Once the undisputed leaders in merchant payments, banks across the Middle East are now finding themselves increasingly edged out of the conversation. Agile FinTechs, embedded payment platforms, and a new breed of digital-first service providers have disrupted the status quo. In response, many banks have had to pick up their pace of innovation to stay in the race, but not all have decided which direction they’re really running in.
The question isn’t whether banks should re-enter or refresh their role in payments. They must. The real question is this: who are they trying to serve, and why?
Because the moment a bank tries to do it all — serve everyone, everywhere, with every possible feature — it usually ends up doing none of it particularly well.
The importance of strategic focus
Across the region, financial institutions vary widely in how they approach merchant payments. Some have mature acquiring services and enterprise clients firmly embedded into their wider banking relationships. Others are playing catch-up, acutely aware that new entrants are nibbling away at their customer base.
Others are playing catch-up, acutely aware that new entrants are nibbling away at their customer base. And then there are those who know they need a proposition but haven’t yet crystallised what it looks like. That’s where the need for clarity comes in.
Before investing in platforms, partnerships or product design, banks must make a deliberate choice about which segment they are aiming to serve. Whether it’s the enterprise space or the long tail of micro and small merchants, each comes with its own set of operational realities and expectations. And the differences are not trivial, they’re transformational.
Understanding your customers’ world
Let’s look at the small and micro merchant segment. In Saudi Arabia, for example, nearly 80% of businesses fall into the “micro” category, meaning they have fewer than five staff or turn over less than SAR 3 million. Oman’s market shows a similar structure, with micro enterprises making up more than 70% of the total landscape.
For these smaller merchants, user experience is everything. They’ve grown accustomed to consumer-grade simplicity, whether that’s onboarding within minutes, using smart point-of-sale terminals, or accessing embedded reporting via mobile. Many are already tied into independent software vendors (ISVs) or marketplace platforms that offer easy, all-in-one solutions.
Winning in this space isn’t about competing on price or brand heritage. it’s about offering seamless, plug- and-play services that integrate into how these merchants already work. Banks that try to bring legacy systems into this environment, or assume trust alone will carry the day, are quickly outpaced.
At the other end of the spectrum are medium and large enterprises — complex, often multinational businesses that already manage their own technology stack. They may have stringent compliance requirements, need multi-channel processing, or demand ultra-reliable infrastructure paired with deep
reporting and analytics. While they bring higher volume, they also bring lower margins and often demand customisation over simplicity.
Here, the playbook is completely different. It’s about strategic account management, cost efficiencies, bundled banking and acquiring services, and the credibility to operate across multiple markets. But even this segment is evolving. As digital expectations rise, large enterprises too are starting to look beyond the traditional bank-led model and exploring modern alternatives that offer faster innovation and greater agility.
Why trying to serve everyone rarely works
It’s tempting, especially for large, established banks, to try and cater to both ends of the spectrum. After all, they’ve done so unchallenged for decade and now wouldn’t want to leave value on the table. But the truth is that with the status quo now changing, this lack of focus can be counterproductive. Banks risk building fragmented or bloated systems that try to please everyone but truly delight no one.
We’ve seen banks invest in enterprise-grade platforms only to find they’re far too complex (and expensive) to be relevant to small merchants. Conversely, we’ve seen lightweight solutions fail to scale or meet the compliance needs of large retailers and corporations.
This isn’t just a technology issue, it’s a strategic one. Without a clear view of which customers you’re solving for, how can you design the right go-to-market, pricing model, onboarding journey, or even support structure?
Building your segment-led strategy: A practical path forward
So how can banks get this right? I recommend a four-step approach — simple in structure, but powerful in impact.
Step 1: Define
Start with your target. Who are you serving? And more importantly, why do you believe you’re well placed to win? Whether it’s your brand, customer access, data, or regulatory positioning, be honest about your advantage.
You also need to pinpoint what really matters to your chosen segment. Is it price? Speed? Support? Simplicity? And don’t forget to map out the competitive landscape because in payments, your biggest competition might not be another bank, but rather, a software platform.
Step 2: Clarify
Next, take stock of what you already have. Many banks are surprised to find they’re closer to a viable proposition than they thought — but only once they take time to review internal assets, platforms and partnerships. Understand what can be reused or evolved, and what may need to be replaced altogether. Then set your north star. Without a clear strategic goal, it’s easy to get lost in tactical decisions.
Step 3: Roadmap
It’s easy to get overwhelmed by the size of the task, which is why a phased approach works best. Start with a Minimum Viable Product (MVP). This focused, fast-to-market offer allows you to test your assumptions and collect early feedback. Not everything has to be solved from day one. Use ‘no regrets’ exercises that add value, regardless of where you land and iterate with insight.
Step 4: Business Case
Lastly, bring the rest of the business with you. Payments transformation is not just a technology undertaking; it’s a strategic shift. That means your roadmap must be visible, digestible, and costed realistically. Help internal stakeholders understand the trade-offs between building and buying, and lay out the investment case with clarity and conviction. If the business isn’t bought in, even the best plans can stall.
In a fast-moving region with rising digital expectations and increasing competition, banks can no longer afford to be all things to all people. But by choosing their battleground — and building a strategy rooted in a deep understanding of the customer — they can carve out a space that’s defensible, scalable, and deeply valuable.
