The hub of MENA's fintech innovation is cloud connection

Saudi Arabia, alongside Dubai and Bahrain, has consistently emerged as a leader in digital banking within the Middle East. A remarkable 76% of banking customers in the country utilize online or mobile applications, showcasing a robust digital banking ecosystem. McKinsey's insights indicate that key features of Saudi digital banking include loyalty programs (53%), mobile discount coupons (51%), and virtual prepaid debit cards (50%). Notably, substantial investments in technology, amounting to $12 billion over the next decade by banking and security firms, underscore the region's commitment to digital innovation. Recent launches of public cloud data centres further highlight the Middle East's growing technological landscape.

Despite being perceived as a cloud laggard in comparison to other regions, recent developments suggest a potential acceleration of the Middle East's cloud adoption. The digital transformation imperative is not limited to traditional players in the fintech industry; neobanks and challenger banks must also align with evolving technology trends to cater to the underserved and unbanked populations. These innovative financial service providers, offering branchless digital solutions, mobile applications, budgeting tools, and streamlined loan approval processes, address the diverse needs of consumers, ranging from ex-pats to migrant workers.

For financial service providers, being born in the cloud or prioritizing cloud connectivity in infrastructure innovation is crucial. The COVID-19 pandemic has played a pivotal role in intensifying interest in cloud technology, prompting rapid implementation. Fintech companies, unencumbered by traditional banking structures, have demonstrated the viability of mass-market growth, providing a blueprint for scaling exponentially.

In the Middle East, neobanks and challenger banks thrive by offering digital alternatives, considering cultural nuances, and launching community-based digital banks, especially appealing to the region's sizable millennial population. Beyond global cloud giants like Microsoft Azure, Amazon Web Services, Oracle, and IBM establishing a presence in the Middle East, there remains room for local and regional cloud providers to succeed. While challenges such as migration complexities, security enhancements, and cross-border legal considerations persist, the cloud's affordability, processing power, and expansive data storage options are vital for the Middle East's developing nations. Initiatives like Bahrain’s cloud-first policy, the UAE Vision 2021, Saudi Arabia’s Vision 2030, and the New Kuwait Vision 2035 demonstrate a commitment to cloud adoption. Regulatory frameworks, exemplified by Saudi Arabia's Cloud First Policy, contribute to a 16% increase in cloud services usage and signal a potential $10 billion market for cloud services in the Kingdom by 2030.