Across the GCC and MENA region, the debate inside bank boardrooms has shifted in a very visible way. Two approaches dominate: modernize the legacy core, or build a parallel greenfield entity and let it compete. Both are live in 2026, and both are under pressure.Â
The Numbers That Frame the Debate
The scale of change becomes clearer when viewed through current market data. Digital banking revenues across MENA are expected to reach USD 4.1 billion in 2025, up from USD 3.2 billion in 2023. This represents a 28 percent increase in just two years, indicating not just growth, but acceleration. Customer behavior has shifted just as quickly, with 65 percent of GCC retail banking customers now relying primarily on mobile or digital channels for their day to day transactions. Only a few years ago, that number stood at 48 percent, which highlights how rapidly expectations have evolved. At the same time, banks are investing heavily to keep up with this shift. Core banking modernization spending in MENA is projected to reach USD 1.8 billion in 2025, with Saudi Arabia and the UAE accounting for more than 60 percent of that total. Despite this level of investment, progress has been uneven. As of early 2026, only 22 percent of incumbent banks in the region have completed a full core replacement, which means the majority are managing customer-facing digital products while running on infrastructure that was never designed for them.Â
Greenfield: Speed and Flexibility
The greenfield model has gained attention largely because of its ability to move quickly. By building a digital bank from scratch, institutions avoid many of the constraints that come with legacy systems. Technology stacks are modern from day one, product development cycles are shorter, and operational structures are designed around efficiency rather than adaptation. This allows greenfield entities to respond faster to market changes and experiment with new offerings without the burden of existing infrastructure.
Examples across the region highlight this momentum. STC Bank in Saudi Arabia crossed two million customers within two years of receiving its full license, demonstrating how quickly digital first models can scale when supported by strong distribution and brand recognition. In the UAE, Wio Bank has expanded its SME focused offerings through multiple platform partnerships, positioning itself within broader business ecosystems rather than operating as a standalone bank. Across the UAE’s digital banking segment, deposits grew by 34 percent year on year in 2024, showing that customer adoption is not limited to transactional usage but is extending into deeper financial relationships.
Greenfield: The Profitability Challenge
Despite this growth, the financial realities of the greenfield model are still being tested. Digital banks across MENA reported average cost to income ratios of around 72 percent in 2024. While this represents improvement over earlier stages, it remains significantly higher than the 55 to 58 percent range typically seen in established GCC banks. The gap reflects a fundamental challenge. Greenfield banks are able to acquire customers quickly, but converting that growth into sustainable profitability requires a broader product mix, particularly in lending.
The issue is not demand, but depth. Payments and deposits, which form the initial foundation for most digital banks, operate on relatively thin margins. Without a scaled lending portfolio, revenue generation remains limited, making it difficult to achieve operating efficiency at scale. This creates a situation where growth is visible and measurable, but long term sustainability depends on how quickly these institutions can expand beyond their initial offerings. The greenfield model has proven its ability to attract customers, but its ability to deliver consistent profitability at scale is still evolving.
Legacy Modernization: Stability and Scale
For incumbent banks, modernization presents a very different set of dynamics. Instead of building something new, these institutions are working to transform existing systems that often span decades. This process is inherently more complex, involving not just technology upgrades but also organizational change, risk management, and regulatory alignment. As a result, timelines tend to be longer, and execution requires sustained commitment across multiple business units. Data from the region reflects this reality. The average core banking modernization project in MENA takes approximately 4.2 years to complete and exceeds its initial budget by around 35 percent. These figures highlight the scale of effort involved, particularly for large institutions with extensive product portfolios and customer bases.Â
Our team has built multiple digital banks across the MENA region, and one thing we’ve learnt about digital success is that it isn’t defined by launching an app, but by how quickly a bank can evolve it. In a market where mobile-first adoption is still accelerating and customer expectations are rising, the ability to iterate, integrate, and innovate at speed has become the real competitive advantage.
– Tom Romanski Brand & Communications Lead – Codebase Technologies & Co chair of Digital Banking Working Group, MFTA
Legacy Modernization: Where It Works
Where modernization has been executed with discipline, the results are tangible. First Abu Dhabi Bank reported a 19 percent increase in digital transaction volumes in 2025, with digital channels contributing 43 percent of its retail revenue. This demonstrates how incremental improvements can translate into meaningful business outcomes when aligned with customer behavior. Similarly, Saudi National Bank has invested heavily in its API infrastructure, processing over SAR 18 billion in open banking transactions in 2025 through systems aligned with SAMA’s regulatory framework. These examples highlight a key advantage of the legacy approach. Established banks already have scale, customer trust, and diversified revenue streams. When modernization efforts are successful, they enhance existing strengths rather than attempting to build them from scratch. The trade off is clear. Legacy banks move slower, but they operate from a position of strength.
Regulation Is Accelerating the Timeline
One of the most important factors shaping this debate is regulation. Across MENA, regulatory frameworks are evolving in a way that actively encourages digital innovation while setting clear expectations for compliance. In Saudi Arabia, SAMA’s Open Finance Framework Phase 2 went live in the second quarter of 2025, enabling payment initiation capabilities across participating institutions. This has already brought together more than twenty banks and over a dozen fintech companies, creating a more connected financial ecosystem. In the UAE, the Central Bank has introduced open finance regulations that require banks to implement API based systems by the end of 2026. This creates a defined timeline for transformation, particularly for legacy institutions that may have previously delayed large scale upgrades. Egypt has taken a different approach by introducing a digital banking licensing framework, opening the market to new entrants, while Bahrain continues to expand its regulatory sandbox, with over 130 participants and multiple successful transitions to full licenses. Together, these developments indicate that regulatory pressure is not only increasing, but doing so in a structured and coordinated manner across the region.
The Real Divide Is Not the Model
When viewed in isolation, both greenfield and legacy approaches present clear advantages and limitations. But the data from 2025 and 2026 suggests the distinction between the two is becoming less important than how they are executed. Institutions that continue to struggle are often those treating digital transformation as a technology upgrade rather than a broader shift in how the business operates — implementing new systems without rethinking processes, product structures, and customer journeys.
The banks pulling ahead are increasingly taking a dual-track approach: modernizing the core while simultaneously launching or supporting a digital subsidiary. The objective is not to pick a winner between the two models, but to let each serve a distinct role — the digital entity moves quickly, tests new products, and captures emerging customer segments, while the core bank maintains stable revenue and regulatory alignment. Early indicators suggest banks pursuing this strategy are outperforming single-path peers on customer acquisition, cost efficiency, and product development.
The model matters less than the discipline behind it.
The Next Phase of Banking Transformation
The next phase of banking transformation in MENA will be shaped by how effectively institutions can integrate these approaches into a coherent strategy. As customer expectations continue to evolve and regulatory frameworks become more advanced, the margin for inefficiency will narrow. The banks that will struggle are those still treating digital transformation as a technology procurement exercise. The ones pulling ahead are treating it as a business model redesign.
Interested in knowing more? Reach out to us at marketing@mena-fintech.org
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