Banks in the Middle East stand to reduce risk and compliance costs by more than 20% through targeted investments in emerging technologies such as generative AI, automation, and cloud-based treasury systems, according to financial software provider Finastra.
As regional banks contend with increasingly complex regulatory environments and fragmented legacy infrastructure, the financial incentive to modernise compliance and risk management frameworks is growing. Olivier Morice, Principal Solutions Consultant for Treasury & Capital Markets at Finastra, said the shift is no longer optional but necessary for banks to remain competitive and responsive to regulatory demands.
“Banks in the region continue to struggle with legacy systems and manual processes,” Morice said. “Integrating cloud-native platforms and advanced technologies like generative AI can go well beyond the 20% savings benchmark, while significantly improving speed and accuracy in compliance and risk reporting.”
Regulatory complexity
In recent years, compliance obligations in the Middle East have grown due to enhanced anti-money laundering (AML) directives, evolving Basel III and IFRS 9 requirements, and pressure from global correspondent banking partners. Despite the growing burden, many banks in the region still rely on outdated legacy systems and siloed data structures.
“Many of these systems were built incrementally and have become increasingly fragmented,” Morice noted. “This leads to duplicated processes, higher operational risk, and costly manual interventions.”
Finastra argues that consolidating risk and compliance workflows onto unified cloud-based platforms allows banks to streamline data collection, enhance reporting accuracy, and adapt more quickly to regulatory updates.
Real-time risk management and the role of AI
One of the biggest value propositions lies in shifting from periodic compliance cycles to real-time monitoring. Technologies such as automation and generative AI are enabling banks to run daily—or even intraday—risk assessments, reducing reliance on static reports that may be outdated by the time they’re reviewed.
“By using generative AI to process and summarise internal policies, regulatory updates, and market data, banks can empower employees with timely, context-sensitive insights,” Morice said. “This improves decision-making across the organisation and accelerates audit readiness.”
Finastra also points to the growing utility of API-driven systems and microservices architecture, which allow banks to quickly deploy or upgrade modules without disrupting core operations. This is particularly relevant as GCC banks prepare for shifts in areas like climate risk disclosure and ESG-related reporting.
Regional adoption lags
Globally, 75% of banks are planning to accelerate technology transformation in risk and compliance, according to Finastra’s research. While the Middle East has historically lagged behind Europe and Asia in adopting such systems, macroeconomic volatility and regulatory scrutiny are pushing regional banks to act.
Bahrain’s Central Bank and the Saudi Central Bank (SAMA) have both issued guidance over the past year encouraging banks to enhance digital risk oversight. In the UAE, regulatory sandboxes have helped banks test AI-driven solutions for AML screening and transaction monitoring.
Competitive advantage and long-term resilience
Beyond cost reduction, Finastra says the benefits of advanced risk and compliance technology extend to improved customer experience, faster onboarding, and reduced reputational risk. By adopting real-time compliance capabilities, banks can also improve their standing with global partners and regulators, potentially opening new lines of business.
“In today’s environment, compliance isn’t just a cost centre—it’s a strategic differentiator,” Morice said. “Banks that move first will be better positioned to grow, innovate, and navigate uncertainty.”
As the pressure builds to modernise financial infrastructure, banks in the Middle East are entering a pivotal phase. Those who invest early in next-generation platforms could shift from reactive compliance to proactive risk intelligence—unlocking both cost efficiencies and long-term stability.
