By Market Research Saudi | Posted December 3, 2018
Saudi Arabian government is driving the development of financial technology (fintech) sector as a part to diversify economy, cut-back on its oil dependency, and meet Vision 2030 targets. Finance becomes one of the prominent industries which has been earmarked for driving its future growth.
The Saudi Arabian Monetary Authority (SAMA) launched the Fintech Saudi Initiative, in line with Saudi Arabia’s Vision 2030 to support entrepreneurship and the enhancement of financial technology services. The initiative aspires to achieve a number of objectives, including: launching the first version of Kingdom’s fintech system; supporting local banks, international fintech companies and partners to establish fiverse fintech activities; and educating individuals to develop knowledge and skills in the fintech field.
This ongoing progress is mainly driven by the increasing use of big data and smart devices, the growing demand for financial services that is tailored to consumers' personal needs and requirements, as well as the new technologies that boomed recently such as Artificial Intelligence (AI) and Blockchain. These things has undeniably led to a major shift in the fintech services development in Saudi Arabia.
Granted Fintech Licenses
As the Saudi financial regulatory authority, the Capital Market Authority (CMA) has officially granted permissions to two fintech firms back in July 2018. Through these crowdfunding investment platforms on a trial basis, CMA aims to create opportunities for fintech ecosystem. It hopes to assist in providing capital needs and closing the funding gap, especially for small-to-medium-size companies and young entrepreneurs. This also marked the first important step towards making Saudi Arabia the real fintech hub in the region.
The first Fintech ExPermits (Financial Technology experimental permit) was granted to Manafa Capital, a Riyadh-based firm founded in January 2018. The second Fintech Expermit was granted to Scopeer, the first crowdfunding platform in Saudi Arabia, started back in 2017. As the applications from startups keep increasing, the CMA said that it will be accepting more applications to secure permission and commercialize fintech services in Saudi Arabia. On top of that, the government is aiming for a full-force development in the sector in order to diversify the national economy away from oil, and achieve the targets of the Vision 2030 reform plans.
Steering towards blockchain-powered nation
The Kingdom is set to revolutionise the fintech industry using blockchain technology. Banks and fintech companies in Saudi Arabia are collaborating to develop innovations and improve customer experience through blockchain development.
In 2017, the Islamic research and Training Institute, the arm of Islamic Development Bank, had signed an agreement with local firm Ateon and Belgium-based company SettleMint to do a technical feasibility study with the plan to use blockchain technology This aimed to develop sharia-compliant products and support financial inclusion-effort.
At around the same time, Al Rahji Bank also completed a cross border transaction within a few seconds using blockchain. Together with US-based Ripple, Saudi Arabia’s central bank signed a deal to allow banks in Saudi Arabia to use Ripple’s software to settle payments sent into and out of the country in February 2018. This would allow for cheaper, faster and also more transparent transactions.
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