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As the Middle East's financial sector experiences rapid digital transformation and the fintech industry continues to flourish, the collaboration between established financial institutions and fintech companies is becoming more important.

Embracing this partnership will help businesses drive innovation, allowing financial institutions to offer Shariah-compliant banking solutions, while enhance customer experiences, and navigating the evolving financial landscape of the region.

Fintechs and banks in the Middle East: the opportunity

Once a threat, traditional organisations are now viewing fintechs as enablers rather than disrupters. Large banks are tapping into the start-up ecosystem to collaborate in areas like wallets, payments, investment intermediation, online client acquisition and more. And they’re not just developing these platforms but actively investing in them. The benefits to partnering instead of competing are clear:

Access to innovative technology: Fintechs bring cutting-edge technology and digital solutions to the table, which can help banks enhance their services and improve the customer experience.

Increased market reach: By partnering with fintechs, banks can tap into new customer segments and expand their market reach, especially in the rapidly-growing fintech scene of the Middle East.

Regulatory compliance: Fintechs often have a deep understanding of regulatory requirements and can help banks navigate the complex regulatory landscape in the region, ensuring compliance and reducing risks.

Cost efficiency: Collaborating with fintechs can help banks streamline their operations, reduce costs, and improve efficiency through automation and digitisation.

Innovation and competitiveness: Partnering with fintechs allows banks to stay competitive in the financial services industry by leveraging new technologies and staying ahead of the curve. Overall, the partnership between fintechs and banks in the Middle East can bring mutual benefits and drive innovation in the region's financial sector.

The big players move in

Financial exclusion has been a pressing reality in the Middle East, and it’s partly this opportunity that has supercharged the growth of fintechs in the area, servicing audiences that were historically underserved by traditional banks. Initiatives driven by the government have even been launched to address the issue and to encourage the uptake of innovative digital financial services and to accelerate the growth of fintech enterprises.

The leading cloud service provider Google hasn’t missed the boat either. The launch of a new Google Cloud region in Saudi Arabia is a strategic move, supporting the digital entrepreneurship drive and bolstering the Kingdom’s regional computing hub ambitions. Providing advanced cloud services to SME and start-up businesses, the move is projected to generate 148600 jobs within the economy by 2030, contributing significantly to the economic landscape.

Google’s cloud services allow clients access to cloud computing, which reduces the need for physical data centres, benefitting the banking sector, insurance sector, and the fast-emerging fintech industry in the Kingdom.

Innovative digital Islamic financing

Contributing to this ecosystem, Ta3meed, a leading Islamic fintech in trade finance in Saudi Arabia, leverages Mambu’s SaaS banking platform to deliver innovative digital Islamic financing for SMEs and investors in the region.

Mambu’s agile core banking technology integrates into Ta3meed’s automated Purchase Order (PO) financing platform. The combined solutions support the vision of accelerating the digital transformation of financial institutions combined with Sharia-compliant financing and investment solutions in Saudi Arabia.

The partnership will also focus on the financial inclusion and accessibility of working capital finance to small and medium-sized enterprises (SMEs), who are an important contributor to Saudi Arabia’s economic development and currently account for 8.3% of banks and financing companies’ total credit facilities.

Trends of tomorrow

Financial organisations that partner with fintechs can look forward to a suite of benefits – not only for themselves but for the customer, the economy and the betterment of the country.

  • Increased collaboration: We can expect to see more partnerships between fintech companies and traditional banks as they work together to leverage each other's strengths and drive innovation in the financial sector.
  • Focus on customer experience: Fintech and bank partnerships will likely prioritise enhancing the customer experience by offering more personalised, convenient, and seamless financial services through digital channels.
  • Expansion of services: Fintech and bank partnerships may lead to the development of new products and services that cater to specific customer needs, such as AI-powered financial advice, digital lending platforms, and blockchain-based solutions.
  • Regulatory compliance: With the evolving regulatory landscape, fintech and bank partnerships will need to focus on ensuring compliance with regulations while still delivering innovative solutions to customers.
  • Emphasis on cybersecurity: As digital transactions increase, cybersecurity will be a top priority for fintech and bank partnerships to protect customer data and prevent fraud.

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