Fintech in Saudi Arabia

by | Nov 18, 2019 | Financial

November 18, 2019

Fintech is an emerging technological and financial industry, which uses technology to improve and advance financial services. The new mobile money transfer service industry is an excellent example of Fintech. Cryptocurrency is another excellent example of Fintech. The technology aims at revolutionizing the traditional methods of financial services delivery, making them faster and more efficient. Fintech has become popular in most developed countries, with most of the people carrying non-cash transactions to pay for services or buy goods. Fintech is a vital instrument of economic growth; Developed countries like Britain and the USA have utilized this technology to ease payments and other business transactions. Fintech promotes trading activities in the capital markets, business activities, and international trade, as well. For example, companies like PayPal and Pioneer facilitate international payments, which, in turn, facilitate international trade. As such, Fintech is promoting the growth of the financial industry and other businesses, as well.

Fintech will be an important tool for financial services in Saudi Arabia. One, Saudi Arabia’s vision 2030 aims at privatizing most of the government-owned corporations. This means that it will have to sell some of the shares, where the Fintech comes in. Fintech will facilitate easy, efficient, and faster trading platforms in the capital markets. Similarly, technology will promote the local business environment by providing better payment methods. The growth of Fintech companies will also create employment in the country and consequently promote economic development. For example, Fintech companies in London employ over 40 % of the population in the city. The same employment opportunities will arise in Saudi Arabia.

Fintech is quite new in Saudi Arabia. The country has held may years of traditions, but it is slowly opening up to new technological advancements. The non-cash transactions account for less than 20 % of the country’s total transactions. This means that the country’s Fintech industry is still young. The Fintech companies are also few. However, investment in the new technology is one the rise. STC, Saudi Arabia’s largest telecom company, launched a digital payment platform in February 2018. The technology has attracted over 200000 customers in one year. Hence, there is a high chance for the industry’s growth in the next few years. The Saudi Arabian Monetary Authority is responsible for licensing and regulating the Fintech industry. The Fintech companies have to undergo thorough scrutiny, which included the ownership, sources of funds, charges applicable, and reliability of the company. The monetary authority had licensed seven Fintech companies in 2018; it has licensed the other fourteen in 2019, bringing them to twenty-one companies. Some of these big Fintech companies in Saudi Arabia include Bayan Payments Company Limited, Saudi Digital Payments Company, Gidea, and HalalaH.

One should know that Fintech companies are essential instruments for development, but caution is very important. Fintech is as real as any other financial industry. The only difference is the use of non-cash transactions; the technology mostly uses the internet to facilitate financial transactions. Fintech in Saudi Arabia has its risks as well. Data security is one of the biggest challenges in the industry because of issues like hacking and customer data privacy. Financial Services Companies regulators also doubt the Fintech companies, which makes it hard for them to thrive, especially in new markets like Saudi Arabia.

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