‘Growth, Sector Convergence, and Cross-Border Connectivity’. These are three opportunities emphasised by Findexable and FinTech Saudi in their recent report ‘Fintech Saudi: Ready for Take-off’.
Key stakeholders are clear on the potential for Fintech in the Kingdom. Reem al-Harbi, Saudi Arabian General Manager of Checkout.com espouses this, commenting: ‘Saudi’s fintech ecosystem has never been as vibrant. From just ten fintech start-ups in 2018, there’s now an ecosystem, spanning payments, currency exchange, lending, banking, and personal finance.’
Such growth is mirrored in venture investment in Saudi Fintech. 2021 was a record-breaking year, totalling US$548 million compared to US$148 million in 2020 and a combined value of US$361mn between 2017 and 2020.
The regulatory environment is evolving in step. Expected to go live in 2022, the Saudi Open Banking Framework demonstrates how regulators are keen to diversify and create genuine competition with the financial services sector.
Thus, with good access to investment and a supportive regulatory climate, Fintech start-ups are poised to disrupt a domestic market that has long been dominated by a limited number of banks.
Regionally, opportunities abound. Within the GCC there is work to do on cross-border standardisation but there have been promising signs. Saudi Arabia’s deal with Bahrain to treat cross-border debit card transactions as domestic transactions is indicative of this and Saudi Fintech start-up Lean has offices in Saudi, the UAE, and the UK.
In the wider MENA region, low engagement with formal banking infrastructure juxtaposed with high penetration of mobile technologies represents an opportunity for expansion. Whereby there was no previous demand, apps such as Careem have demonstrated the appetite for innovative propositions in countries such as Egypt and Jordan.
Domestically, a young population has embraced new technologies and Saudi Arabia has achieved the highest level of contactless payments in the MENA region at 94%. Internet access has also shifted the mood for investing. Contrasted with 2012, whereby Dawul CEO Mansour Al-Harbi was forced to close a venture owing to poor technological infrastructure, he comments ‘Now it’s feasible to launch products, and I’d rate the infrastructure in major markets such as Jeddah and Riyadh as A+.’
Findexable concludes that whilst challenges such as attracting quality talent remain, Fintech in Saudi Arabia and the GCC is entering a new period. Regulation is key in ensuring the growth of a sustainable ecosystem. However, Blockchain, AI, Big Data, and lending for SMEs are key areas of focus for fintech in Saudi Arabia.
To read the full report, follow this link
To find out more about Saudi Arabia’s open banking reforms, follow this link
