Legacy Systems Continue to Slow Financial Innovation in Saudi Arabia and the UAE
Financial institutions in Saudi Arabia and the United Arab Emirates are still grappling with legacy technology that is limiting innovation, increasing costs and reducing execution speed, according to new research commissioned by Stitch and conducted by YouGov.
The study found that outdated infrastructure, together with limited control over product execution, remains a major obstacle for banks, exchange houses, financing companies and fintech firms in both markets. While many institutions have adopted third-party technology vendors, the report suggests that these arrangements have often been layered on top of older systems rather than replacing them entirely.
More than 87% of financial institutions globally said they currently use external technology vendors, while adoption in the UAE is even higher at over 94%. In the region, exchange houses and financing companies showed the highest reliance on external vendors at 93%, followed by banks at 87% and fintech companies at 84%.
Legacy Infrastructure Still Dominates Core Operations
Despite the broad use of external providers, legacy systems remain in active use across much of the financial services sector. Stitch noted that many institutions have modernized the customer-facing layer of their operations while leaving core infrastructure unchanged. This approach has created a fragile operating model in which new features depend on older systems that are harder to maintain and integrate.
The research showed that more than six in 10 institutions offering lending products still operate on purely legacy technology setups. According to Stitch, this creates added dependencies, slower delivery cycles and higher operational overhead as institutions attempt to introduce new capabilities.
Missed Opportunities and Execution Constraints
The report also highlighted the business impact of these fragmented environments. In Saudi Arabia, 64% of financial institutions said their current technology setup had caused them to miss business opportunities. In the UAE, the figure stood at 54%.
Among industry segments, fintech companies reported the highest level of missed opportunities due to technology limitations at 76%. Exchange houses and financing companies followed at 70%, while banks reported a lower but still notable 50%.
Stitch said another key concern is the loss of execution control. In Saudi Arabia, 73% of financial institutions reported heavy dependence on third parties for launches and updates. The figure was 66% in the UAE. The company added that working with multiple vendors can create integration issues, increase modification costs and limit flexibility.
Move Toward Unified Platforms
Against this backdrop, Stitch is advocating for a shift toward a single unified system that can serve as one operating layer across products, support launches and updates from one control plane, and provide a central source of truth for operations and data.
Survey results indicate growing interest in this model. In Saudi Arabia, 73% of financial institutions agreed that a single unified vendor offers more value than managing multiple vendors. In the UAE, 66% shared that view. Exchange houses and financing companies were the most supportive, with 83% favoring the approach, followed by fintech firms at 80%.
Respondents also said they expect unified platforms to simplify management, improve customer experience and accelerate product launches. Overall, 55% cited simplified management as a key benefit, 52% pointed to better customer experience, and 50% said the model would help speed up launches.
Modernization plans appear to be gaining momentum. In Saudi Arabia, 84% of financial institutions said they intend to upgrade or modernize their technology infrastructure within the next year. In the UAE, 78% said the same. Exchange houses and financing companies again led the way, with 93% planning upgrades, followed by fintech firms at 84%.
Industry Analysis
The findings reflect a broader challenge facing financial services in Saudi Arabia and the UAE: the need to balance innovation with the realities of legacy infrastructure. As institutions increasingly rely on external vendors, the ability to coordinate upgrades, maintain operational control and reduce integration complexity is becoming more important. The report suggests that modernization efforts are no longer optional, but central to competitiveness in fast-moving financial markets.
These trends also indicate that demand for unified financial technology platforms may continue to grow as institutions seek faster delivery, lower operational friction and stronger execution control.
