PwC Middle East identifies top trends driving the region’s banking ecosystem

Dubai, UAE: 23 December 2022 – PwC Middle East hosted its inaugural Financial Services Horizons - Annual GCC Leadership Meet featuring guest speaker Brett King – Australian futurist, best-selling author and co-founder of Moven – who shared insights on the need for digital transformation and disruption in the financial services industry and key trends that will shape the Middle East’s banking ecosystem. 

The three-day meet hosted by PwC’s Financial Services practice leaders offered a unique platform for banking and financial services professionals to discuss new developments in global banking and debate on growth areas for banks in this region. The conversations focused on the transformation taking place in financial services, importance of customer integration, evolution of payments and digital wallets and challenges with growing digitalisation.

During the keynote session, Mehryar Ghazali, Financial Services Leader at PwC Middle East, and Brett King explored new approaches on how the structure and culture of financial organisations in the Middle East must shift. This included designing the workforce of the future, building the skills of the future, training and sourcing digital savvy talent, building innovative cultures from the top-down and embracing risk in experimentation. Committing to cloud services would be underpinned by advancement in cloud regulation which is essential for higher levels of product sophistication (and how cloud will be more secure and sustainable as new technology evolves), platform readiness with the rise of open banking, digital wallet integration and the re-imagination of the metaverse and digital twins as well the future economies of 2050. 

Additional key insights shared at the meet that are driving the region’s banking industry are:

1. Regulations:

The one area that is likely to continue to be a growth constraint for financial services in the region is the regulatory structure around cloud services. Current regulations require cloud service providers to be based in the country where it plans to offer its services. Authorities in the region are aware of this issue and are moving ahead on this front. Once this constraint on cloud services is resolved,it has the potential to tremendously expand the scope of financial services in the region.

2. Rise of experiential banking:

Banks in the Middle East have a substantial advantage to gain market share in the digital space. In order to move away from a transactional banking mindset to one focused on customer experience, banks will need to focus on operational efficiency, understand customer data and must fully utilise analytics and artificial intelligence (AI) to anticipate and service client needs better than competition, as they focus on building AI into the core of digital services.3/

3. Digital financial inclusion:

The launch and growth of digital financial services in the Middle East has led to an unprecedented increase in the number of people having access to financial services. For the unbanked populations, access to credit can be extremely difficult. However, with mobile wallets and digital payment cards, there is vast potential to promote financial inclusion in the region – all at the touch of a button.

4. The fintech boom: 

The MENA region is steadily building its financial technology (fintech) sector. Fintech hubs have emerged across the region and are channelling significant funds to dynamic, small companies. MENA region startups received more than US$2.5 billion in funding in 2021 alone. Trends in the first half of 2022 indicate this year will surpass that, given the $1.73 billion that has been raised to date. A growing number of these companies are having successful initial public offerings (IPOs). In particular, GCC countries have moved decisively into fintech. Some of the GCC fintech hubs are now so large that they are on the global fintech map. The critical challenge for fintech in the MENA region, the GCC in particular, is to remain competitive in a fast-developing sector. By focusing on the long-term imperatives of greater fintech scale, deeper capital markets, and talent development, GCC countries can become vibrant players in global fintech.

Commenting on the meet Mehryar Ghazali, Financial Services Leader, PwC Middle East, said: “At this year’s Annual GCC Leadership Meet, we were thrilled to host Brett King, the renowned futurist who joined our colleagues and valued clients across the region in providing insights on where the banking industry is headed. The Middle East region has advanced exponentially in the financial technological ecosystem mirrored with our focus on investing in strategic partnerships, emerging technologies and our people to help solve our client’s biggest problems. We firmly believe that the future of the industry is heading towards a brighter path, one filled with innovation and inclusion.”

Additionally, during the meet, Brett King delved into the global fintech landscape, discussing the successes and failures in fintech, and the response of retail and corporate customers to changing capabilities, and how the pandemic has accelerated expectations around digital services. Additionally, he shared insights on some of the metrics behind the best fintechs in the world, and how the market is aligning behind these broad changes around digital customer acquisition, market cap, lifetime value and core operational efficiency, and how that is starting to see traditional banks’ share prices wane in comparison. 

Dr. Sandeep Srivastava, Financial Services Consulting Lead at PwC Middle East, said, “The Middle East region is emerging as a serious player from a regulatory reform and fintech ecosystem perspective. In recent years, we have seen how the region has transformed into an agile economy thus helping in the transformation of the banking ecosystem. It's going to be really fascinating to see how the region will develop its digital banking capabilities in the years to come.”