News & Events

Neobanking Growth in the Middle East and Africa: Achieving Risk and Compliance

The banking landscape is experiencing a transformative journey driven by the remarkable rise of neobanks. This paradigm shift towards digital banking is gaining momentum in the Middle East and Africa regions.

In the Middle East, the digital banking sector demonstrated a growth rate of 52% from 2021 to mid-2023, as outlined by C-Innovation, a French fintech-focused research firm. This expansion can be attributed to increased consumer adoption, strategic initiatives, and favourable demographic factors, such as the region’s significant population of unbanked and financially underserved individuals. Additionally, the prevalence of a young and digitally-savvy population has contributed to the industry’s positive trajectory.

Saudi Arabia has been at the forefront of this digital banking wave, having issued its first licenses in 2021. At the same time, the UAE has taken proactive steps by facilitating the Al Maryah Community Bank, Zand Bank, and Wio Bank P.J.S.C. to offer online banking services. Moreover, the UAE granted preliminary approval to Naqd Neobank in March 2023, marking a strategic move towards digital banking innovation.

Additionally, Egypt implemented regulations in July 2023, focusing on the licensing and registration of digital banks, while Qatar is actively formulating rules to encompass digital banking, open banking, crowdfunding, and other emerging technologies and business models. This dynamic regulatory environment reflects the region’s commitment towards embracing digital transformation within the financial sector.

Neobank growth in Africa is upending conventional banking patterns, although their current presence is relatively limited, concentrated primarily in Nigeria and South Africa. According to the 2023 African Digital Banking Report, the development of digital platforms by African banks is ongoing, but progress is characterised as steady rather than revolutionary. Even though African banks consider digital transformation necessary for growth, only half prioritise it. Notably, 28% allocate over US $3 million yearly, while a quarter dedicates less than US $300,000.

The transformative journey into digital banking presents challenges in the realm of regulations, particularly concerning Anti-Money Laundering (AML) compliance. These rules are essential for preventing the misuse of the financial system for money laundering or financing terrorist activities, with non-compliance leading to fines, legal consequences, and reputational damage.

Introducing WiseBOS RiSC – Risk Intelligence, Scoring & Compliance: an advanced, comprehensive, next-generation solution, designed to enhance risk-based compliance capabilities for financial and non-financial institutions. Developed in-house by our team, WiseBOS RiSC stands out for its robust capabilities in assessing and managing risk.

WiseBOS RiSC effectively assists in minimising exposure to financial fraud and terrorism-related activities while simultaneously ensuring regulatory compliance. The solution proves invaluable for our clients, serving as their top choice when navigating anti-money laundering procedures, determining risk levels, and mitigating associated risks during customer onboarding and monitoring.

With WiseBOS RiSC, businesses can seamlessly meet their regulatory compliance obligations, optimise existing compliance workflows, and fortify their defences against potential financial and AML threats.

Additional Sources:

Get in Contact with our Team of Experts

Book a demo with us today to find out how WiseBOS RiSC can help your business!