The global fintech industry is booming, with revenues set to reach US$294.5 billion by 2027. Notably, fintech has considerably impacted the realm of payments and remittances. The 2021 World Bank Findex data survey revealed that the percentage of adults engaging in digital payments has surged from 35 percent in 2014 to an impressive 57 percent in 2021.

The Gulf Region is at the Forefront of the Fintech Revolution

According to Business Unit Head, Banking and Financial Services at WNS Jay Venkateswaran, we are witnessing a thriving fintech revolution in the Gulf region. Traditional banks have also established digital banking arms to seize new opportunities. Moreover, major players in travel, telecom and ecommerce are also entering the fray as white-labeled partners, harnessing the support of fintech firms. A staggering 85 percent of fintech firms in the Middle East and North Africa countries focus on payments and remittances. The Gulf countries witness higher outgoing remittances than the United States, with a significant portion flowing into emerging money markets, such as India, the Philippines, Bangladesh and Indonesia.

The Gulf Council Cooperation stands tall as a beacon of fintech innovation, boasting four prominent fintech hubs: the Abu Dhabi Global Market; Bahrain FinTech Bay; Fintech Saudi; and the FinTech Hive at the Dubai International Financial Center. Saudi Arabia, in particular, wholeheartedly supports the fintech industry, fostering the development of groundbreaking fintech products, services and business models.

The Rise of Banking-as-a-Service

Amid this exhilarating fintech landscape, Banking-as-a-Service (BaaS) is gaining traction. A study by Arthur D Little predicts that BaaS revenues in the Middle East will reach US$5 billion, accounting for four percent of the region’s total banking income. BaaS offers an unprecedented opportunity for both banks and non-banking entities to expedite the time-to-market for innovative financial products.

For traditional banks grappling with the pressures exerted by disruptive entrants, BaaS could be the ideal solution. By combining digital technology platforms and finance, BaaS enables revenue growth at low costs. With consumers craving comprehensive offerings within a single app, the ‘as-a-service’ model could revolutionize how banks deliver financial services. BaaS acts as the perfect middle ground between legacy players and new disruptors.

Moreover, the agile and scalable nature of BaaS makes it an ideal vehicle for entering new markets. Distributors can tap into new revenue streams at attractive margins while gaining deeper insights into consumer behavior through financial data analysis.

Rapid Development Requires Strong Support for Success

In the coming years, global majors will likely enter the United Arab Emirates and further disrupt the financial services industry. Financial institutions must be ready to ride the fintech wave, strengthening their lending and payment capabilities. To accomplish their goals at speed and scale, businesses require support.

In the United Arab Emirates, banks face unique challenges, including a talent crunch in critical areas such as risk management, financial crime and capital markets. They also seek dedicated tech and digitization support to drive the seamless adoption of digital banking and payments.

It is thus crucial to collaborate with strategic partners proficient in the Middle East banking systems and operations, with expertise in digital technologies, cloud computing, AI and data analytics. Their ability to operate in convenient time zones can bring enormous benefits.

At WNS, we have nurtured long-standing partnerships with global banks, fintechs and neo-banks, supporting them through end-to-end operations management, advisory services and transformation initiatives.

A notable example is our decade-long partnership with a Middle East regional commercial bank, encompassing various service areas, including trade consumer credit operations, corporate credit and financial spreading, retail and commercial banking, payroll and cards, and anti-money laundering.

Similarly, our relationship with a leading bank in the United Arab Emirates has grown from strength to strength, characterized by a shared focus on transformation and innovation. We have co-created success by establishing global operating models, driving automation, enhancing policies, undertaking process re-engineering and implementing robust business continuity planning through multi-city setups.

The rise of fintech and digital banking in the GCC represents an unparalleled opportunity for financial institutions to grow and innovate. They must leverage technology, data analytics and AI to achieve agility, adaptability and customer-centricity. Moreover, building a workforce with skills to navigate the digital revolution will be paramount. By cultivating strategic collaboration and adopting a forward-thinking mindset, banks can position themselves at the forefront of this transformative era.