How the future of retail banking is evolving in the Middle East

In this episode of the MENA Financial Services podcast, Mayur Pau and Abdalla Awad discuss the future of retail banking in the Middle East, exploring key themes such as lifestyle banking.

Key takeaways:

The MENA region's retail banking is rapidly digitizing, driven by high mobile usage and a tech-savvy youth.
Future banking in MENA will focus on digital services, AI personalization, blockchain, embedded banking, and foreign bank expansion.
Improving financial inclusion, MENA's regulatory frameworks are adapting to support digital transformation and data security.
Banks are integrating into daily life through Super Apps, merging financial services with lifestyle activities.
Traditional banks must innovate and collaborate with FinTechs to survive in the evolving MENA banking landscape.

EY Host: Mayur Pau

Hello! Welcome to the EY MENA Financial Services podcast, where we will explore how banking is evolving in the Middle East. I am Mayur Pau, and I lead our MENA Financial Services practice.
FinTechs, Big Techs and super apps are disrupting traditional banking models, while regulatory frameworks struggle to keep pace.
The Middle East region is unique in this transformation. With high mobile penetration, rapid digital adoption and a young, tech-savvy population, it is one of the fastest-growing FinTech markets.
In the past five years, the retail banking sector in the Middle East has undergone significant transformations. The rise of digital banks is redefining customer experiences, while FinTech companies are addressing localized challenges, such as remittance services for expatriates, who make up a substantial proportion of the population.
Lifestyle integration is also on the rise — banks are embedding themselves in apps used for food delivery services, e-commerce and even transportation. Apps now offer integrated payment solutions, blurring the lines between banking and lifestyle platforms.
So, where is the retail banking industry headed in the next few years?
I’d like to welcome Abdalla Awad, one of our Financial Services sector Partners at EY MENA to today’s podcast. It’s great to have you with us today, Abdalla.

EY Speaker – Abdalla Awad:

Thanks Mayur, it’s great to be here.

Pau:

So Abdalla, where does the retail banking sector stand in the MENA region compared to the global banking sector?

Awad:

So, Mayur, you know, the Middle East is quite unique when it comes to retail banking. We have a very solid regulatory framework. And while regulators are closely following global trends, they’re doing so in a very calculated way that’s tailored to the specific needs to their local markets. This means that we are seeing a balance between innovation such as digital wallets, artificial intelligence (AI), mobile-first banking, as well as infrastructure development, including national ID systems, real-time payment rails and secure data-sharing platforms.
All of this is happening at a time when the region is also undergoing a significant change. Many countries, as you know, have set ambitious national strategies, such as the Saudi Vision 2030, the UAE digital strategy, and they have also launched wide-reaching initiatives to accelerate progress. A key focus across these programs is improving financial inclusion. That’s why you can see banks now has pushed themselves to offer more than basic services and to create more value-added services for their retail customers. That’s why we see today that, more than 50% of the GCC residents are regularly using digital wallets and mobile banking applications, which is a huge jump from 20% to 25% range that was a decade ago.
This high adoption rate isn’t about technology; it’s the result of an intentional policy, ecosystem building and the shift of how banks view their role. Initiatives like FinTech Hive in UAE and Open Banking Program in Saudi Arabia have helped building momentum. Their traditional banking model is being reshaped to prioritize convenience, access and users experience.
That said, there’s still ground to cover, especially when it comes to open banking and Banking as a Service (BaaS). Globally, these areas are more mature. However, we’re seeing encouraging movements in Saudi Arabia and Bahrain, for example, that they have already rolled out open banking frameworks, while also UAE is actively piloting its own. However, on the BAAS side, most countries still don’t have clearly defined guidelines. But again, this pace is deliberate, not slow. The GCC’s strong regulatory foundation means that the region is well-positioned to close the gap in a way that’s both sustainable and locally relevant.

Pau:

Great, Thanks Abdalla. Given that there’s a significant rise in the digital adoption within the MENA market, what does the future of retail banking look like for the MENA region?

Awad:

Okay, so Mayur, retail banking will be defined by four key drivers. The first one is digital-only services. The second one is AI-driven personalization. The third one is embedded banking. And finally, blockchain and crypto adoption.

If we talk about digital-only services, we’re seeing a major shift in how customers interact with banks. Traditional branches are no longer the go-to for everyday banking. In fact, today around 60% of the MENA residents prefer using digital channels — like mobile apps and online platforms — for routine, low-value transactions such as transfers, bill payments and account inquiries. And that number is expected to increase to 75% to 80% by 2030, especially as younger, digitally native generations become the majority.

This means that the strategic ambition for banks should be clear:

a) First, fully digitized low-value, high-frequency transactions.
b) And second, redirect high-value or complex transactions to either optimized physical branches or virtual advisory channels.

Branches shouldn’t disappear — but they need to evolve. They should act more like a sales hub or advisory centers. That means rethinking the branch’s layouts, staffing and even location strategies. Think smart service hubs equipped with AI-powered advisors, biometric authentication, paperless onboarding and even immersive financial planning tools. Walk in and get recognized instantly. Move from mobile to in-branch without repeating yourself. Speak to a human, but one who knows already your context — your data, your goals and your recent touchpoints.

The next-generation of branches won’t be about footfall — they’ll be about outcome-driven experiences. Whether you're finalizing your mortgage or restructuring your SMEs [small and medium enterprises] finances, or planning your retirement, the environment should be designed to feel seamless, integrated and even predictive.

But here’s the catch: while digital is essential, human touch still matters — especially in moments that impact trust and lifetime value. A key point that I always stress with clients is digitalization should be ambitious but never come at the cost of empathy or personal connection. The winning model will be a hybrid — seamless digital for everyday needs and optimize the human support where it counts most. So that's on the first aspect.
On the second point around AI-driven personalization:
AI and data analytics will allow banks to predict customer’s needs and offer them hybrid personalized services. Imagine a bank suggesting investment opportunities through AI based on your day-to-day behaviors such as consumer spending and lifestyle choices offering financial advice tailored to your long-term objectives.
And the third one was embedded banking: What does it mean?
Embedded banking means Integrating banking into daily activities — whether it's a child saving money, millennials shopping online or SMEs managing finances.
And finally, blockchain and crypto adoption:
The UAE and Saudi Arabia are piloting blockchain solutions for trade finances and payments. While crypto adoption is still uncertain due to regulations, central bank digital currencies (CBDCs), as we call them, could become a mainstream in the region.

Pau:

Excellent, Abdalla, some very valid emerging themes. You mentioned digital-only, AI driven personalization, embedded banking. And then we even talked a little bit about blockchain and crypto. So, given some of these trends, do you think financial inclusion will improve in the MENA region?

Awad:

Absolutely. Financial inclusion in the MENA region has improved rapidly over the past few years — and digital banking has been a big part of the story. Before COVID, only around 38% of the adults in the region had access to financial services. That number rose to 48% in 2023, thanks to a combination of mobile-first banking, regulatory mandates for basic accounts and targeted programs focused on youth, women and rural communities. While it’s still below the global average of 69%, the region is clearly closing the gap.
Over the past few years alone, more than 35 million people in MENA gained access to financial services. Central banks have also played a major role in this — by adopting national financial inclusion strategies and pushing banks to reach underserved segments. And with smartphone penetration rising fast, especially in countries like Egypt, Jordan and Morocco, the unbanked population is expected to shrink even further. The target now is to reach 60% to 65% inclusion across MENA by 2030 — which would be a massive shift of how individuals and SMEs participate in the digital economy.
This is about more than just opening accounts — it’s about empowering people to save, borrow, invest and grow. And digital is proving to be the most scalable, cost-efficient way to make this happen.

Pau:

That's great to hear Abdalla. As a financial services leader, financial inclusion is very close to my heart, and it's great to hear that 60% to 65% is the expected adoption rate or the financial inclusion rate, I should say, in the future, which brings us much closer to the global market, assuming the global market stays the same.
Q4. Before I pivot slightly to a different topic, what do you see as the biggest regulatory changes in the Middle East?

Awad:

So, Mayur, regulation plays a pivotal role in shaping the future of retail banking in MENA region. And there are four key changes that we need to look after:

The first one is digital banking regulations. Historically, the region focused heavily on technological innovation — investing in new tools, platforms and digital capabilities. But as customer demand for digital-first experiences surged, it quickly became clear that innovation alone was not enough. Regulators began stepping on over in the last two to three years to build dedicated frameworks that could support the rise of fully digital banks. As you may know, most digital banks are retail-focused banks, targeting underserved and digitally savvy customer segments with streamlined, mobile-only offerings. This shift has led regulators to recognize that digital transformation and regulatory clarity must progress in parallel. And that’s exactly what we’re seeing now — clearer licensing models, sandbox environments and tailored guidelines to help digital banks scale responsibly and sustainably. So that’s the first one.
The second one is open banking. As mentioned previously, this is a hot topic in the MENA region and it helps providing more efficient solutions to banks, FinTech entities and overall entities that operates within the ecosystem of financing. This helps in creating more competition and better services to the customers.
And the third change is around data privacy. With digitalization comes the challenge of protecting customers’ data. Regulations across the MENA region are focused on strong cybersecurity frameworks to ensure safe transactions to their customers.
And finally cross-border payments. The MENA region is also exploring seamless cross-border payment systems to facilitate trade and remittances, which is a major need in this expat-heavy region.

Pau:

Right, So, you mentioned the four regulatory challenges around digital banking, open banking, data privacy and cross-border payments.
Do you think the regulators are balancing innovative themes that are emerging and security effectively?

Awad:

Yes, but it’s challenging. While frameworks promote innovation, they must also ensure financial stability and protect against risks such as data breaches.

Pau:

It's a great insight there on the regulatory side.
Abdalla, so you know, we've clearly covered quite a lot of ground there. But if I now sort of move away to everyday life, you know I’ve been in the MENA region for 13 years, you were born and bred in MENA. How do you think retail banking is going to change lifestyle in the MENA market?

Awad:

Yeah, so Mayur, we have all noticed and all banking customers have noticed that banks are increasingly embedding themselves into the apps that they use on their daily activities — and that’s exactly where Banking as a Service or BaaS, comes into play. Instead of customers logging into a bank application, the bank is now coming to them — through a platform that is already used by them for shopping, mobility or communication. A clear example of this is Careem, which is a super app at MENA that is well known in the region, and integrates payments, transfers and even bill settlements within its ride-hailing and delivery services — which is enabled by partnerships with regulated financial players.
On the infrastructure side, some banks’ platforms are empowering and developing embedded banking solutions for startups and FinTechs, and to enable them to offer current accounts, payments, and KYC onboarding directly inside their own apps — without building the core banking rails themselves.
This is the future of banking: where your lifestyle app handles your money, and your bank works silently in the background — in a modular, invisible and fully embedded approach in your daily life.

Pau:

Right, now, I absolutely concur with you, Abdalla. You know, I think a number of super apps that we have available to us today compared to five years back is significant. But I still feel there is a disruptor out there in the market, and we're going to see someone emerge that's going to be able to bring a lot of these things that you've just been talking about in an efficient manner, as well as making it a more commercially viable proposition for the provider. Do you have a perspective on this?

Awad:

Yes, absolutely Mayur. Embedded finance is now on the rise — and it’s changing how people access financial services in real time. Imagine browsing an e-commerce site and getting a loan approved instantly at checkout, or buying travel insurance with a single click while you’re booking your flight. This kind of seamless integration makes banking invisible, but far more impactful. We’re also seeing similar integrations on platforms in the MENA region, where finances are embedded directly into the shopping journey. This trend is not just about convenience — it’s about bringing banking to where people are in the context, and at the right moment. That’s the real power of embedded finance.

Pau:

Q8. Excellent, bringing banking to where people are. So, given your point of view on the super apps, Abdalla, what can we expect in the banking landscape in the next five years?

Awad:

Mayur, it’s going to be less probably about what we expect from banks; its going to be more about what bankable population will demand. If we rewind five to 10 years ago, regulatory licenses were limited — mostly around traditional banks, foreign branches and basic payment services. Fast forward for today, we’re seeing that the landscape has expanded to include digital banks, payment gateways, crowdfunding platforms and even other types of licenses. This shift have opened the door for new players and new business models.
For example, at EY we’ve seen this firsthand — we have worked with a client in the MENA region to help them transform their digital wallet business to become a fully digital bank through the journey of licensing, integration, compliance and business model redesign, which is a great example of how regulations and strategies should work hand-in-hand.
So, as regulators grow more flexible and banks increasingly partner with FinTechs, we’ll see financial services become more embedded, and even more inclusive, and more invisible. So, will banks still be here in 10 years? The answer is absolutely. But they won’t be a destination — you won’t go to the bank. Banking will come to you.

Pau:

I really like that, Abdalla. Banking will come to you.
So, you see banks still being there in this space or in our sector 10 years from now. But do you think the traditional banks really will survive with the rise of FinTechs and Big Techs?

Awad:

Absolutely, but only if they adapt. Collaboration with FinTechs, investment in technology and a customer-first approach will be the key for survival.

Pau:

Thanks for sharing these fascinating insights, Abdalla. Especially around how the traditional banking model needs to adapt in order to be fit for the future and the rise of super apps. Covered a lot of ground today – around digital, around the regulatory environment, as well as around lifestyle banking.
Thanks for being with us here today, Abdalla.

Awad:

Thank you, Mayur

Pau:

That’s it for today’s episode on the future of banking and in particular, retail banking. Stay tuned for our next episode in the MENA Financial Services podcast series which is also available on ey.com, where we’ll dive deeper into other financial services-related topics.
Thanks for listening.

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Mayur Pau

EY MENA Financial Services Leader

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Episode 1

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18m 36s

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How the future of retail banking is evolving in the Middle East

Key takeaways:

EY Host: Mayur Pau

EY Speaker – Abdalla Awad:

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Presenters

Mayur Pau

In this series

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