The oil-rich emirate’s banks are also expanding across the Gulf region.
With Kuwaiti lenders embracing new technologies through fintech partnerships and substantial in-house innovation investment, all of the emirate’s major banks now offer a wide array of digital products and services. “Kuwait’s 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 biggest bank. He predicts investment in digital will continue to grow rapidly.
With a majority of Kuwaitis under the age of 35, demographics are a driving force. “This young population is typically more adept at and dependent on technology for managing their daily lives, including their financial transactions,” says Salah al-Fulaij, Kuwait CEO of National Bank of Kuwait (NBK).
The Central Bank of Kuwait (CBK) is encouraging change. In 2022, it rolled out a licensing process for digital banks. For now, neobanks remain the side projects of established local lenders—NBK launched Weyay, Boubyan Bank has Nomo, and KFH has Tam—but other applications from other financial institutions and telecom operators are reportedly in the pipeline.
The CBK is also encouraging cloud computing, digital onboarding, and enhanced 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 utilizing and encouraging technological growth in the field of financial services and the protection of the Kuwaiti financial and banking sector,” explains CBK Governor Basel A. Al-Haroon.
Kuwaiti banks are already “focused on what’s coming next,” says Abdullah Al-Tuwaijri, CEO of Private, Consumer, and Digital Banking for Boubyan Bank, one of Kuwait’s fastest-growing lenders. “The technological turbulence is changing the way banks would generate revenue, by extending services beyond banking. Banks that become early adopters to new market trends will own the future.”
That future holds great promise. “The next phase of evolution will be even more dynamic” with the integration of AI and other emerging technologies, says Talal Bader Al-Othman, vice president of asset management at ABK Capital.
Banks are likely to leverage data-driven insights to enhance personalized services and streamline operations, Al-Rushood predicts. “There will be more reliance on AI and robotics, as adopting generative AI promises improvements in decision-making, profitability, fraud detection and prevention, and risk management.” Alongside AI, open banking—sharing data between banks and third-party providers through APIs—is the big change on everyone’s mind.
Historically, Kuwaiti banks have focused tightly on the domestic market, except when they follow rich Kuwaitis on their ventures in London, Paris, Geneva or New York. But today, they are increasingly looking to expand across the fast-growing Persian Gulf region.
“We will maintain our strategic focus on the Gulf Cooperation Council [GCC] projects market, which is poised for another significant phase of expansion,” says Al-Fulaij. NBK has a presence in Saudi Arabia, Bahrain and the United Arab Emirates, he notes, and is hoping to capitalize on “the remarkable growth observed in project-award activity surging.” Total contracts awarded in the GCC in 2023 reached $205 billion, according to Middle East Business Intelligence: an 88% year-on-year increase.
Aside from megaprojects, Kuwaiti banks are looking to bring added value to wealth management, notably in digital services. Last April, Boubyan’s Bank of London and the Middle East (BLME) subsidiary signed a strategic partnership with Abu Dhabi Commercial Bank and its Islamic subsidiary Al Hilal Digital Bank to roll out Boubyan’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-biggest Islamic bank, in Riyadh. Tuwaijri says it is “open to explore new markets.”
Populous Egypt is among the most attractive destinations for Kuwaiti banks. NBK’s subsidiary in Cairo has delivered “exceptionally strong results” thanks to a “strong financial position and ambitious digital agenda,” says Al-Fulaij. KFH, which acquired Bahrain’s Ahli United Bank in 2022, also has expanded its network beyond Bahrain: Saudi Arabia, Egypt, Turkey, Malaysia, Germany and more. “We will consider any opportunity for further growth,” says Al-Rushood.
With deep pockets and expanding tech offerings, Kuwaiti banks are ready to step up their game.
