Why the Middle East is banking on digital

Why the Middle East is banking on digital

The Middle East is increasingly turning to digital technologies to modernise and transform its financial sector. This shift towards digital banking, also known as online banking or internet banking, is being driven by a number of factors, including the proliferation of mobile technologies, the need to improve financial inclusion and accessibility, and the desire to increase efficiency and reduce costs.

One of the major drivers of digital banking in the Middle East has been the proliferation of mobile technologies, particularly smartphones. According to a report by the Middle East Fintech Association, the number of smartphone users in the region is expected to reach 368 million by 2025, up from 246 million in 2019. This increase in mobile usage has created opportunities for banks and other financial institutions to offer digital banking services through mobile apps and other digital platforms.

Another reason why the Middle East is banking on digital is to improve financial inclusion and accessibility. In some parts of the region, traditional banking infrastructure may be limited, making it difficult for people in rural or remote areas to access financial services. Digital banking can help to bridge this gap by providing financial services online or through mobile apps, which can be accessed from any location with an internet connection.

In addition to improving financial inclusion and accessibility, digital banking can also help to increase efficiency and reduce costs for banks and other financial institutions. Digital banking platforms can automate many of the tasks that are traditionally performed manually, such as account opening and money transfers, which can save time and reduce the need for human resources. Digital banking can also help to reduce the cost of maintaining physical branches and ATMs, which can help to lower overall operating costs.

The adoption of digital banking in the Middle East has been supported by a number of initiatives and policies aimed at fostering innovation and supporting the development of fintech (financial technology) companies. For example, a number of governments in the region have established fintech hubs or incubators, which provide resources and support for fintech companies. In addition, some governments have implemented regulatory sandboxes, which allow fintech companies to test their products and services in a controlled environment before launching them to the wider market.

The private sector has also played a role in supporting the adoption of digital banking in the Middle East. A number of banks and financial institutions in the region have established partnerships or collaborations with fintech companies, or have launched their own fintech units or accelerators. These partnerships and collaborations can help fintech companies gain access to the necessary resources and expertise to develop and scale their products and services.

In addition to partnerships with fintech companies, some banks and financial institutions in the Middle East have also developed their own digital banking platforms in-house. These platforms can offer a range of services, including account management, money transfers, and bill payments, and can be accessed through mobile apps or online portals.

Overall, the adoption of digital banking in the Middle East is being driven by a range of factors, including the proliferation of mobile technologies, the need to improve financial inclusion and accessibility, and the desire to increase efficiency and reduce costs. The growth of digital banking in the region has been supported by a range of initiatives and policies, as well as partnerships and collaborations with fintech companies. It is likely that this trend will continue in the coming years, as the Middle East looks to leverage the benefits of digital technologies to drive innovation and growth in its financial sector.