MEA Banking in the Digital Era: The Race for Relevance is On
Naoures Ben Brahim, Customer Value Director at Temenos MEA, explores how banks across the Middle East and Africa must fast-track digital transformation—or risk losing ground in a rapidly evolving market.
In the Middle East and Africa (MEA), banking is changing fast and not just on the surface. The region is seeing a wave of digital disruption that’s reshaping what customers expect and how financial services are delivered. MEA regulators are increasingly enabling financial innovation by licensing digital banks, introducing open banking frameworks, and establishing regulatory sandboxes to support safe and agile Fintech development
Today, it’s no longer just about expanding market share; it’s about staying relevant. Banks have historically focused on growth within their comfort zone, but the game has fundamentally changed. The risk now isn’t just losing customers. It’s becoming irrelevant in a market driven by immediacy, convenience, and digital-first experiences, where AI is playing a fundamental role, and a large branch network is becoming less relevant in digitally mature countries. Also, having a limited vision and a rigid business model, focusing too much on a single segment or concentrating excessively within a portfolio, can be damaging to banks, leading to liquidity problems or declining credit quality.
Legacy systems: The invisible anchor
The rise of FinTech, neobanks, changing customer expectations, AI use cases across the banking value chain, and increasing pressure on legacy infrastructure are converging to create a defining moment for the MEA region’s banking sector. However, many banks have focused on modernizing front-end experiences, while several analyses show that more than 50% of MEA banks still rely heavily on legacy back-end systems, creating bottlenecks and operational inefficiencies. This is like renovating the façade of a building while ignoring its crumbling foundations. Without addressing core infrastructure challenges, banks risk undermining the full potential of their digital transformation efforts. Modernising the core is now non-negotiable.
For example, STC Bank’s successful go-live with Temenos Core in February 2022 marked a transformative leap in scalability, agility, and innovation for the bank—now processing over 5 million daily transactions with high reliability. By leveraging Temenos’ out-of-the-box capabilities, microservice-based architecture, and automated CI/CD pipelines, STC Bank has accelerated product delivery while minimizing complexity. The deep, collaborative partnership—including onsite support and open technology integration—has empowered STC Bank to evolve rapidly and confidently. It is also exploring how new offerings and AI-driven efficiencies from Temenos can further improve operational efficiency, development workflows, and delivery timelines.
This is a powerful example of how full-stack modernisation can help banks compete and grow in a digital-first era.
Meeting new customer expectations
Today’s banking customers want everything instantly: onboarding, payments, personalised offers, and rock-solid security. This is especially true across MEA, where mobile-first is now the norm.
The 2024 West Africa Banking Industry Customer Experience Survey shows that customers are more value-driven than ever, with many turning to digital channels due to cash shortages and branch constraints. In Ghana, 73% of retail customers now use mobile money every week, and interoperability has become a key driver of satisfaction.
Meanwhile, EY’s MENA 2024 Banking Report highlights how AI is fast becoming a key differentiator in the region’s financial services. Customers expect smart, seamless, and secure experiences, and banks must deliver or fall behind.
Our Temenos Value Benchmark shows that Retail banks ranked AI-driven customer attrition risk insights for front office staff (importance average of 4.2/5) and embedded finance with lifestyle management (importance average of 4.1/5) as top strategic priorities.
Nearly half of the region’s customers now consider security and fraud prevention a top priority when choosing a bank. And younger generations simply won’t tolerate poor mobile experiences. If we can’t meet those expectations, banks risk becoming irrelevant.
Fintechs and Neobanks are raising the bar
FinTechs are setting a new standard for digital agility and customer experience. According to a report from McKinsey, the MENA region is expected to be the fastest-growing region globally, with 35% annual growth in Fintech net revenue until 2028, compared with a global average of 15%. This is primarily because the Fintech share of banking sector revenues in the Gulf Cooperation Council (GCC) has room to grow, representing only 1 to 2%, compared with 3 to 5% in the US and the UK.
These challengers benefit from operational efficiency and AI to achieve profitability. They are winning because they’re built on flexible, composable technology that allows rapid change, and leveraging partnerships and acquisitions to accelerate growth. Traditional banks need to learn from this and adapt their own models accordingly.
Investing for innovation and sustainable growth, not just survival
Our Temenos Value Benchmark shows that the top-performing banks in MEA are making bold moves. They’re investing more than half (59.7%) of their IT budgets into growth and innovation, not just maintenance. And it’s paying off. These banks are achieving cost-income ratios of 26.8% (half the industry average) and returns on equity of 29.0%, three times higher than peers.
Banks that shift from a “keep the lights on” mentality to an innovation mindset are the ones unlocking efficiency and relevance.
Partnering for transformation
The truth is, no bank can go it alone anymore. Transformation at speed and scale requires strategic partnerships. I’ve seen how working with the right partner, one that understands core banking, compliance, and customer experience, can make the difference between a good idea and a great outcome. In a rapidly evolving market, co-innovation takes priority, making the build-versus-buy debate less relevant.
For example, Bank Albilad’s rapid transformation into a leading digital Islamic bank was powered by Temenos’ end-to-end banking platform, enabling the launch of its retail business in just six months and new products in as little as three days. With low-code configurability, reduced COB processing time, and seamless scalability across subsidiaries, Temenos has helped Bank Albilad accelerate innovation, reduce IT costs, and expand with agility. Today, 71.0% of new retail customers are onboarded digitally, reflecting the bank’s commitment to inclusive, future-ready banking aligned with Saudi Arabia’s Vision 2030. Backed by a renewed 15-year partnership, Bank Albilad continues to evolve with Temenos – driving speed, flexibility, and long-term growth.
Still, many banks hesitate because they fear disruption. But doing nothing is the greater risk. Incremental, low-risk modernisation with a trusted partner can help banks evolve without upending their entire operation.
Relevance requires a mindset shift
Digital transformation isn’t just a tech investment; it’s a mindset. It’s about embracing agility, innovation, and customer-first thinking.
Banks need to reimagine how they deliver value across every channel, product, and process. The banks that will lead in the years ahead are those willing to act boldly, embrace change, and rethink the status quo.
The future of banking in MEA isn’t just digital; it’s composable, customer-led, and relentlessly adaptive. The race for relevance is on, and there’s no time to lose.
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