Al-Majid: Capital strength, liquidity, and planning are key pillars for strengthening banks

Adel Al-Majid, Vice Chairman and Chief Executive Officer of Boubyan Group, affirmed that enhancing the competitiveness of the Kuwaiti banking sector in the coming years is linked to its ability to continue developing its business models, diversifying funding and revenue sources, improving operational efficiency, and leveraging opportunities provided by capital markets, modern technologies, and sustainable finance. This, he noted, will strengthen the sector’s role in supporting the national economy and consolidating financial stability in the long term.

He pointed out that recent economic and geopolitical changes have underscored the importance of maintaining strong capital and liquidity levels, diversifying credit portfolios across various sectors, and enhancing proactive risk planning. He emphasized the need to test the capacity of funding sources and deposit stability to withstand various scenarios, thereby supporting the sector’s readiness and ability to handle changes efficiently.

This statement came during Al-Majid’s participation in a closed banking panel hosted by the Central Bank of Kuwait in collaboration with Global Finance magazine. The session was attended by His Excellency Bassel Al-Haroun, Governor of the Central Bank of Kuwait, and a group of senior executives from the Kuwaiti banking sector, to discuss the opportunities and challenges facing the Kuwaiti economy and financial sector, as well as the key transformations influencing the future of the banking industry and the priorities necessary to further strengthen the sector’s resilience and robustness at global, regional, and local levels.

**Priorities for the Coming Phase**

Regarding the structural and operational priorities for the Kuwaiti banking sector over the next three to five years, Al-Majid explained that the current phase requires improving the funding mix and diversifying revenue sources, alongside enhancing cost management efficiency and building broader capabilities to utilize capital market instruments. This will support banks’ ability to sustain growth amid economic and financial transformations.

He added that raising the efficiency of the banking sector requires continuing to enhance operational and cyber resilience in cooperation with the Central Bank of Kuwait, accelerating automation, and expanding the use of artificial intelligence (AI) in customer-facing services, internal operations, and decision-making. This should run parallel to developing frameworks for Environmental, Social, and Governance (ESG) standards and sustainable finance.

**Deepening Capital Markets**

On the topic of financing and liquidity laws, he affirmed that developing a deeper and more diversified local market for sovereign bonds and sukuk represents a crucial step in supporting capital markets and enhancing liquidity management efficiency within the banking sector. These instruments provide banks with a local base of high-quality liquid assets, helping them meet regulatory requirements and reducing reliance on foreign sovereign instruments for liquidity management.

He clarified that increasing the volume of sovereign issuances contributes to building a local yield curve, which serves as a clearer and more accurate basis for pricing bank issuances. This supports banks’ access to funding more efficiently and expands the range of investment tools and opportunities available in the local market.

Al-Majid further noted that developing the trading of sovereign debt instruments would support an effective local repurchase agreement market, thereby enhancing interbank liquidity and providing the Central Bank of Kuwait with more efficient tools for liquidity management and open market operations.

He highlighted that Boubyan’s experience in the sukuk and financing issuance markets underscores the importance of a more efficient local market, which helps establish a clear and specific benchmark for pricing issuances and supports banks’ ability to diversify funding sources and access a broader base of local and regional investors.

**Artificial Intelligence and the Future of Banking**

Regarding the impact of technology on the sector’s future, Al-Majid stated that AI has become a business agenda reshaping customer experience, productivity, growth, and risk management. He explained that the most significant opportunities for banks lie in providing more accessible, faster, and tailored services to meet each customer’s needs, while boosting employee productivity, operational efficiency, and regulatory functions.

He emphasized that accelerating innovation requires secure technology platforms, strong governance frameworks, and controlled environments that allow for the testing and scaled deployment of new solutions in a measured manner, while maintaining cybersecurity, protecting customer data, and complying with regulatory requirements and human accountability. He added that governance is a fundamental factor enabling financial institutions to expand the use of AI safely, confirming that Kuwait’s real opportunity lies in fostering a market capable of innovating in AI technologies while maintaining customer trust and operational resilience.

At Boubyan, Al-Majid clarified that the bank has adopted a comprehensive institutional program for AI transformation, based on a multi-year roadmap leading its transition from digital leadership to building an AI-enabled institution. This program focuses on customer experience, employee empowerment, and improving operational efficiency, all within a clear governance framework and responsible usage guidelines.

**Sustainable Finance**

Regarding sustainability, he noted that the Kuwaiti banking sector is witnessing a clear shift toward integrating ESG standards and sustainable finance into its strategies and financing and investment decisions. This is evident in the growth of investments in sustainable assets and projects, as well as the progress achieved by several Kuwaiti banks in this field.

He explained that Kuwait possesses promising opportunities to expand sustainable finance, particularly in renewable energy projects, financing for small and medium-sized enterprises (SMEs), and financing decarbonization pathways in the oil and petrochemical sectors. Additionally, he pointed to the development of a local sukuk market, which would help diversify capital sources and activate the secondary market.

Al-Majid concluded his remarks by emphasizing that the development of the banking sector in the coming phase requires a comprehensive vision that combines financial robustness, operational efficiency, and responsible innovation. He stressed the need to leverage opportunities in capital markets, AI, and sustainable finance to enhance the sector’s competitiveness and broaden its contribution to supporting economic growth and diversification in Kuwait.