Despite global challenges, the banking sector has shown stability with increased net profits, total assets, and customer deposits. In this second edition of Banking perspectives: Jordan, we will consider the impact of rising market interest rates on loan duration and expected credit losses coverage ratio, as well as the industry’s robust granting and collection strategies.

Notably, there has been a significant increase in net profits in FY2022 by approximately 42 percent compared to FY2021, and total assets have grown by 5.9 percent since 31 December 2021, demonstrating the sector’s stability.

The financial landscape is undergoing a transformative evolution as fintech is increasingly integrating with legacy financial systems, requiring both substantial technological investments and regulatory support. In Jordan, notable advancements have been made, including the establishment of dedicated fintech entities by banks and innovative mobile applications offering enhanced convenience and personalized data-driven services. The upcoming wave of fintech innovation is anticipated to address critical global shifts, such as demographic impacts, the low carbon economy, automation, and emerging markets integration.

Jordan is positioned as a forward-looking player, embracing a profound commitment to embedding sustainability within the banking and finance sector. This move aligns with the surging momentum of the environmental, social, and governance (ESG) agenda across the Middle East. Government initiatives and rising demands for transparency in sustainability reporting are major actors driving this trend forward. However, the complexity of sustainability-related topics remains a central challenge in reporting, as it complicates the process of data collection and coordination.

In this dynamic environment, auditing quality has gained paramount importance. Businesses navigating rapid changes and disruptions must adhere to rigorous standards and meet stakeholder expectations. Technological innovations, novel approaches, cultural shifts, and a focus on talent are converging to shape an auditing framework that is both efficient and precise. This framework empowers firms to confront challenges head-on and deliver audits that excel concerning quality, timing, and deliverables.

The final stage of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) is underway, aiming to address tax challenges stemming from the digitalization of the global economy. With the enactment of global model GloBE rules, Jordan stands among 135 nations readying themselves for forthcoming reforms. The establishment of a 15 percent global minimum corporate tax rate and the authority to impose taxation bolster nations‘ ability to secure fair taxation from multinational enterprises.

The impending launch of Web 3.0 is set to pave the way for banking in the metaverse—an intriguing next step. However, significant challenges continue to exist in areas that require collaboration and consensus on standards, rules, and protocols. Key questions loom, including how to verify the provenance of virtual identities and connect them with real-world individuals. While technological expertise exists, overcoming these challenges demands collective efforts.

The integration of fintech into Jordan’s traditional financial systems is a trend well underway that will continue to demand significant investments from incumbents and regulatory backing from the Central Bank of Jordan (CBJ). Jordan shows a proactive stance by fostering fintech innovations and embracing sustainable financial practices. The journey toward a more inclusive financial landscape is underscored by the ESG agenda, innovation and robust regulatory reforms.

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