Riyadh, Saudi Arabia – Saudi Arabia’s fintech sector has emerged as a major force within the country’s financial services industry, generating over SR3.75 billion ($1 billion) in revenues and serving millions of customers daily. The sector’s rapid growth is transforming the Kingdom into a leading regional fintech hub, with significant global ambitions.
Khaled Al-Dhaher, Vice Governor for Supervision and Technology at the Saudi Central Bank (SAMA), underscored this progress while speaking at the 24 Fintech Conference in Riyadh. “The Saudi fintech sector has made substantial progress over the past five years to the point where it is now firmly established as the leading regional hub for fintech with an increasingly prominent global role,.
Since 2019, the number of fintech companies in Saudi Arabia has surged from 14 to more than 230. This growth has not only revolutionized the financial landscape but also prompted traditional financial institutions to accelerate their adoption of digital services. Partnerships between banks and fintech companies are helping drive innovation, enhance customer offerings, and digitize the financial sector at a faster pace.
“We expect this strong momentum in Saudi fintech to be sustained,” Al-Dhaher said, adding that the Kingdom aims to increase the number of active fintech firms to 525 by 2030. This ambitious target is fueled by the entry of new and innovative business models that will continue to elevate the sophistication of the financial sector.
International Growth and Employment Opportunities
Al-Dhaher also pointed to the potential for greater international involvement in Saudi Arabia’s fintech sector. “The growing presence of international fintech companies will further enhance the sector’s contribution to employment and gross domestic product,” he said.
Drivers of Rapid Expansion
Several key factors are driving fintech growth in the Kingdom. Al-Dhaher highlighted Saudi Arabia’s young, tech-savvy population, which enjoys high mobile penetration and prefers digital services. This demographic trend has naturally fueled the demand for fintech solutions across the country.
Government support has also been pivotal in creating a fertile environment for fintech development. The Financial Sector Development Program, a central component of Vision 2030, and the National Fintech Strategy have laid the groundwork for the sector’s expansion.
SAMA has taken proactive steps to cultivate the fintech ecosystem. One of the flagship initiatives is the regulatory sandbox, launched in 2018, which allows fintech startups to test their solutions in a controlled environment. Since its inception, over 500 companies have applied to participate in the sandbox, underscoring the high demand for fintech innovation in Saudi Arabia.
Other regulatory bodies, such as the Capital Market Authority (CMA) and the Insurance Authority, have also established fintech incubators, creating a dynamic and collaborative regulatory landscape. These efforts are driving growth in emerging areas such as Insurtech, Buy Now Pay Later (BNPL), and Open Banking.
Fintech Saudi, a government-backed initiative, has further catalyzed the development of infrastructure and talent. Al-Dhaher highlighted the importance of the Makken program, supported by SAMA and CMA, which offers essential resources in technology, cloud computing, and cybersecurity to help fintech entrepreneurs scale their businesses.
Challenges to Sustained Growth
Despite the sector’s impressive growth, challenges remain. Al-Dhaher pointed out the need for diversification within fintech beyond the payments sector. Early fintech companies focused primarily on payments, significantly increasing the electronic transaction ratio to 70 percent, ahead of schedule. However, to sustain long-term growth, there is a need to expand into other areas like crowdfunding, robo-advisory, BNPL, and Open Banking.
Regulators like SAMA are working to ensure a diverse range of fintech business models that cater to the evolving needs of consumers. Additionally, maintaining a balance between fintech innovation and the stability of the broader financial system is crucial for the sector’s success.
“A main focus of our mandate is to make sure the fintech ecosystem will effectively co-exist with traditional financial institutions and complement each other, without disruption to the broader financial system,” Al-Dhaher emphasized.
A Collaborative Regulatory Approach
In such a dynamic sector, regulation must be flexible and responsive to new trends. Al-Dhaher highlighted SAMA’s commitment to continually evolving its regulatory framework to support sustainable fintech growth while safeguarding the financial system.
“We are engaged in an ongoing dialogue with key stakeholders within the sector to ensure we fully understand their needs,” he said, emphasizing that Saudi regulators closely monitor global fintech trends and adjust their frameworks accordingly.
The regulatory sandbox remains a key tool for staying abreast of the latest developments, allowing SAMA to refine its regulations to foster fintech innovation. Entities like the CMA and the Insurance Authority play integral roles in maintaining a regulatory environment conducive to fintech growth.
As Saudi Arabia’s fintech sector continues its upward trajectory, the Kingdom is well-positioned to strengthen its role as a global fintech leader, driving innovation, employment, and economic growth.
