The fintech sector in Saudi Arabia seems to be making significant strides towards becoming a global hub. A report by Arthur D. Little points out that the Saudi Arabian Monetary Authority’s (SAMA) and other regulatory bodies’ central contribution in driving the sector’s expansion, outlining strategic milestones, critical developments, and the dynamic prospects defining the future of fintech in the region.
The number of fintech companies has grown from 89 in 2022 to over 200 by the end of 2023 and has garnered close to $1 billion, over SAR 4 billion, from local and global investors.
Arjun Vir Singh, Partner and Global C-Head of Fintech at Arthur D. Little added “To become a leading global fintech hub, the need to address emergent challenges of regulatory enhancement, broadening of funding avenues, and greater talent cultivation are key to maintaining the necessary momentum.”
This impressive growth has been catalysed by a range of measures fueled by SAMA and other regulators to stimulate innovation, with four in particular standing out:
- The establishment of Fintech Saudi was a catalyst for change, leading to the Fintech Accelerator program, the Fintech Saudi Innovation Hub, an online fintech directory, and regulatory enhancements in collaboration with SAMA and CMA.
- The SAMA-established sandbox allows controlled live testing of fintech innovation, facilitating a smooth transition into the open market.
- Start-up funding is available through various financial support mechanisms, such as Saudi Venture Capital Company (SVC), supported by CMA and the Financial Sector Development Program (FSDP), launching a SAR 350 million fund focused on fintech start-ups.
- Fostering financial partnerships to encourage cross-border collaborations and supporting Saudi fintechs in their international ventures will be instrumental in long-term success.
The SAMA Annual Fintech report published in 2023 shares the significant growth in digital payments, alternative financing like ‘buy now, pay later’ and debt crowdfunding, and financial product aggregation.
“Saudi Arabia is prioritising visionary leadership and proactive policy-making to cultivate a thriving fintech landscape. The Kingdom is not only addressing, but capitalising on strategic areas of improvement to propel forward its national economic ambitions of Vision 2030,” added Singh.
While the trajectory for fintech in Saudi Arabia points upwards, the journey involves strategic refinement in areas such as enhancing international positioning, fostering international partnerships, streamlining regulatory frameworks, broadening funding avenues, cultivating talent, and optimising infrastructure investment. By keeping momentum in these sectors, Saudi Arabia reinforces its fintech infrastructure, supporting both local and global investors and innovators.
