Article by: Makram Salloum, Regional Vice President – Middle East, Backbase
GCC banks have done something real. Onboarding journeys that took weeks now take minutes. SMEs access financing, trade services, and relationship management through polished digital portals. By almost every front-end measure, the region looks transformed.
But looking transformed and being transformed are different things.
Behind those interfaces, some banks are running on operational foundations that haven’t moved.
The SME that onboards in minutes waits days for internal workflows to catch up. The credit decision that appears instant was preceded by manual handoffs across three disconnected systems. The data needed to serve a customer in real time is locked inside processes that were never built to move that fast.
The customers end up repeating themselves multiple times across every channel. In parallel, a RM opens five systems to answer one question. The servicing experience contradicts everything the onboarding promised. But the digital storefront is no longer the problem. The real challenge is bridging the gap between the experience banks market to customers and the operational reality required to deliver it at scale.
Convenience without orchestration creates compounding friction
The fragmentation is not the product of poor decisions. It is the cumulative effect of launching the right capabilities at the right time, individually, but without a unified coordination layer underneath. New portals, RM tools, self-service channels, embedded services, and onboarding apps, each deliver genuine value. Collectively, they create friction.
Consider a typical SME client journey. Onboarding begins digitally. Documentation requests arrive by email. A relationship manager engages through one system. A support interaction happens through another. Compliance information is submitted separately. From the customer’s perspective, these feel like interactions with the same bank. Internally, relationship teams, operations, and compliance are each looking at different systems, with different data, trying to piece together the same picture.
This is what is described now as “swivel chair servicing” — employees spending as much time navigating systems as serving customers. Fragmentation extends into customer intelligence, onboarding processes, servicing workflows, and compliance controls, making it structurally difficult to deliver consistent, personalised experiences across the organisation.
Why the core is no longer the differentiator
Historically, banks seeking competitive advantage focused heavily on core banking modernisation. In many global markets, that logic still holds. Legacy infrastructure continues to constrain agility, inflate costs, and limit innovation.
This market is different. Many leading regional banks have already invested heavily in modern core infrastructure over the past decade. Core replacement alone no longer guarantees competitive differentiation. After all, large-scale rip-and-replace programmes introduce their own risks while competitors continue to move. The strategic question is therefore shifting. Competitive agility no longer lives in the core. It lives in the operational layer surrounding it.
The layer banks have been missing
Now that the front-end is built, the gap is what sits behind it. Banks are recognising the need for a unified orchestration layer sitting between core systems and the channels customers interact with daily. Its role is not to replace the core, but to orchestrate everything from customer journeys, onboarding, and servicing, to workflow automation, compliance controls, and channel coordination around it.
Without this, banks add digital experiences on top of fragmented operational foundations. The front-end appears modern, but behind the scenes processes remain dependent on disconnected workflows, duplicated data, and manual intervention. When properly implemented, this orchestration layer changes the equation.
Instead of rebuilding capabilities repeatedly across business lines, banks establish reusable services, unified workflows, centralised governance, and consistent customer intelligence that scale across multiple propositions simultaneously. An SME onboarding journey can be adapted for a new market or product configuration without rebuilding compliance processes or servicing models from scratch.
Building the foundation for AI-native banking
The orchestration layer is also the AI layer GCC banks are already investing in. Copilots for relationship managers. Automated credit decisioning. Intelligent servicing tools. The ambition is real.
But AI does not fix fragmentation — it exposes it.
A relationship manager copilot is only as useful as the data it can reach. An AI credit tool is only as good as the workflow it sits inside. An agent that has to reason across multiple disconnected systems is not an agent; it is an expensive search bar.
The banks that win the AI era will not be the ones with the most advanced models. They will be the ones with the most connected operating environments. Unified customer context. Consistent data. Orchestrated workflows that give AI something to actually work with.
The foundation and the AI strategy are the same investment. Banks that treat them separately will pay for both twice.
A more pragmatic path forward
For GCC banks, this points to a more pragmatic path forward. Innovation does not depend on high-risk core replacement to succeed. Banks can continue leveraging existing core investments while establishing a more agile operational foundation around them. This allows institutions to accelerate innovation, reduce fragmentation, improve governance, and scale customer experiences more effectively without introducing unnecessary disruption.
This is why the concept of a Banking Operating System is gaining traction. Not as another layer of technology complexity, but as the coordination engine capable of connecting the systems that already exist, orchestrating the workflows that run across them, and enabling the kind of consistent, intelligent customer experience that fragmented architectures simply cannot deliver.
