The impact of AI on the future of the finance industry in the GCC region is significant and multifaceted, with opportunities for substantial growth and innovation as well as challenges to be addressed.

AI adoption in the GCC is seen as having substantial potential to deliver real value, with estimates suggesting that AI could contribute as much as $150 billion to the region’s economy. However, capturing this potential is not straightforward and requires significant organizational change, including embedding AI technology and adopting new ways of working. High-performing companies in AI adoption differentiate themselves through their strategies, organization and talent, data and technology infrastructure, and adoption and scaling capabilities. Yet, only a minority of companies in the GCC feel well-positioned in these areas, highlighting a need for considerable development to accelerate AI adoption​​.

Neobanks and fintech are rapidly transforming the financial landscape in the GCC, spurred by the region’s young and digitally savvy population, high connectivity rates, and robust regulatory support. The sector is poised for explosive growth, with digital payments and remittances leading the way and consumer interest in fintech services significantly outpacing current usage. Regulatory bodies in the GCC are increasingly supportive, introducing policies and frameworks to foster fintech innovation, including the establishment of regulatory sandboxes. The Saudi Central Bank and others across the region have been proactive in licensing digital banks and fintech companies, indicating a concerted effort to nurture the fintech ecosystem​​.

The evolving relationship between traditional banks and fintech companies is moving towards collaboration rather than competition. Banks are investing in fintech to improve customer acquisition and retention, recognizing the efficiency and innovation that fintech companies bring to the finance industry. This collaboration is changing the industry landscape, with both banks and fintech working together to capture market opportunities​​.

Regulatory adaptation is a critical aspect of this transformation, with GCC governments and regulators working to build environments that support market participants effectively. Regulatory sandboxes have been instrumental in testing innovative financial products and services, with several GCC countries launching their own initiatives. There is also an increasing awareness of the need for comprehensive regulations that cover emerging technologies, including cryptocurrencies and cryptoassets, as well as data protection laws that consider the digitization of the banking and finance industries​​.

In summary, the future of the finance industry in the GCC region is being shaped by the integration of AI and the growth of fintech and neobanks. While there are challenges to be overcome, particularly in terms of AI adoption and regulatory adaptation, the potential for innovation and growth in the sector is considerable