The future of Saudi’s banking sector: A push for agility and digital growth
The Saudi Arabian banking sector has entered a highly transformative period: Saudi banks must urgently balance rapid digital growth with aggressive cost control and strict regulatory compliance to navigate a shifting competitive landscape. Hussam Kayyal, managing partner at DefineX, shares his insight on the sector.
The Saudi banking sector has boasted strong momentum in recent years, with moderate growth last year despite margin compression. Moving forward, the question is how leadership in the sector will be able to keep that momentum going and shift into the next phase of growth.
As financial institutions across the Kingdom allocate more than $5 million toward systemic upgrades and aim for a 10% reduction in operating costs, executive teams face significant pressure. According to Kayyal, bank leadership teams are navigating a rapidly shifting landscape where digital success must be balanced with operational efficiency and robust risk management.
Navigating conflicting priorities
Reflecting on recent industry performance, Kayyal notes that it has been a rewarding period for executive boards, but several core pressures remain.
“Three major priorities are still occupying the leadership of these banks,” Kayyal states. “The fact that they have invested significantly in building digital channels, how can they continue to grow these digital channels, how they can continue to make sure that it is relevant to their customer base. And more importantly, as they do that, how they can reduce and control costs. So these are conflicting components.”
Beyond balancing growth and cost management, risk mitigation remains paramount. Kayyal emphasizes that organizations must carefully manage risk, “especially in areas of cybersecurity, resilience, how they can continue to be very strong uptimes, and more importantly, how can they continue to meet SAMA regulations, evolving regulations.”
As technology evolves and new services enter the market, continuous compliance with the Saudi Central Bank remains non-negotiable.
Overcoming latency to accelerate delivery
The competitive environment in the Kingdom has shifted dramatically over the past 12 to 18 months, forcing institutions to rethink their operational agility. There has been a significant shift in the mindset of how banks operate and this reality calls for more rapid market responses and seamless service delivery.
The issue is that achieving speed to market is often hindered by internal bottlenecks. Kayyal identifies three specific areas that consistently slow down the deployment of new services:
The first is decision latency, driven by slow prioritization, heavy committees, and unclear ownership across different internal business units. The second is dependency latency, where tightly coupled systems and shared services cause architectural blockers. Finally, delivery latency often severely impacts timelines due to environment bottlenecks, manual testing, and security gates that are applied too late in the development cycle rather than continuously.
FOTO 2 van 2: Banks in Saudi of anders Riyadh generiek. Subtext: The Saudi banking sector has enjoyed strong momentum in recent years
Speed and core sovereignty
To unlock speed, banks must modernize their infrastructure strategically. Kayyal advises focusing on specific architectural layers in a deliberate sequence.
“The fastest way to actually move into modernization is you actually work to modernize your channel and orchestration layer because that will unlock the fastest way to actually go to market as you deliver these services,” Kayyal explains.
Institutions should then stabilize their integration and application programming interface contracts to reduce downstream breakage before replacing core legacy infrastructure.
While modernization often involves external collaboration, Kayyal insists that certain capabilities must remain entirely in-house to protect competitive advantages. Financial institutions must maintain absolute ownership over their product management lifecycle and domain definitions.
Furthermore, banks cannot outsource architectural standards, platform direction decisions, end-to-end security ownership, or data governance.
Deploying AI safely
AI offers powerful opportunities to enhance productivity across the entire software development lifecycle, provided it is implemented within controlled guardrails. Kayyal highlights that AI can deliver substantial value when applied to requirement summaries, code assistance, test generation, defect triage, and operational support. However, the highest return on investment occurs when AI is fully integrated into existing workflows rather than treated as a standalone tool.
Kayyal warns against the misconception that technology will entirely replace human workers, calling it a dangerous myth. The reality is more nuanced.
“By applying guardrails, you basically ensure that you are deploying AI where it makes sense from an impact perspective while balancing it with the human intervention,” Kayyal says.
This balance is especially vital in complex business use cases such as corporate lending for small and medium enterprises. Realizing the benefits of AI in credit scoring and underwriting requires rigorous data quality, robust governance, explainable models, and a human-in-the-loop framework to finalize decisions safely.
With offices in Turkey, Dubai, and the US, DefineX has helped financial industry clients around the world with their expertise, drawn from a strong team of bankers, consultants, engineers, and marketers.
Another area DefineX has focused on is embedded banking, which has been big for modern financial institutions looking to drive growth and stay relevant by integrating services directly into daily digital ecosystems. For example, the consultancy helped Isbank build a scalable software infrastructure to seamlessly deploy checkout and financing solutions across 15 external platforms.
