Banking and payments services across the Middle East are being transformed by a potent combination of fast-evolving customer preferences, new technologies, and a regulatory environment that supports innovation as part of a push to modernize national economies.
Customers are demanding greater convenience, instant fulfillment, deeper insights into their finances, and more integrated views of their financial lives. With banks and fintechs racing to differentiate offerings using tools such as AI-driven technologies, gamification and improved data management, the competitive environment is becoming more testing across banking, payments and wealth management.
“Many of the trends transforming banking markets around the world are in full flow in the Middle East, including the advent of digital-first banks with innovative operating models, the shift to the cloud, and increasing momentum in the adoption of AI and open banking. 2025 will be a year in which many senior leaders crystallize their strategic thinking and take decisive action towards transforming their bank and its adaptive capabilities.”Naim Alame, Managing Partner, Capco Middle East
There are significant implications for banks and their competitors, as we discuss for each of the 10 trends we have identified. During 2025 senior executives will need to take key decisions regarding business strategies, technology transformations, cloud adoption, and industry partnerships – as well as crafting responses to the emergence of open banking and CBDCs.
.The latest comprehensive research on banking in the Middle East highlights a sector at a pivotal moment of stable growth combined with rapid digital transformation. Fitch Ratings’ Middle East Banks Outlook 2025 projects a ‘neutral’ outlook reflecting solid economic conditions, with credit growth expected to accelerate, buoyed by high oil prices and moderate expansion in non-oil sectors15. Similarly, EY’s 2025 GCC Banking Sector Outlook emphasizes strong capital buffers, rising lending volumes, and increased fee income driven by infrastructure projects and economic diversification efforts in countries like Saudi Arabia, UAE, Qatar, and Bahrain
Digital banking and FinTech innovation are central themes shaping the future of the region’s banking industry. A detailed study by SBS identifies seven key trends including data-first banking, AI personalization, central bank digital currencies (CBDCs), ESG integration, and talent acquisition as critical to the sector’s evolution2. The digital banking market in the Middle East and Africa is projected to nearly double from $11.56 billion in 2025 to $22.3 billion by 2030, underscoring the urgent push for modernization and agility.
According to the EY GCC Banking Sector Outlook 2024 report, GCC banks will continue to benefit from strong capital levels, supporting their overall performance in 2025. The expansion of gas production in Qatar, implementation of economic transformation projects in the Kingdom of Saudi Arabia (KSA), and non-oil economic growth in Bahrain and the United Arab Emirates (UAE) will underpin the resilience of GCC banks this year. In addition, the Brent crude price is expected to stay above US$74 per barrel for 2025-27, which will help uphold banking sector resilience.
Credit growth in most GCC countries is broadly based on a strong project pipeline, with aggregate contract awards driven by infrastructure development, especially in KSA and the UAE. The positive trajectory is expected to continue in the near future. This outlook is supported by rising lending volumes, increased fee income, stable margins and effective cost management. As the cost of lending turns more favorable, GCC countries might expand their investments globally.
Mayur Pau, EY MENA Financial Services Leader, says:
“As we go into the first quarter of 2025, the GCC banking industry should remain strong due to considerable capital cushions, healthy asset quality indicators and adequate profitability. Furthermore, resilient economies, the region’s economic diversification efforts and enabling policies will support higher consumption and investment, further boosting the sector’s performance. The upcoming financial year looks to be a transformative period, with advancements in technology, shifts in consumer behavior and regulatory changes shaping the future of banking.”
Capco’s Top 10 Banking Trends in the Middle East 2025 report further highlights the transformation driven by customer demand for convenience, instant fulfillment, and integrated financial insights. Banks are adopting AI, cloud technologies, and open banking frameworks to remain competitive48. The rise of digital-first banks and the increasing role of gamification and improved data management are reshaping retail banking and payments, especially in Saudi Arabia, UAE, and Qatar.
In summary, the latest research portrays Middle Eastern banking as stable yet in the midst of a fintech-driven transformation. While traditional metrics like credit growth and capital adequacy remain strong, the sector’s future competitiveness depends heavily on embracing digital innovation, regulatory adaptation, and sustainability practices. Institutions that successfully integrate these elements are expected to lead the region’s banking industry forward in 2025 and beyond123458.
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