UAE Business: BaaS revenues to reach $28bn by 2031 in the Middle East alone – Gulf Digital News

UAE Business: BaaS revenues to reach $28bn by 2031 in the Middle East alone – Gulf Digital News

Banking as a Service (BaaS) BaaS revenues in the Middle East should reach $28 billion by 2031, which would amount to about 17% of total banking income, said Arthur D Little (ADL), the world’s first management consulting firm.

In a report, titled ‘Banking as a Service: at the Heart of the Bank of Tomorrow’ the firm outlines the many signs that BaaS is being adopted by small and midsize banks operating at subscale and, as more do, this segment of the market will grow at a compound annual growth rate (CAGR) of approximately 25%.

That would mean that, by 2026, revenues in the region from BaaS could stand at $5 billion or approximately 4% of the total banking income in the Middle East.

Route to salvation

To date, the BaaS market has remained relatively small and largely at the preserve of digital banks, FinTechs and digital nonfinancial platforms. However, as their traditional markets and margins come increasingly under threat from disruptors, BaaS will be the route to salvation for many incumbent banks.

Philippe de Backer, Managing Partner and Global Financial Services Lead at Arthur D. Little said: “Banking as a service enables banks and non-banks to offer a host of completely new financial products to