Saudi Arabia, the largest country in the Gulf Cooperation Council (GCC) has witnessed a big uptick in the demand for fintech solutions since 2020, owing to the pandemic which served as a catalyst to fuel the surge. In 2021, the number of fintech companies increased by 37% as compared to 2020, while a massive investment of SAR 1.3 billion was made in venture capital into the fintech companies of Saudi Arabia. A survey done in early 2021 suggests, 74% of Saudis have used at least one fintech service which indicates the trends in the nation.
With a total transaction value of USD 42.25 billion as projected by the end of 2022, the digital payments segment leads the fintech industry. The average transaction value per user, centered in the Alternative Financing segment is expected to reach USD 98.83 thousand by 2022. Getting meticulous into the analysis, the neobanking segment is speculated to grow by 56.5% by 2023. The number of users in the digital payments segment is expected to cross 37.62 million by the year 2027.
From E-wallets to online lending apps and digital insurance aggregators, the fintech industry has reshaped payments services allowing users to carry out continuous and seamless transactions. Several fintech companies in the Kingdom of Saudi Arabia plan on employing Blockchain Technologies, Application Program Interface (API), Artificial Intelligence, and machine learning to further enhance their fintech solutions.
Saudi Central Bank (SAMA) has been instrumental in the development of financial technology in the nation. SAMA launched a regulatory sandbox environment in 2018, which enables fintech firms of Saudi Arabia and also international firms to test their digital products such as peer-to-peer (P2P) transfers, e-wallets, lending, and direct international transfers before it is unveiled to the citizens of Saudi Arabia. As reported in April 2020, there were 26 applicants whose products were being tested with SAMA’s sandbox. Moreover, SAMA has plans on collaborating with UAE Central Bank to build on fintech solutions for cross-border transactions in addition to digital currency projects.
As reported in January 2020, SAMA introduced its regulations to supervise payment services in the country. This enables payment solutions companies to offer their services. It also licensed banks to offer their electronic money transaction services while monitoring the efficiency and safety of payment operations.
Currently, the Kingdom is witnessing solid economic development under the Saudi Vision 2030 mission. It is a mission to reduce the dependency on oil and broaden the economy with infrastructure activities, tourism, recreation, non-oil trade, and more. One of the programs established in the vision is the Financial Sector Development Programme (FDSP) which will heighten and modernize the sector to set world standards, and will greatly aid the growth of the Fintech industry.
Saudi-based Emkan, one of the leading fintech companies in Saudi Arabia has been emerging as the fastest-growing digital finance company in the kingdom. The company offers sophisticated financial products such as Microfinance, Top up Finance, Purchases Financing, and Auto Lease. Furthermore, Emkan provides speedy financial services to the citizens of Saudi Arabia using its state-of-the-art lending system.
As reported in October 2022, Emkan in collaboration with Saudi-based Al Rajhi bank launched a revolutionary loan program called ‘Emkan loan for social security beneficiaries to the citizens of Saudi Arabia. The loan can be availed without a guarantor and the procedure is entirely done using Emkan’s official mobile app. Available for employees working in the government sector and private sector, the loan will be granted to borrowers with a minimum age of 25 years and not more than 60 years. Reportedly, it comes with the lowest interest rate in the Kingdom, and the amount of loan starts from SAR 50,000 to SAR 1.5 million.
In appreciation of its quick and easy financial solutions, Emkan won ‘Best Digital Finance Company Saudi Arabia 2022’ at International Business Magazine. The award has been conferred based on its innovative and customer-driven financial products with hassle-free customer care services as witnessed recently by its millions of customers in Saudi Arabia.
SAMA made an announcement in January 2021 that it is developing an Open Banking Initiative that brings an open banking framework that in turn leads to greater efficiency by sharing customer data securely yet consensually with third-party developers that will aid in developing innovative features like flawless execution of transactions, management of financial information, supplying real-time credit and more.
By 2030, Saudi Arabia aspires to expand from 82 to over 525 fintech companies that would create at least 18,000 job opportunities. Digital transactions are expected to increase by 70 percent within the next three years. As reported in June 2020, Saudi’s Financial Sector Development Programme (FSDP) introduced the Fintech Strategy Implementation Plan which further propels the growth while also aiding fintech to offer more than financial solutions like investments, retail, real estate, hospitality, healthcare, and so on.
Blog By Harish Rajulu
