Banks in the oil-rich emirate are also expanding their operations in the Gulf region.
With Kuwaiti lenders embracing new technology through fintech partnerships and significant in-house investment in innovation, all major banks in the emirate now offer a wide range of digital products and services. “The Kuwaiti banking market is experiencing a surge in digital banking solutions as customers increasingly opt for convenient online banking solutions,” says Abdulwahab Al Rushood, acting group CEO of Kuwait Finance House (KFH), the country’s largest bank. He predicts that investment in digital technologies will continue to grow rapidly.
Since most Kuwaitis are under 35 years of age, demographics are the driving force. “This younger population tends to be more technology savvy and dependent on it to manage their daily lives, including financial transactions,” says Salah Al Fulayj, CEO of the National Bank of Kuwait (NBK).
The Central Bank of Kuwait (CBK) is encouraging change. In 2022, the licensing process for digital banks was launched. For now, neobanks remain spin-offs from established local lenders—NBK launched Weyay, Boubyan Bank launched Nomo, and KFH launched Tam—but other bids from other financial institutions and telecom operators are reportedly in the works.
The CBK is also encouraging cloud computing, digital adoption and improved cross-border payment systems. While Kuwait may appear more conservative than neighboring Dubai, the regulator is moving in the same general direction, seeking to “create a balance between harnessing and encouraging technological growth in the financial services industry and protecting the Kuwaiti financial and banking sector.” explains the manager of the pulp and paper mill Basel A. Al-Harun.
Kuwaiti banks are already “focused on what’s next,” says Abdullah Al Tuwaijri, CEO of private, consumer and digital banking at Boubyan Bank, one of Kuwait’s fastest-growing lenders. “Technological turbulence is changing the way banks generate revenue, expanding services beyond banking. The future will belong to the banks that are the first to embrace new market trends.”
This future holds great promise. “The next stage of evolution will be even more dynamic” with the integration of artificial intelligence and other new technologies, says Talal Bader Al-Othman, vice president of asset management at ABK Capital.
Al-Rushood predicts that banks will likely use data-driven insights to improve personalized services and streamline operations. “There will be greater reliance on artificial intelligence and robotics, as the adoption of generative AI promises to improve decision-making, profitability, fraud detection and prevention, and risk management.” Along with artificial intelligence, open banking—data sharing between banks and third-party providers via APIs—is the big change that everyone is excited about.
Historically, Kuwaiti banks were focused on the domestic market, except when they followed wealthy Kuwaitis in their ventures in London, Paris, Geneva or New York. But today they are increasingly looking to expand their operations in the fast-growing Gulf region.
“We will continue to place a strategic focus on the Gulf Cooperation Council. [GCC] A project market that is poised for a significant new phase of expansion,” says Al-Fulaij. PBOC has a presence in Saudi Arabia, Bahrain and the United Arab Emirates, he notes, and hopes to benefit from “a remarkable increase in project grant activity.” According to Middle East Business Intelligence, the total value of contracts awarded in the GCC reached US$205 billion in 2023, up 88% year-on-year.
Beyond megaprojects, Kuwaiti banks are looking to add value to wealth management, especially in digital services. Last April, Boubian’s subsidiary Bank of London and the Middle East (BLME) signed a strategic partnership with Abu Dhabi Commercial Bank and its Islamic subsidiary Al Hilal Digital Bank to roll out Boubian’s neobank Nomo to customers in the United Arab Emirates. In May, the bank also opened BLME Capital, an investment subsidiary of BLME, Europe’s second-largest Islamic bank, in Riyadh. Tuwaijri says the company is “open to exploring new markets.”
Populated Egypt is one of the most attractive destinations for Kuwaiti banks. The NBK subsidiary in Cairo has achieved “exceptionally good results” thanks to its “strong financial position and ambitious digital program,” Al-Fulaij says. KFH, which acquired Bahraini bank Ahli United Bank in 2022, has also expanded its network beyond Bahrain to Saudi Arabia, Egypt, Turkey, Malaysia, Germany and other countries. “We will look at any opportunity for further growth,” says Al-Rushood.
With deep pockets and expanding technology offerings, Kuwaiti banks are ready to step up their game.