A new study from Stitch finds fragmented legacy systems are slowing innovation across Saudi Arabia and the UAE despite rapid digital banking market growth.
Stitch, the Riyadh-based unified platform for launching and scaling financial products globally, has released a comprehensive study examining the technology infrastructure barriers constraining financial innovation across Saudi Arabia and the United Arab Emirates.
The GCC digital banking market is set to grow from US$12.7 billion in 2025 to US$47.6 billion by 2032, reflecting expanding opportunities across payments, lending, deposits and related services. Yet fragmented technology infrastructure and persistent reliance on legacy systems are preventing financial institutions across the GCC from capitalising on growth prospects.
While vendor adoption has grown, with 87% of banks now relying on external platforms, this shift has not eliminated legacy systems. Instead, modern capabilities have been layered on top of older architectures, creating increasingly complex and unmanageable technology environments.
In the UAE specifically, 94% of financial institutions use external vendors, the highest adoption rate in the region, yet this proliferation has increased operational complexity.
Over half of financial institutions in Saudi Arabia and the UAE report that their current technology stack has caused them to miss business opportunities. Across institution types, 70% of exchange houses and financing companies, 76% of fintechs, 50% of banks and 45% of other financial institutions report that their current technology setup has limited growth. The data shows technology infrastructure is creating disadvantages rather than accelerating innovation.
Financial institutions cite slow implementation of product launches and updates, integration challenges across vendors and systems, high costs and lack of flexibility. More than one in five institutions describe their systems as outdated or difficult to upgrade.
Across the Gulf, 73% of Saudi Arabian institutions and 66% of UAE institutions report being heavily dependent on third parties for product launches and updates. This dependency is most pronounced among Fintechs, at 80%, which rely on vendor release cycles rather than internal roadmaps.
More than 60% of institutions offering lending products operate exclusively on legacy systems. Lending remains one of the most risk-sensitive and infrastructure-heavy functions within financial institutions, helping explain why vendor adoption and cloud migration alone have not resolved modernisation challenges.
“Everyone talks about digitisation and AI adoption across the sector, but the reality is that legacy and fragmented systems still sit at the heart of all institutions. They slow things down, limit progress and drain budgets; the hidden culprit. As the MENA region continues its unprecedented progress, modern stacks and a unified operating system unlock a new dimension of opportunity and growth,” said Mohamed Oueida, Founder and CEO, Stitch.
The tension between modernisation ambition and execution constraints is especially visible in Saudi Arabia as companies work to meet Vision 2030 economic diversification goals. The Saudi Arabian digital banking market generated revenue of US$1,094.1 million in 2025 and is expected to reach US$3,591.9 million by 2033.
Despite this growth, 84% of Saudi Arabian financial institutions plan to modernise or upgrade their technology within the next 12 months, signalling that current infrastructure cannot support the required pace of innovation. In the UAE, 78% of institutions plan similar upgrades.
However, high switching costs, long-term contracts, regulatory and compliance concerns and downtime risks continue to constrain the transition to modern platforms.
A clear majority of decision-makers are now favouring consolidation. Some 73% of Saudi Arabian institutions and 66% of UAE institutions agree a single unified vendor would deliver more value than managing multiple disconnected platforms.
Expected benefits include easier management from a single interface (50%), improved customer experience (52%), faster product launches (50%) and lower running and maintenance costs (42%). For exchange houses and financing companies, 65% expect easier management and 59% expect faster product launches.
Among fintechs and exchange houses, which report the highest levels of missed opportunities and vendor dependency, modernisation commitment reaches 93%, highlighting a strong willingness to pursue significant infrastructure change.
Unification consolidates complexity into a single platform, giving product control back to enterprises while replacing fragmented legacy systems with integrated infrastructure designed to prioritise innovation.
