Discover the booming Saudi fintech market, experiencing unprecedented growth and competing with neighboring economies. With record funding and advanced technology infrastructure, explore the thriving industry supported by government backing.
Unprecedented growth is being seen in the Saudi fintech market. According to a survey by the U.S.-Saudi Business Council, it has started to compete with neighboring economies Egypt and the UAE in startup investments in recent years.
One of the most advanced and well-capitalized financial service sectors may be found in Saudi Arabia. It includes innovative technological advancements that enhance or automate financial services. These include data management, capital market services, lending, payments, and insurance.
Kingdom fintech enterprises increased 79% YoY until August 2022. 10 of Saudi Arabia’s 147 fintech businesses operated in 2018. Liberalized business regulations caused this rapid expansion. Investment and technology infrastructure are also significant.
In 2022, Saudi fintech startups received record funding. Between September 2021 and August 2022, Saudi Arabia’s fintech industry got SAR1.5 billion ($402.2 million).
Venture capital funding in Saudi Arabia tripled to SAR2.2 billion ($584 million) in H1 2022. The Kingdom’s technology and digital transformation investments topped 2021’s total. Saudi Arabia’s venture capital access rose from 12th to ninth in IMD’s Global Competitiveness 2022 study.
Fintech investment agreements led the first half of 2022. Albara’a Alwazir, the U.S.-Saudi Business Council’s director of economic research, said Sequoia, 500 Global, and Mastercard invested in fintech startups.
“Continuous growth has been supported by well-developed technology infrastructure, including widely available 5G and cloud services, high domestic demand for financial services, and ongoing government support.”
By 2030, the market is anticipated to triple
By 2030, Saudi Arabia wants to increase its direct GDP contribution from SAR1.2 billion ($317 million) in 2021 to SAR13.3 billion ($3.6 billion). There will be 525 active fintech companies and 18,200 direct jobs in the fintech sector.
Fintech is a crucial component of not only the future of the financial services sector, but also of several Vision 2030 activities, including:
- Increasing the private sector’s GDP
- boosting small and medium-sized businesses (SMEs)
- securing international investment
- the growth of the digital economy
- improving the business environment
Saudi Arabia wants to attain a number of milestones by 2025, including increasing the number of active fintech participants to at least 230 businesses, achieving 70% of non-cash transactions, and increasing the GDP contribution of fintech to SAR4.5 billion ($1.2 billion).
Development of digital services
Along with record fintech licenses, the Saudi Cabinet licensed three regional digital banks. STC Pay would become a SAR2.5 billion ($667 million) digital bank first. Abdul Rahman bin Saad Al-Rashed and Sons Company launched Saudi Digital Bank with SAR1.5 billion ($400 million). D360 Bank, the third Saudi digital bank, acquired its license lately.
The PIF backed D360 Bank. These advances will enable consumer microfinance, payments, and insurance brokerage without a physical firm.
After digital bank licensure, Saudi Arabia has 35 banks. This includes 11 traditional Saudi banks, 3 digital Saudi banks, and 21 international banks. SAMA’s Open Banking Policy should boost Saudi fintech competition. especially as open consumer financial data could lead to new financial products and business models.
Saudi citizens have a particularly high demand for a range of financial services, including banking, insurance, investing, asset management, and financing that complies with Shariah. The high rate of smartphone adoption and the large number of banked young people made the shift to a booming digital economy relatively quick.
In recent years, Saudi Arabia has seen a dramatic increase in the use of cards and electronic payments. Since 2016, it has climbed steadily, and the Covid-19 epidemic has caused an additional acceleration. The shift to a digital economy has also been quickly adopted by Saudi consumer habits. According to a 2022 Mastercard survey, 89% of Saudi Arabians utilized at least one new payment option in the previous year.