RIYADH: On the second day of the 24 Fintech conference in Riyadh, experts and industry leaders took to the stage to discuss Saudi Arabia’s growing prominence in the global digital landscape.
With an audience of investors, regulators, and innovators, panel discussions throughout the day highlighted the Kingdom’s rapid transformation into a fintech powerhouse, driven by technological innovation and regulatory support under Vision 2030.
This progress is part of a broader movement that has seen Saudi Arabia attract $1.84 billion in venture capital investments since 2018, with 216 fintech startups having received funding during this period, according to the Small and Medium Enterprises General Authority, also known as Monsha’at.
During a panel titled “The Future of Saudi Digital Banking,” Eze Szafir, CEO of D360 Bank — an entity backed by the Public Investment Fund — provided a comprehensive overview of how the Kingdom is distinguishing itself within the global fintech ecosystem.
Szafir, who has spent over a decade studying fintech ecosystems worldwide, reflected on Saudi Arabia’s unparalleled approach to fostering a vibrant financial technology sector.
He pointed out that, globally, regions such as the UK, Europe, Latin America, and Asia have developed robust fintech environments, but they have yet to achieve the level of integration between various sectors that the Kingdom has.
The CEO explained that the collective push from private and public sectors toward realizing the goals set by Vision 2030 sets Saudi Arabia apart. This long-term initiative seeks to transform the nation’s economy by diversifying away from oil dependency and fostering growth in sectors such as fintech.
Szafir said: “What we see here is something we haven’t seen anywhere else in the world,” emphasizing that macro-level policies and micro-level initiatives create fertile ground for fintech innovation.
The CEO continued outlining the unique circumstances driving fintech growth in Saudi Arabia. On a macro level, the government’s active involvement and Vision 2030’s Financial Sector Development Program have laid the groundwork for systemic changes that enable the ecosystem.
He highlighted how financial regulators, banks, and tech companies are working in unison, adding that “it’s a unique place where competitors can also be partners.”
This collaborative effort is helping to create a supportive infrastructure for fintech startups, ensuring that regulatory frameworks are innovative and flexible enough to foster growth.
Szafir also shed light on the micro aspects, saying that the Kingdom has “close to 75 percent plus of fintech literacy, people having at least one fintech app in their cell phone.”
He added: “You have 5G covering more than 80 percent of the population. And you have instant payments, more than 90 percent of the total payments.”
Credit landscape being reshaped
Another notable session focused on the shifting landscape of consumer credit, as experts discussed how alternative methods for credit scoring are transforming access to financial services.
On the panel titled “Is the Consumer Credit Landscape Experiencing a Shift?” Alaa Al-Mashhadi, chief business development officer of the Saudi Credit Bureau, known as SIMAH, addressed the challenge of reaching underserved populations.
Al-Mashhadi underscored that although SIMAH covers around 20 million individuals in Saudi Arabia, not all have complete credit profiles, a problem commonly referred to as the “thin file” issue.
This occurs when individuals do not have enough credit history to be accurately assessed by traditional scoring models, limiting their access to financial services.
Al-Mashhadi pointed out that in Saudi Arabia, telco data is one of the key components in credit reporting, a rare advantage that sets the country apart from many others.
“Globally, telco is not usually being reported to credit bureaus, and if it is, then the credit bureau is lucky. Saudi Arabia is considered one of the lucky ones,” he said. Yet, there remains a significant unscored population, and bridging this gap is crucial for enhancing financial inclusion.
Building on this, Tariq Sanad, the chief financial officer of Tarabut Gateway, highlighted the transformative role that open banking is playing in reshaping the credit landscape.
According to Sanad, the future of consumer credit will be defined by seamless access to financial services, with fintech data enabling more accurate and real-time credit profiles.
“You will no longer realize that you are accessing financial services. It’s going to be seamless,” Sanad said, illustrating how open banking can provide secure, verified data directly from an individual’s bank account.
This allows lenders to create more precise credit profiles, even those with thin files, and enables consumers to make more informed financial decisions.
“With open banking, we have a very secure, verified source of that information,” he added, underlining that this can also help fintech companies develop new products tailored to individual spending habits and financial needs.
Central banks step up cooperation
The 24 Fintech conference also saw significant announcements that further underscored the Kingdom’s growing stature in the global fintech sector.
On the sidelines of the event, the Saudi Central Bank, known as SAMA, and the Central Bank of the Republic of Turkiye signed a memorandum of understanding to enhance cooperation between the two institutions, particularly in areas related to financial stability and fintech.
This agreement, signed by SAMA Governor Ayman Al-Sayari and CBRT Governor Fatih Karahan, strengthens bilateral ties between the two nations and establishes a framework for future collaboration in central banking operations.
Fintech funds
Saudi-based venture capital firm 1957 Ventures announced the size of its fund, totaling SR800 million ($216 million).
CEO Emad Kashgari highlighted that this fund will be pivotal in supporting the Kingdom’s fintech ecosystem, offering startups the financial backing needed to scale their operations.
This announcement reflects the broader trend of increased venture capital investment in Saudi fintech, which has attracted $1.84 billion since 2018, according to data from Monsha’at.
In the first half of 2024 alone, the Saudi fintech sector raised $186 million across 50 deals, reinforcing its status as one of the fastest-growing markets in the region.
As the Kingdom accelerates its journey toward establishing 525 fintech firms by 2030, the discussions at the conference have underlined the country’s ambition to lead the international fintech sector.
With the support of regulatory frameworks, investment capital, and cutting-edge technology, Saudi Arabia is well on its way to achieving its Vision 2030 goals, contributing $3.5 billion to the economy and creating over 18,000 jobs within the sector.
