Is the Kingdom of Saudi Arabia the next fintech hotspot?

As the Kingdom of Saudi Arabia (KSA) diversifies its economy from oil and gas, the fintech industry has become a cornerstone of its economic strategy. Thunes Country Head of KSA, Ahmad Yaacoub, weighs in on the latest trends shaping this nation.

Over the past few years, the fintech landscape in Saudi Arabia has experienced significant growth. Backed by government support, local and international investors and a tech-savvy population, the country has created a conducive environment for fintech expansion. 

Government paves the way 

The reason for this shift is Saudi Vision 2030, an initiative launched by the government in 2016 to increase economic, social and cultural diversification. One of its aims is to reduce the country’s dependency on oil while enhancing non-oil sectors. The programme has helped foster entrepreneurship and empowered fintechs to bring innovative solutions to market.  

A sound regulatory framework is foundational  

By implementing a favourable regulatory structure and providing fintech sandboxes, KSA has enabled startups and key industry players to innovate, test, and launch new innovative financial services. This move has attracted local and foreign investors and signalled confidence in the market’s potential.

However, regulations are continually evolving, and upcoming changes are expected to focus on data protection, cybersecurity, open banking standards and consumer protections. Fintech entrepreneurs are advised to become well-versed in KSA’s regulatory and compliance requirements and digital payments before gearing up new business plans.

Collaboration is vital to expansion

Open banking initiatives enhance the collaboration between fintechs, regulators and traditional financial institutions. New players with APIs or other services can slot into this ecosystem and provide innovative services to businesses and consumers. One example is Thunes’ new partnership with Loop, an innovative App and digital wallet provider. Loop provides ride-hailing solutions and domestic money transfers; with Thunes, the app offers cross-border payments between KSA and countries like India, Egypt, Pakistan, Philippines, Bangladesh and Jordan. 

Future developments 

Three initiatives with KSA are on our radar: improvements to cross-border payments, the mada expansion to Gulf Cooperation Council (GCC) nations and enhanced SME financing. 

Enhancing cross-border payments demonstrates KSA’s growth in-country and regionally. An uptick in cross-border remittances corresponds to rises in immigration, incoming talent and the need for workers. Cross-border B2B payments are linked to healthy imports and exports and the growth of services as Gulf state economies become more intertwined.  

The mada expansion is a remarkable example of how a domestic debit card scheme (and the most popular payment method in Saudi Arabia) is now accepted across GCC nations, showcasing the Kingdom’s ability to offer value regarding financial connectivity and collaboration. 

And lastly, better SME financing has resulted in the emergence of more innovative payment solutions, further creating opportunities for small and medium enterprises and spurring the growth of fintech.