The banking industry is experiencing massive digital disruption, with online deposits, mobile apps and electronic bill payments becoming the norm.

In the Middle East, the payments landscape is heading for an inflection point, says Al-Rai daily.

Although the region’s population is digitally savvy – smartphone penetration has reached 80 to 90 percent in key markets – the region has continued to rely heavily on cash.

Only about a third of retail transactions are conducted electronically, thanks to factors such as underdeveloped infrastructure and services for digital payments, underbanked consumer and merchant segments, and a cultural bias for dealing with cash.

However, new government and regulatory initiatives, along with the entry of new local, regional and global payment service providers, are rapidly changing.

In addition, the COVID-19 pandemic has accelerated digital adoption and flight from criticism, as has happened in other regions.

The rise of fintech coupled with a shift in consumer preferences has disrupted the banking and financial industry across the MENA region.

This was further enhanced as governments encouraged digital transformation in the financial services industry in order to maintain its competitiveness globally while keeping pace with the evolution of customer preferences.

In a recent report, Standard & Poor’s said that large banks must adapt to current developments because their ability to defend their retail market share from competitors largely depends on how advanced their digital offerings are.

Conversely, Gulf digital banks have to overcome high barriers to maintain market share, as they may have to invest heavily in acquiring younger clients and underserved target areas by existing banks if they want to capture a large market share.


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