Saudi Arabia Sets Course to Become a Global FinTech Hub

Saudi Arabia is rapidly advancing toward its goal of becoming a global FinTech powerhouse, driven by Vision 2030’s Financial Sector Development Program (FSDP). The nation’s burgeoning digital FinTech landscape was prominently showcased at FinTech 24, the flagship event organized by the Financial Sector Development Program, the Saudi Central Bank (SAMA), the Capital Market Authority (CMA), and the Insurance Authority (IA), and hosted by FinTech Saudi.

FinRate’s Report Highlights Surging Investments

During the event, FinRate launched its latest report, “Unlocking the Future: An Overview of the FinTech Opportunity in Saudi Arabia.” Despite global challenges in the first half of 2024, such as geopolitical uncertainties and high interest rates, Saudi Arabia’s FinTech sector continued to attract substantial investments. Between September 2020 and December 2023, the sector secured over $1.14 billion, with a remarkable $791 million invested in 2023 alone, reflecting a 231% increase from the previous year.

Strategic Vision Driving Growth and Innovation

The Kingdom’s commitment to FinTech, propelled by the FSDP and the FinTech Strategy Implementation Plan, has led to an impressive surge in startups and digital payment adoption. The number of FinTech companies has jumped from 89 in 2021 to over 226, surpassing initial targets. Regulatory bodies like SAMA and the CMA have played a critical role, fostering innovation through regulatory sandboxes and maintaining a continuous dialogue with FinTech players.

Ovais Shahab, Head of Financial Services at KPMG in Saudi Arabia, stated, “Saudi Arabia has built a conducive ecosystem for FinTechs to flourish. Strong regulator-backed enablers, access to capital, and collaboration among banks, coupled with favorable demographics, make it a space to watch.”

Diversifying the FinTech Landscape

Saudi Arabia’s FinTech ecosystem is expanding beyond traditional digital payments. Areas such as cybersecurity, RegTech, SME lending, trade finance, open banking, and digital banking are gaining traction. Alternative financing options like BNPL and crowd-funding are also flourishing, with BNPL customer numbers surging from 76,000 in 2020 to 10 million by 2022.

Additionally, SAMA’s proactive approach to open banking, including the launch of the Open Banking Lab in 2023, has further accelerated adoption rates. With over 1.3 million SMEs, B2B FinTechs solutions are in high demand to tackle challenges in credit access, payment processing, and financial management.

Future Growth Areas and Strategic Opportunities

Looking ahead, Saudi Arabia is poised to invest in emerging technologies like Web3, the metaverse, and augmented reality. The Kingdom is also leading in climate tech and sustainable finance, with $443 million invested from 2018 to 2023. The digital banking sector is gearing up for growth, with three digital banking licenses issued and two banks expected to launch publicly soon.

High-growth areas such as digital payments, alternative financing, open banking, and SME financing offer significant opportunities for investors and businesses. With success stories like Tamara and Tabby reaching unicorn status in the BNPL space, Saudi Arabia’s FinTech sector offers abundant scaling opportunities and innovation potential.