, a compelling and digital customer experience has moved from being a mere luxury to being imperative to satisfy customers;
• The wealthier GCC countries present a region that is a major source of attracting talent – a compelling employer branding or employee value proposition is necessary to attract talent that has a wide set of choices in front of them;
• Key government priorities to foster future growth involve digital transformation and sector diversification, including financial services and technology.