July 18, 2024

The Banking Arena within the GCC facing all crisis and still undergoing huge paradigm shift


The marking of the commencement of the entire GCC’s banking and finance industry, was initiated with the opening up of the Oriental Bank’s initial branch in Bahrain over a century ago.

Another century later, the business faced its biggest hurdles unlike any it has viewed in ever before. Most demanding and recent among these has been the disturbing bearing of the COVID-19 pandemic, and the adjoining unique uncertainty of the post-COVID era, that springs out before us for the probable future.

From an operative perspective, the commerce has been traumatized to its core, as like elsewhere in the globe, the territory banks ran to familiarize robust dealings to guard their workforce and client, such as wide-ranging campaigns for remote employment, as well as familiarizing reprieve efforts such as funding capacity deferrals and overdraft limit upsurges to sustenance of clients and the wider economy.

Many banks are yet to see the full power of COVID-19 on their funding portfolios, noteworthy portions of which have been subject to such postponements. Moreover, the pandemic crash into during a period of factually low oil prices, which collective with the factors stated above, is exerting negative pressure on liquidity and profitability.

In short, the industry is facing a period of heightened uncertainty. However, as crucial chauffeurs of financial progress and variation, banking and financial services are significant sectors for administrations across the GCC.

Moreover, as the latest edition of KPMG’s GCC registered bank outcomes report makes vibrant, financial tendencies in the territory such as an asset and productivity progress over 2019 were largely encouraging, meaning the sector was already in a robust situation to grip the foreseeable gravities on liquidity and revenue. Indeed, it has proven robust so far.

Another significant contest that will continue into the forthcoming year and beyond is one that precedes but has been catalyst by the pandemic – specifically with the commencement of global digitalisation and the enduring upsurge of FinTechs. For a long time, the global banking industry was suspect of being rooted in its habits, and restrained to transformation, and this was no less true in the GCC.

However, this perception was shifting Post-COVID all cheers to huge levels of investment in technology and more active partnerships with FinTechs, and is now out-of-date as banks swiftly pivot to meet alterations in client conduct – which is now vague to what it was just months ago.

The nations clients are well known for their fondness for cash, even in the digital era, but the rapid shift to living under the circumstances of the pandemic has seen a spectacular upsurge in the use of online payments, for an illustration.

A recent survey by Visa displayed that 49 percent of UAE clients have been spending online more because of the pandemic, with three out of five (61 percent) now utilizing the cards or digital wallets more to do the payments online instead of opting for cash on delivery. In Saudi Arabia, according to a report by Mastercard, 77 percent of clients are outlaying more currency online.

Banks in the territory have necessitated to reply swiftly to this new certainty, and in Bahrain, we are farsighted a plenty of indication of this – a production of virtual branches, mobile banking apps, WhatsApp banking and so on.

Digital Banking
This crucial need to rapidly familiarize and respond to the digital necessities of today still poses a noteworthy roadblock for the industry, however, it is also perhaps its greatest prospect.

It is worth restating that while Covid-19 has indisputably catalysed a digital alteration in client conduct, across the territory, we were already viewing rapid progress in digital banking. Online payments dispersion across MENA had already reached 76 percent, which is expected to upsurge.

E-commerce is predictable to mount from $8.3bn in 2017 to $28.5bn in 2022. In the GCC, smartphone infiltration is at well over 100 percent. Moreover, digitalisation of the Islamic Finance sector presents an exclusive prospect to the territory banks, and nowhere more so than for Bahrain, which is a global leader in this arena.

The Kingdom has surpassed the territory in the Islamic Finance Development Gauge (IFDI) for eight consecutive years, and the latest Islamic Finance Development Report emphasized FinTech as a crucial pointer and shaper of the Islamic Finance industry.

There is a clear prospect for the GCC’s banks to mature new products, services and revenue streams that will perceive them not just endure these impulsive times but flourish in them. For the sector to innovate they will require to view more alliance with forthcoming FinTechs, and both banks and FinTechs themselves are flattering better at enabling this. In Bahrain, recognising the vibrational variation experienced by financial services firms, and as part of its ongoing creativities towards financial digital transformation, the CBB has recognized a steadfast FinTech and Innovation Unit.

Open banking
Thanks to these efforts, Bahrain is household to the territories initial onshore FinTech supervisory sandbox, where presently more than 25 FinTechs from all over the globe are testing their technologies.

One of the first alumni from this sandbox – Tarabut Gateway (TG), the territories initial open banking substructure provider – partnered with Bahraini banks to support them roll-out open banking services.

The CBB is successively attracting this ecosystem, making it even comfortable for banks to collaborate, innovate and grow. Recent expansions include the launch of FinHub 973, a FinTech podium that offers conventional banks and FinTechs with a virtual space to partner and join forces; and the Bahrain Open Banking Framework (BOBF), a usual piece of guiding principle for open banking and the initial in the world to integrate Islamic Finance.

There are numerous ranges for enhancement, but ultimately the GCC finance network has been mounting more supple, innovative, open and progressive for some time now, as has its governing landscape. The forthcoming GCC RTGS system for cross-border payments is a prime illustration of boosted native partnership and amalgamation that will rationalize dealings between GCC nations.

This is a definitive gamechanger for the industry in a territory where uneven market dynamics and governing standards can make partnership tricky and executing digital creativities at scale is expensive.

For the banking sector in Bahrain and the widespread territory, its most projecting hurdle is also its chief prospect: disruption. Those banks that grip innovation and revolution; that are set to affiliate with, conjoin with and learn from alert as well as modern swifter FinTech; that can retort to the global alteration in client necessities – those are the banks that will prosper in the so-called “new normal”. Fortunately, those are the banks that have been powering in the momentous GCC’s spectacular progress in banking since its modest initial stages in 1920s in Bahrain.



ESG Sustainable Finance: Operating with the Accountability and Accurate Response for the future benefit
turn-on-2917049_1280_Automation-transforming financial services to a more human-focussed Industry
Automation-transforming financial services to a more human-focused Industry
tierra-mallorca-NpTbVOkkom8-unsplash_The Vital force to reckon for recovery post the crisis is the path to make a Sustainable Investment
The Vital force to reckon for recovery post the crisis is the path to make a Sustainable Investment
  • logo banner warba
  • Mutual Trust Bank Plc
  • Ahli United Bank


The business landscape is going through continuous change, which means that there are constantly new challenges arising in HR. This blog entails on few of the major challenges arising in 2024
Representational Image
ACCA announces the addition of new Emirati members to its Members’ Advisory Committee with a government-led goal of achieving a 10% increase in Emiratisation of the skilled workforce by 2026
CyberKnight announces VAD partnership with Forescout for META. CyberKnight to offer complete asset intelligence and control across IT, OT, and IoT to Forescout.