Transforming Internal Audit: A Strategic Imperative for Middle East Fintech

By Sanjay Rajagopalan, Managing Director, Protiviti Member Firm for the Middle East region

A transformative wave is sweeping across the financial landscape in the Middle East. Our region, long known for its oil wealth and traditional banking strongholds, is rapidly emerging as a global fintech hub. From the gleaming towers of Dubai International Financial Centre to the innovative startups in Riyadh and the tech incubators of the Abu Dhabi Global Market, we are witnessing a digital renaissance that promises to reshape our economic future. Yet, as we stand on the edge of this exciting new era, we face a critical challenge that demands our immediate and urgent attention: the evolution of internal audit standards in the face of technological disruption.

The fintech revolution signifies a seismic shift that’s redefining our financial systems. Blockchain technology is challenging traditional notions of transaction verification. AI is revolutionizing credit scoring and risk assessment. Big data analytics are providing unprecedented insights into consumer behaviour and market trends. In this rapidly evolving landscape, our traditional approaches to internal auditing are quickly becoming obsolete.

As leaders in the Middle East‘s financial sector, we must recognize that this technological shift presents both immense opportunities and significant risks. The potential for growth and innovation is considerable, but so too are the challenges of cybersecurity, data privacy, and regulatory compliance. In this context, the global evolution of internal audit standards is essential to our region.

A Strategic Shift in Internal Auditing

The new Global Internal Audit Standards represent a more integrated and strategic approach of the auditor’s role in the digital age. No longer can we view internal auditing as a retrospective and siloed function, focused solely on financial reporting and compliance. Instead, we must embrace a forward-looking, strategically oriented approach that positions internal audit at the very heart of our organizations’ decision-making processes.

This strategic shift encompasses several key dimensions. First and foremost is the move towards proactive risk management. In the fast-paced world of fintech, waiting for risks to materialize before addressing them is a luxury we can no longer afford. Our internal audit functions must evolve to become proactive risk management partners, working together with executive leadership to anticipate and mitigate potential threats before they emerge. This requires a deep understanding of both technological trends and the unique regulatory landscape of the Middle East.

Equally crucial is the integration of technology into the audit process itself. As our fintech firms leverage increasingly sophisticated technologies, our auditors must become technology experts. They need to understand not just the mechanics of blockchain or AI but their strategic implications for our businesses. This technological proficiency will enable our auditors to provide valuable insights on everything from system vulnerabilities to the ethical implications of algorithmic decision-making.

The focus on operational efficiency is another crucial aspect of this evolution. In the competitive world of fintech, operational agility is vital to success. The new audit standards emphasize continuous auditing and real-time monitoring, leveraging advanced analytics to provide timely insights that can drive operational improvements. By embracing these approaches, our internal audit functions can become catalysts for innovation and efficiency across our organisations.

Perhaps most importantly, the evolving standards call for internal audit to align closely with organisational strategy. Internal auditors must understand the ‘how’ of our operations and the ‘why’ – the strategic goals and market positioning that drive our decision-making. Only then can they provide valuable insights that help steer our organisations toward long-term success.

The Urgency of Adaptation

The need for change is urgent, particularly in our region. The Middle East’s fintech sector is growing at an unprecedented rate, with investments pouring in from local and international sources. Our regulatory bodies, from the UAE’s DFSA to Saudi Arabia’s SAMA, are developing innovative frameworks to support this growth. In this dynamic environment, we must maintain our internal audit practices. The cost of inaction is high. Firms that fail to adapt risk not only regulatory non-compliance but also strategic obsolescence. In a sector where trust is paramount, robust and forward-thinking internal audit practices are essential to maintaining investor confidence, consumer trust and stakeholder expectations.

A Roadmap for Transformation

Transforming our internal audit functions to meet these new challenges will require concerted effort and strategic investment. A comprehensive roadmap for change must begin with a focus on talent. We need to attract and retain auditors who are both financially savvy, technologically proficient, and strategically minded. This may involve rethinking our recruitment strategies and investing heavily in ongoing training and development for upskilling people.

Hand in hand with this focus on talent must come a wholehearted embrace of technology. Our audit functions need to be at the forefront of technological adoption. This means investing in advanced analytics platforms, AI-powered audit tools, and robust cybersecurity systems. These technological investments will not only enhance the efficiency of our audit processes but also ensure that our auditors are equipped to understand and evaluate the cutting-edge technologies being deployed across our fintech sector.

Fostering collaboration is another crucial element of this transformation. Breaking down silos between internal audit and other organizational functions is essential. We must create cultures where auditors work closely with IT teams, risk management professionals, and business strategists. This collaborative approach will ensure that our audit functions have a holistic view of our organizations and can provide insights that are truly valuable at a strategic level.

Our audit methodologies too, must evolve to become more agile, risk-focused, and forward-looking. This may involve adopting new frameworks that emphasize continuous auditing and predictive risk assessment. Moving away from periodic, retrospective audits towards a model of ongoing monitoring and analysis, we can ensure that our audit functions provide real-time insights that drive business performance.

Finally, as our audit practices evolve, we need to maintain open dialogues with regulatory bodies to ensure alignment and contribute to developing supportive regulatory frameworks. The Middle East has the opportunity to lead the way in crafting regulatory environments that foster innovation while maintaining robust risk management practices. Our internal audit functions can be crucial in shaping these regulatory conversations.

A Call to Action

The evolution of internal audit standards presents an opportunity for change. By embracing this change, we can keep pace with global best practices and define the future of internal auditing in the digital age. As leaders in the financial technology space, we must champion this transformation within our organisations. We must allocate the necessary resources, drive cultural change, and position internal audit as a strategic partner in our journey toward innovation and growth. The path ahead is challenging, but the rewards are immense. By revolutionising our approach to internal auditing, we can build more resilient, efficient, and trustworthy financial institutions. We can create an environment that fosters innovation while maintaining the highest risk management and corporate governance standards.