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The Gulf is ripe for fintechs to serve the underserved

Expanding financial inclusion offers an opportunity for savvy innovators

Conventional banks in the Gulf are attempting to address the needs of their underserved customers who only use one product LightField Studios/Alamy via Reuters Connect
Conventional banks in the Gulf are attempting to address the needs of their underserved customers who only use one of their available products

Promoting financial inclusion in emerging economies is no easy endeavour. However, fintech startups will find that there are long-term opportunities in the sector.

Only 3 percent of the adult population of the United Arab Emirates is unbanked, but a whopping 31 percent remains underserved.

This means 2.8 million individuals in the UAE alone.

We define the banked population as individuals who are 15 years and older who have a relationship with a formal financial institution such as a bank and who have one – or a combination – of the following products: a transactional account, a demand deposit account such as a savings account or a credit card.

The underserved population uses only one of the products.



In Saudi Arabia, more than half of the population – 53 percent – is underserved while 16 percent were still unbanked in 2023. This translates into more than 4.3 million individuals who are unbanked and over 14 million who are underserved. 

Unbanked and underserved populations are historically less attractive segments for traditional banks – which often focus on salaried, middle-income and high-net-worth individuals when they design products and services.

But many of these unbanked consumers are highly engaged digitally. For example they may use digital platforms for social messaging, online shopping and consumption of media. Digital literacy is growing at a rapid pace compared to literacy in general and financial literacy.

The rise of the gig economy is also challenging traditional salaried lifestyles. This calls for new ways of banking, such as digital wallets. 

The combination of providing financial services and digital platforms in a less regulated, more inclusive manner supports financial inclusion. 

While fintechs are rising to the challenge in addressing market gaps and identifying opportunities, they remain focused on limited segments of the population – such as peer-to-peer payments, cross-border remittances and By Now Pay Later. 

Conventional banks are also aiming to address the gaps of unbanked and underserved such as home-makers and women through products such as supplementary cards. 

Blue collar workers, who form a sizeable share of the population in the UAE and Saudi Arabia, can also be offered closed-loop prepaid cards and “Workers Payment Systems”. 

But financial products such as cashless shopping, reward-based platforms, or loyalty programmes are missing from the market. 

Lack of credit to poorer consumers has driven the growth of BNPL programmes but also exposed these customers and the wider economies to credit risk. 

Overall, there is an absence of customised retail payment options that tailor shopping to unbanked people and fulfil their financial needs. 

Lack of trust in the formal financial system is no longer a challenge when reaching out to these consumers, as many want products relevant to their needs, such as digitised and convenient payment options.

While there is room for enhancing financial literacy, providing financial products for these consumers is an untapped opportunity for both traditional financial entities and fintechs. 

Building an equitable and digitally powered financial ecosystem offers greater financial independence to the many and translates into wider benefits for all as economies benefit from widespread inclusion in digital payment systems.

Rabia Yasmeen is a senior consultant at Euromonitor International

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