Chairman of the Kuwait Banking Association (KBA) and Chairman of Kuwait Finance House (KFH), Hamad Abdulmohsen Al-Marzouq, presented a comprehensive outlook on the resilience and strategic direction of Kuwait's banking sector, positioning it as a pivotal platform for national economic transformation. Speaking at the panel "Financial Infrastructure as a Platform" during the "Kuwait – The Beacon of a New Era: Foundations for Economic Transformation" event, held in parallel with the IMF–World Bank Annual Meetings, Al-Marzouq detailed how the sector is converting its stability into a competitive advantage and a foundation for global growth.

The panel was attended by Kuwait’s Minister of Electricity, Water and Renewable Energy and Minister of Finance and Acting Minister of State for Economic Affairs and Investment , Dr. Subaih Abdul Aziz Al-Mukhaizeem, as well as Ambassador of the State of Kuwait to the United States of America, Sheikha Al-Zain Al-Sabah, along with a number of senior leaders and officials from Kuwait’s banking sector.

Banking Sector Strength: A Strategic Asset Attracting Investment

When asked how the financial system's strength can attract long-term international partners and investment, Al-Marzouq affirmed the sector's exceptional health.

"Kuwait’s banking sector is indeed well capitalized, backed by prudent regulatory oversight and a capital adequacy ratio nearing 20%, well above the regulatory minimum of 13%. It has consistently demonstrated resilience especially in the aftermath of global economic crises," he stated. He provided up-to-date figures from the Central Bank of Kuwait H1 2025 report: "Asset quality remains strong, with a gross non-performing loan ratio of just 1.6% and an NPL coverage ratio of 242.1%, probably considered the highest in the region and globally. Liquidity as measured by LCR or liquidity coverage ratio is solid at well above 150%, and profitability is good with local banks achieving ROE of around 12% reflecting operational efficiency and robust returns."

He concluded, "This strength is more than a safeguard — it’s a strategic asset. Kuwaiti Banks have been leveraging these strengths through forming strategic partnerships and ventures with international asset managers, positioning Kuwait as a secure and credible financial hub in the GCC and MENA markets."

Furthermore, he noted that this financial robustness is utilized through syndicated lending and structured finance. "Mega projects that were financed or will be financed by Kuwaiti banks include power stations, Mubarak Port, and mortgage lending, which is expected to be approved soon under new legislation.”

Kuwait's Vision for Ethical and Islamic Finance

Addressing the growing relevance of ethical and Islamic finance, Al-Marzouq highlighted Kuwait's historical credentials and future ambitions.

"The Islamic finance industry today is valued at around US$ 5–6 trillion. Kuwait, one of the pioneer countries in Islamic banking with the first license granted in 1977, has the credibility to shape its next phase. One of the main ambitions of Islamic banking is to fully cater to the financial needs of the Muslim population of 2 billion making a quarter of the world population," he explained.

To ensure international relevance, he stressed the drive for digital transformation and standardized practices. "KFH among many Islamic banks has been at the forefront of setting harmonized Shariah standards that facilitates cross-border flows and build investors’ confidence just as we, at Kuwait Finance House, have done in UK, Germany, and Egypt. We have been integrating ESG principles within Islamic instruments introduced such as green sukuk and sustainable energy financing. We have also been focusing on nurturing fintech sandboxes that export Kuwait-certified solutions. These innovations ensure Kuwait remains internationally relevant, while appealing to diverse markets seeking ethical, inclusive, and Sharia compliant financial system."

Safeguarding Trust and Balancing Regulation in the Digital Shift

Discussing the acceleration of digital banking, Al-Marzouq focused on the critical role of trust.

"This question is twofold: the first relates to trust, which is considered the most valuable currency in banking, and every digital initiative must reinforce it through diligent security to ensure safety against cyber-attacks to the best degree possible," he stated. He also cited the domestic rollout of instant payments: "Kuwait’s rollout of instant payments system (WAMD), which requires only entering the beneficiaries’ phone number demonstrates the commitment to adopt the latest payments technologies by the banking sector. WAMD has processed over a million transactions in its first year and has been well received by customers reflecting confidence in digital rails."

To mitigate the sophisticated risks from hackers, he noted two measures: " The first involves fraud awareness campaigns by the Central Bank and the local banks, while the second is fraud-reporting war room established by the concerned authorities to receive reports and immediate action."

On the balance between regulation and agility, he highlighted the collaborative approach in Kuwait. "Although it is not a secret that banks around the world always complain about regulations, the situation in Kuwait is probably better than other countries because of the continuous dialogue between the banks and the Central bank as well as other regulatory authorities. This has led to a balanced regulations that take into account public interest while not impeding banks agility and innovation."

Lessons from Advanced Markets and Capital Mobility

On adopting lessons from advanced markets without stifling local adaptability, Al-Marzouq noted that policies must be shaped by a country's size, the maturity of its financial institutions, and national objectives.

"Among the main lessons is how volatile liquidity can shift from one market to the other as global markets witness substantial increase in hot money. The 2008 crisis exposed the vulnerability of depending on unstable capital flow," he remarked, citing the US government's emergency measures during that period. "Other areas of interest where we can benefit are the advances achieved in compliance, risk management, and the deployment of AI and robots in achieving fast and efficient products and services provided to our clients."

Linking Financial Infrastructure to Economic Transformation

Al-Marzouq clearly defined the economic transformation Kuwait is seeking: "We need to transform the economy from being largely dependent on oil into a more diversified economy that can basically achieve two objectives: 1. Ability to generate foreign currency from other sources than oil and 2. The ability to generate jobs. This transformation has to be done jointly between the public and private sector."

He confirmed that expanding the private sector's role is a priority under Kuwait’s Vision 2035. To facilitate this, "financial institutions and private sector players in general are continuously upgrading their technology infrastructure to be able to adapt and facilitate the inflow of capital."

He offered a specific example of contribution: "Let me give you a specific example: at KFH we have been investing in our business-to-business systems and protocols that have made us now better positioned to integrate clearing and settlements with global exchanges, making Kuwaiti sukuk and other instruments seamlessly tradable abroad." He stated this work contributes to positioning Kuwait as a regional liquidity and risk management hub, supported by new digital rails for cross-border payments and blockchain-enabled trade finance, anchoring Kuwait at the center of capital mobility.

Evolving Beyond Traditional Banking: A Platform for Growth

Finally, Al-Marzouq outlined the sector's evolution into a platform supporting entrepreneurship, financial inclusion, and cross-border innovation.

"The Kuwaiti banking sector is evolving beyond classic intermediation into a true platform for growth and inclusion. Our banks are creating venture financing ecosystems that support entrepreneurship, embedding financial inclusion by extending mobile-first solutions to different social segments including for example migrant workers," he said.

Crucially, the sector is "adapting open banking through Application Programming Interfaces (APIs), a key component of Open Banking and Banking-as-a-Service (BaaS), which significantly promotes entrepreneurship. The objective is to promote Kuwait as a testbed for regional fintech interoperability." He concluded, "This way, our financial system becomes more than a banking channel — it becomes a convergence point for innovation, inclusion, and cross-border collaboration, enabling Kuwait to serve as both connector and catalyst for economic transformation."

Al-Marzouq concluded with a clear mandate for the future: "Kuwait’s banking sector stands at a unique juncture. Our resilience is proven, but our mandate now is to transform that stability into global investments and global technology. By fusing our heritage in Islamic finance with innovations in digital banking, and by deepening our linkages with international markets, we can ensure Kuwait is not merely adapting to the global financial future but is determined to be part of shaping it.”