The financial technology (FinTech) sector in Saudi Arabia is experiencing significant growth, driven by strategic initiatives aimed at fostering innovation and digital transformation under “Saudi Vision 2030.” The country is emerging as a key financial hub in the region, leveraging modern technologies, especially artificial intelligence, to support the financial sector.
Digital transformation expert Ramez Al-Qara describes FinTech as the evolution of the banking and financial system towards digitization. He cites examples such as digital wallets, which are popular among telecom companies in Egypt and Saudi Arabia, enabling users to transfer money easily. Other examples include crowdfunding platforms and Tap to Pay services that allow consumer payments via mobile phones.
More Convenient and Efficient
Saudi Central Bank Governor Ayman Al-Sayari emphasizes that enabling financial innovation is crucial to the country’s economic transformation. He notes that this commitment reflects the official efforts to develop the financial system, which plays a vital role in improving service efficiency and enhancing competition while maintaining financial stability and flexibility.
The “FinTech Saudi 2024” conference highlighted this direction, showcasing the launch of the first Saudi FinTech platform utilizing AI for financial risk management and big data analysis. This approach enhances financial institutions’ ability to adapt to rapid changes in the global financial market.
According to Al-Qara, FinTech offers more convenient and efficient customer service at competitive rates. These services simplify payment and fund transfers between companies and their employees, eliminating the need for intermediaries. Advanced technologies like blockchain enhance financial transparency and management, fostering greater competition among companies to offer innovative, fast, and easy payment solutions.
Rapid Expansion
Saudi Arabia’s FinTech sector has seen remarkable developments in recent years. A report by Arthur D. Little indicates that the number of FinTech companies in the kingdom rose from 89 in 2022 to 200 in 2023, attracting investments exceeding 4 billion riyals (approximately $1.1 billion) over the past five years.
This growth is attributed to several factors, including the “FinTech Saudi” initiative and the Saudi Central Bank’s regulatory sandbox for FinTech. Significant financial support from entities like the Saudi Venture Capital Company and the Financial Sector Development Program has also been crucial, with 300 million riyals (around $80 million) allocated to support startups.
Arthur D. Little’s report suggests that Saudi Arabia is on track to become a global FinTech leader, thanks to regulatory reforms and strategic investment support. The number of FinTech companies is projected to reach 525 by 2030, contributing significantly to the goals of “Vision 2030,” particularly in enhancing the digital economy and increasing electronic payments in the retail sector to 80% by 2030.
Artificial Intelligence and Partnerships
AI was a central theme at the “FinTech Saudi 2024” conference, highlighting its role in financial data analysis and investment decision-making. Al-Qara noted that AI has proven capable of enhancing customer experience and providing tailored services to meet individual needs. This aligns with Saudi Arabia’s efforts to lead in FinTech, improving operational efficiency and cybersecurity while offering innovative financial solutions.
Saudi Arabia’s commitment to becoming a global FinTech hub is further evidenced by agreements with international FinTech companies. These partnerships aim to develop AI-driven solutions to enhance cybersecurity and improve digital payment experiences.
The international participation at the “FinTech Saudi 2024” conference underscores the global interest in Saudi Arabia’s FinTech sector. The kingdom aims to leverage this interest to expand international partnerships and support local FinTech companies in their global ventures.
Benefits and Challenges
Professor Jihad Fitroni highlighted several key impacts of technology on finance, including improved access and financial inclusion, cost reduction, increased efficiency, development of personal investment and financing tools, enhanced security, fraud reduction, financial innovation, and improved customer experience. However, he also noted challenges such as increased system complexity, data protection difficulties amid rising cyberattacks, and regulatory challenges in managing new financial services.
Fitroni summarized, “Technology in finance is a driving force for change, improving efficiency and inclusivity, and opening new avenues for innovation. However, it also requires continuous adaptation from companies and regulatory bodies.”
In conclusion, Saudi Arabia is making significant strides in the FinTech sector, driven by “Vision 2030” and its focus on digital innovation. This momentum positions the country as a leader in FinTech, contributing to its digital economy and developing a sustainable financial system for the future.
