Banking in 2026: When money becomes invisible

In 2026, banking in the Gulf and beyond will feel less like a place you visit and more like a digital utility running quietly in the background of daily life. Artificial intelligence, embedded finance and real-time payments are fusing into a new operating system for money that will challenge long‑standing profit pools and legacy business models. For Gulf banks, the next 12 months are not about tweaking apps, but about deciding what kind of institution they want to be in this new landscape.

AI, from buzzword to balance sheet

Analysts estimate that generative AI could unlock upto 340 billion dollars of annual value for global banks, roughly 3 to 5 per cent of industry revenues. That upside is matched by a competitive risk, as AI agents help customers optimise deposits, switch products faster and demand more tailored pricing.

Jamie Dimon of J.P. Morgan has warned that there will be “no job, no function, nothing that won’t be affected” by AI, urging banks to use the technology to “do a better job” or be left behind. For GCC banks, with relatively modern technology stacks and supportive shareholders, this is a rare chance to leapfrog slower Western incumbents by industrialising AI in credit, compliance and customer engagement, not just piloting chatbots on the side.

Banking that is available, yet invisible

Alongside AI, embedded finance is quietly changing where and how people experience financial services. Instead of going to a bank for a loan, a customer might receive instant credit at checkout on an e‑commerce platform, a ride‑hailing app or a B2B software dashboard. Global estimates suggest that embedded finance could generate hundreds of billions of dollars in annual revenues by 2030, as payments, lending, insurance and investments are woven into non‑financial customer journeys.

This is not a simple story of fintechs replacing banks. A new “coopetition” model is emerging, in which regulated balance‑sheet institutions provide licences, risk management and compliance capabilities, while fintechs and large digital platforms own the customer interface and data‑rich engagement layer. Banking becomes utility‑like: always available, mostly invisible, judged on reliability and intelligence rather than branch networks or marble lobbies. The future of banking is as much about new intermediaries that sit where customer attention already lives as it is about traditional banks themselves.

Payments go instant, margins go thin

Payments, historically the steady annuity engine for many banks, are also being rewritten. More than 100 countries now operate real‑time payment systems, with instant transactions projected to reach roughly 27 per cent of all electronic payments. Account‑to‑account transfers and digital wallets are increasingly offering faster, more convenient and secure options than cards or cash for everyday use.

In the GCC, payments innovation sits at the heart of national digital agendas. Saudi Arabia and the UAE are rolling out instant payment infrastructure, interoperable wallets and pilots of central bank digital currency (CBDC) corridors that could reduce friction in trade and remittances. For local banks, the challenge is two‑fold: defending fee income as pricing compresses, while investing in richer data‑driven services for merchants and consumers, from smarter reconciliation to embedded working capital solutions.

Digital assets enter mainstream

Digital assets are also shifting from speculative side‑show to system‑level infrastructure. Stablecoins—reserve‑backed digital tokens usually pegged to the US dollar—already process annual on‑chain transfer volumes in the tens of trillions, outstripping some of the world’s largest card networks and growing more than 80 per cent year‑on‑year in recent periods.

At the same time, tokenization is turning previously illiquid assets into digitally native, fractional claims that can be issued, traded and settled with far lower friction. In the GCC, real estate has become the flagship use case: Dubai has seen multi‑billion‑dollar development pipelines prepared for tokenization, and pilot frameworks from the Dubai Land Department and the virtual asset regulator envisage tokenized property potentially reaching a mid‑single‑digit percentage of city‑wide transaction value over the next decade.

Trust, risk and the governance gap

As innovation accelerates, regulators and societies are asking tougher questions about safety, fairness and resilience. Supervisors from Europe to the GCC are tightening expectations around AI explainability, cloud concentration, cyber security and financial crime controls, even as they encourage experimentation through sandboxes and open banking regimes.

McKinsey has warned that AI could both lift productivity and erode traditional profit pools by increasing price transparency and reducing customer inertia, potentially shaving billions of dollars from bank profits if incumbents fail to adapt. Futurists argue that classic “Know Your Customer” rules will increasingly be joined by “Know Your Machine” and “Know Your Agent”, as banks are held accountable for the behaviour of their AI systems as well as their staff. Boards will need to treat AI risk as a core part of enterprise risk management, not a niche technology topic delegated to the IT function.

Green, inclusive and distinctly Gulf

Finally, sustainability and inclusion are moving from edge issues to central strategic levers, particularly in Middle Eastern financial systems. Across the region, billions of dollars of value are at stake as economies retool for low‑carbon growth, infrastructure investment and diversification beyond hydrocarbons.

Green bonds, transition‑finance structures and ESG‑linked lending are gaining traction, while consumer apps begin to incorporate carbon‑footprint visualisations and sustainable‑spending nudges into everyday financial experiences. At the same time, digital wallets, instant payments and SME‑focused fintechs are expanding access to formal financial services for younger and underbanked groups, a critical priority in demographically youthful GCC economies.

The call to action

For Gulf banks and policymakers, the coming year is therefore about deliberate repositioning rather than incremental digitisation. Institutions that embrace AI‑native operating models, plug into embedded finance ecosystems, invest in modern payment rails, and put trust, security and sustainability at the core of their propositions will shape the region’s financial landscape for the next decade. Those that delay may discover that in the age of intelligent, invisible banking, sheer size is no longer a guarantee of relevance.

- The writer is the host of the popular “Money Majlis” podcast. He was previously the global head of retail banking and wealth management at a leading regional bank.