Executive Summary
Adoption of CBDC
- CBDCs are gaining global momentum as more countries research and develop projects, with integration into financial systems enabling cross- border transactions, retail payments, and innovative applications, while also improving financial inclusion and cross-border payments through smartphone access and reduced production costs for central banks.
Development of DeFi and Crypto
- The Middle East's DeFi market is experiencing a unique dynamic, with some countries embracing cryptocurrency, while others are creating regulatory frameworks to attract crypto firms and support blockchain adoption, which could lead to the development of tokenization or real- world assets and the adaptation of stablecoins as one of the payment methods in online and offline.
Open Banking
- Open banking systems will be more developed. That allows startups and banks to create innovative financial services in different verticals (payments, neobanks, credit scoring, etc)— more consumers can use a wide range of financial services. Open Banking market in Arab countries will grow by 25% annually within five years and can reach $1.17 bn.
Niche Fintech
- Fintech services in the Middle East are growing, particularly in niche segments, as traditional banks struggle to compete due to high costs and slow service delivery. There may be new fintech products on the market, such as those for gig-workers.
Green Fintech and Sustainable Finance
- Fintech companies and banks will start to incorporate ESG practices into their products and operations, implement special features and create relevant products.
AI-Driven business and services
- Most fintech companies and banks will use AI to differentiate their products and services, with a focus on integrating AI capabilities into digital products to generate additional revenue and improve the overall experience for customers. We can expect the emergence of new AI applications and the mass use of LLM in their operations.
Upgraded security and authentication
- This also means the spread of biometric authentication, asTraditional forms of authentication, such as passwords and PINs, are vulnerable to hacking. Fintech companies and especially banks can integrate fingerprint technology and iris recognition at their ATMs or mobile apps.
