Digital Banking in the Middle East: Top 5 Neobanks To Keep An Eye On
The Middle East North Africa (MENA) is a blossoming region in fintech, especially when it comes to banking technologies. And as far as untapped potential goes, the MENA region is perfectly poised to become the next bubbling hub of digital banking innovation.
According to data, the fintech sector in the Middle East amassed a 30% compounded annual growth rate (CAGR) in the past year, and the predicted capital funding will reach 2 billion USD by the end of 2022. The potential for neo or digital banking in the region is enormous, as is evident from the expanding investment in the sector. It is expected that in 2022, about 465 fintech firms in the Middle East will raise over $2 billion in venture capital funding, compared to the 30 fintech firms that managed to raise $80 million in 2017.
Despite the digital banking Middle East scene has lagged behind Europe and North America due to the slower adoption rate of modern banking standards, recently the Middle East countries have made notable waves in the neobanking sector. Bahrain, Israel, Saudi Arabia, and especially the UAE have witnessed the launch of new digital-only banks during the last three years.
Most of these neobanks were launched by incumbents as standalone digital banks and provide a full range of financial products that aim to act as full replacements for traditional banking offerings. Examples include ila Bank by ABC Bank and meem by Gulf International Bank, both in Bahrain, as well as Pepper by Leumi bank in Israel. Let’s see the top 5 neobanks in the Middle East to keep an eye on.
Based in Bahrain, Bank ABC which stands for Arab Banking Corporation, in early 2018, unveiled its plans to launch a standalone neobank. Keeping to the timeline, in 2019, the bank launched ila Bank, foraying into the digital, mobile-only banking space, beginning with Bahrain with a roadmap to take it across the MENA region.
The concept was developed in association with Mobiquty, which is a digital consultancy company. The mobile-only bank offers users an instant virtual card for online transactions, flexible funding options, and an ability to manage a card right from the app, and accounts with extra perks, such as storing funds in foreign currencies and earning even more interest. The neobank aims to leverage its parent’s strength, technology and IT services but will run independently.
This summer, Bank ABC won the ‘Best Bank for Digital Solutions in Bahrain’ award at the Euromoney Awards for Excellence 2022. This award stands testament to the Bank’s pioneering digital solutions that have radically transformed client experience and distinguished its offering from its peers.
Late in 2016, Commercial Bank of Dubai (CBD) announced its plan to launch ”CBD NOW”, which it claims is the nation’s first digital-only bank targeting millennials and digitally connected customers. The new bank was officially launched in early 2017 making the Dubai-based bank a true digital pioneer in the region.
As we said, the bank's main target were millennials and digitally friendly customers with the goal to tap into the smartphone savvy consumer base. To further enhance the product, prior to the launch the bank introduced a CBD Now “co-founders” program that involved customers providing inputs insightful during the piloting phase.
As part of the digital transformation strategy, in the last years the bank launched a series of innovative and first-to-market digital banking initiatives aimed at making banking simpler, efficient and more personalized. Some of these key initiatives included “real time customer account sign up, both in-branch and on-line”, a completely new customer experience for people moving to the UAE “movingtouae.ae”, as well as an advanced payments solutions to support Smart Government and bank’s corporate clients.
Founded in 2017 in Dubai, Mashreq Neo is a bank that looks to answer the day-to-day needs of a world on the move. This neo bank is the right example of how the country has heavily invested in the digital transformation of the banking sector. The digital bank, in fact, is completely branchless and is targeted towards the connected generation who are digitally savvy, use mobile devices extensively, and expect convenience above all.
Customers can do all banking services including customer on-boarding, sales, services, transactions and fulfilment are done via online and mobile platforms, plus can send money to more than 30 countries, earn cashback on salary transfers, and bank and invest right in the same app, among other benefits. Residents can simply scan their Emirates ID by tapping it on their smartphone, snap a selfie, and open an account. The entire process takes less than five minutes most of the time, and if there’s any lag in confirming the biometric data, it could take up to 24 hours at most.
Launched by Israeli Bank Leumi in June 2017, Pepper is a mobile-only banking subsidiary. Entirely mobile banking, without branches and 100 percent free - no checking account fees. Pepper aims to challenge the status quo of banking and create a different and progressive experience. Based on innovative technology capabilities, it provides smart banking using valuable insights that keep customers informed and helps them to better control and manage their finances, Pepper offers savings and lending products, with no checking account fees.
In September 2019 Pepper launched a new investment app that aims to attract young people to buy fractional shares, plus it offers live customer service by professional bankers available around the clock (24/7) via video chat, online messaging, or by phone. The bank relies on Temenos’ software for its technology, front-to-back office.
Qatar Islamic Bank (QIB)
According to IPSOS, over 94% of bank customers in Qatar have used at least one form of digital banking channel and since Qatar has over 75% smartphone penetration, most banks are switching to mobile banking services to address customer needs. In this framework, Qatar Islamic Bank (QIB) is one of Qatar’s leading digital banks in the country.
Recently the institute has unveiled new features on its Mobile App, as part of its ongoing efforts to provide innovative digital solutions to empower its customers and give them more control. QIB introduces a new feature to apply for an Instant Credit Card against Lien by simply blocking an amount equivalent to card limit from their account using the QIB Mobile App. QIB now enables customers to manage their own daily bank transfer limits by increasing or decreasing their daily transfer limits instantly through the QIB Mobile App.
Another new feature allowing customers to cancel their Western Union transfers if the money has not been collected by the beneficiary. In addition, customers can request to modify the beneficiary’s name on the Mobile App and without the need to call the Bank. Last, but not least, the bank launched a video banking service available on the QIB Mobile App, making it the first digital bank to use this feature in Qatar.