Ahmed Abdelaal

The year 2024 has been positive for the financial industry in the UAE and across the GCC, despite challenges brought about by the ongoing geopolitical instability in the region. Banks and other financial institutions appear to be ending the year in a strong resilient position, reporting impressive financial results, and the outlook in the industry for 2025 is one of optimism.

With the Central Bank of UAE maintaining its benchmark rate alignment with the US Federal Reserve, the recent half-percentage-point rate cut is expected to have a mixed impact. While lower financing costs can boost business conditions and support economic diversification initiatives — such as those in Saudi Arabia and the UAE funded through government equity, commercial loans, and project bonds — the effects on banking profitability cannot be ignored. While additional Fed rate cuts are anticipated, albeit softer and more gradual than initially predicted, the UAE economy is poised to benefit from improved financing conditions. These monetary shifts are expected to enhance the competitiveness of exports, reduce borrowing costs, and attract foreign investment, serving as a catalyst for sustainable and resilient economic growth across multiple sectors. Previous analyst predictions of global GDP growth throughout 2025 of just over 3 per cent remain, and I expect the UAE to at least align with, if not exceed this rate. Credit cycles are anticipated to stabilise globally, but challenges such as the ongoing geopolitical instability in the region are likely to have an impact and shape credit conditions.

I am enthusiastic about technological advancements that will continue to drive digital transformation in the financial industry in 2025. We have seen phenomenal success with our digital banking offering, through the Mashreq NEO family, and I am confident this will continue in the coming year. Solid growth in the number of digital-only banks and fintech innovations in 2025 will motivate us all to continue our efforts to enhance our offerings and create the best possible customer experience. With technology such as machine learning and data analytics enabling banks and financial institutions to get to know their customers — and their preferences and behaviours — on a much deeper, more intuitive level than ever before, and the benefits already being comprehensively seen, I fully expect to see a strong focus on hyper-personalised customer experiences. As entities in the banking and finance industries look to streamline operations, increase scalability, and optimise efficiency, software-as-a-service — where banks and other financial institutions can access and use technology applications over the internet without hosting them on their infrastructure — is likely to experience strong demand.

In line with ever-advancing digital transformation across the globe, I see the shift towards digital and mobile banking solutions continuing throughout 2025. Demand for hyper-personalised financial advice, products and services will continue to expand. Concepts like embedded finance and open banking, which eliminate the need to input sensitive financial data for every transaction, are expected to gain momentum rapidly. In the same vein, interest in decentralised finance products will increase. I foresee strong interest in, and demand for, sustainable and ethical investment and financing solutions in 2025, as well as for ESG-focused products, as customers continue to seek solutions that align with their beliefs and priorities.

As in previous years, a key challenge for the banking and finance sectors in 2025 will be striking a balance between profitability and robust risk management. Strengthening risk assessment and governance processes across all material categories will also be vital to ensure compliance with regulations in both existing and emerging markets. At the same time, institutions must optimise risk assurance and monitoring to address evolving threats while safeguarding operational integrity.

As we continue to invest in technology and innovation, it is essential to prudently manage costs to optimise operational efficiency while prioritising the highest levels of cybersecurity. In line with Mashreq’s commitment to investing in human capital, attracting and retaining the brightest talent remains a top priority.