Fintech
Saudi Fintech Scene Sees ‘Remarkable Progress’, with More to Come
Saudi Arabia’s fintech sector has grown rapidly in recent years and is poised for further growth, with the segment at the forefront of innovation and the government maintaining a strong push for expansion, according to a new report from Arthur D. Little.
In its report, the strategic consultancy firm Arthur D. Little identified over 200 fintechs currently active in the Kingdom, up from 89 the previous year. Looking at the sector from a broader perspective, the researchers observed “remarkable progress” over the past five years, a development that has elevated Saudi Arabia’s fintech scene to a regional leader.
According to the report, the success of the Saudi fintech landscape is based on a number of developments, including strong government support, an expanding investment base, and growing adoption of fintech products by banks and consumers.
“Saudi Arabia is prioritizing visionary leadership and proactive policymaking to cultivate a thriving fintech landscape,” said Arjun Vir Singh, partner at Arthur D. Little. “The Kingdom is not only addressing but capitalizing on strategic areas of improvement to advance its Vision 2030 national economic ambitions.”
The government is playing a key role in the progress. Key programs like Fintech Saudi and the Fintech Regulatory Sandbox have driven progress, while the Saudi Arabian Monetary Authority (SAMA) has made great strides in developing a regulatory framework that spurs innovation.
SAMA has also created a sandbox environment where fintech innovation can be experimented and tested before being launched on the market, facilitating a smooth transition to the free market.
Additionally, government entities such as the Saudi Venture Capital Company have provided significant seed funding to complement private sector investment. Overall, by the end of 2023, over SAR 4 billion (~$1 billion) of investment has been channeled into fintech startups from local, regional and global investors.
“The Kingdom’s commitment to fostering a vibrant and inclusive fintech ecosystem is evident, with regulatory improvements from SAMA and CMA and the strategic infusion of capital from Saudi investors into the sector,” said Vir Singh.
And there’s more
Looking ahead, Arthur D. Little’s report suggests that the outlook for Saudi Arabia’s fintech scene is bright. Its impact is set to increase further as more financial institutions integrate fintech solutions into their offerings or operations, and more consumers adopt fintech products to make their lives more convenient.
“We envision a future where fintech not only thrives as an industry, but also serves as a cornerstone in realizing the broader goals of Saudi Arabia’s Vision 2030. Continued dedication to innovation and adaptive strategies are key to maintaining the Kingdom’s leadership in the fintech arena,” said Vir Singh.
Further reading: Middle East Fintech Sector Could Triple in Next Two Years.
To ensure that the Saudi sector maintains its growth momentum, Arthur D. Little has identified a number of priorities for the coming years, including strengthening international positioning, promoting international partnerships, simplifying regulatory frameworks, expanding financing avenues, cultivating talent, and optimizing infrastructure investments.