Middle East Banking Sector Achieves World’s Highest Returns on Equity
The Middle East stands out globally with some of the highest returns on equity (ROE), ranging between 12% and 16%, a performance attributed largely to elevated oil prices and sovereign wealth investments. This contrasts with regions like North America, where ROE is between 8% and 12%, Europe at 5% to 8%, and the APAC region at 10% to 12%.
The banking industry is increasingly leaning into digital transformation as fintech and new-age competitors drive change. Traditional banks are adopting digital-first models, illustrated by launches like ENBD’s Liv and Mashreq’s Neo in the UAE. This shift aims to reshape customer experiences, focusing on enhanced operational efficiency, product innovation, and customized services.
To adapt to this evolving landscape, banks are diversifying income through fee-based services, partnerships with fintech, and unique lending structures. Regional banks are now exploring robust AI-powered platforms like the Intellect eMACH.ai Wholesale Banking Cloud, designed to support operational agility, compliance, and growth with enterprise-grade, cloud-enabled solutions.
Instant gratification in banking is becoming essential, especially through real-time payments and digital wallets. Cross-border transactions, FX management, and embedded payments are also gaining traction, bolstered by supportive regulatory environments. The emphasis on AI-driven capabilities supports banks in managing liquidity, optimizing balance sheets, and engaging with emerging tech sectors through innovative credit products, venture capital, and supply chain support.
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Physical banks remain essential, especially as technology creates value through hybrid setups that monetize digital assets. For most banks, transformation journeys begin with customer engagement and onboarding, moving towards a full suite of products—lending, deposits, and cash management.
Furthermore, the distinction between cryptocurrencies and digital currencies continues to evolve. While digital currencies could streamline cash flow and efficiency, banks remain cautious about crypto adoption. Instead, they’re focusing on central bank digital currencies (CBDCs), with the UAE and other leading markets piloting these initiatives.