Shaimaa Ibrahim
One of Saudi Arabia’s ambitions is to become a global fintech hub. For this aim, the Kingdom enhanced the regulatory framework and developed competencies of the fintech sector, in addition to increasing the number of fintech companies in the Kingdom.
BwaTech is one of the fintech companies licensed by the Saudi Central Bank (SAMA) to provide financial services, enabling corporates that deal with more than one bank to implement several banking processes through one platform.
In this regard, Sharikat Mubasher held an interview with Hashem Al Hekail, Co-Founder and CEO of BwaTech, to learn more about the role of the fintech sector in fostering small and medium-sized enterprises (SMEs) in alignment with the futuristic Vision 2030.
Al Hekail also showcased the products provided by BwaTech to enhance the entrepreneurship ecosystem in Saudi Arabia and highlighted the promising investment opportunities available in the Saudi fintech sector.
What are the services provided by BwaTech to foster the fintech sector in Saudi Arabia? and what are the products that BwaTech offers for SMEs?
Entities and corporates of different sizes usually have multiple banking relationships and we, at BwaTech, provide advanced tech products to enable them to conduct their transactions with different commercial banks safely and seamlessly online via one platform, instead of using the e-portal of each bank. We offer a full suite of products, notably:
Cash Management
This product enables corporates to consolidate their cash balances and transactions with different banks in one interface, in addition to processing various payments and transfers across all banks in a secure and efficient style.
Letters of Guarantees
This product automates the full life cycle of the Letter of Guarantee (LG) and enables corporates and banks to exchange LG actions online. It offers quick delivery of LG from the issuing bank to the beneficiaries and allows beneficiaries to release or confiscate an LG issued in its favor online, in addition to identifying existing transactions and LGs between both parties.
This product currently serves large corporates and entities that receive massive numbers of LGs, but it will serve SMEs that request issuing LGs once SAMA issues related legislation and standards.
It is worth noting that all services are provided via the Bwa Business platform either through the website and the applications or through the application programming interface (API) that links the corporate’s internal system to the platform.
How does the Bwa Business platform enhance corporates’ financial digital transformation?
Earlier, customers had to visit the bank’s branch to finish their transactions, but later on, most banks enabled customers to complete their financial transactions through e-portals.
However, corporates having multiple banking relationships found it difficult to deal with several portals featuring different standards and requirements. Hence, BwaTech provided inclusive portals to tackle these challenges.
The inclusive portals are considered the second wave of the digital transformation following the emergence of digital portals for each separate bank.
In regards to the question, the unified portals are a kind of digital transformation for both banks and corporates as banks will focus mainly on attracting deposits and funding rather than investing in digital portals. Meanwhile, fintech companies will be responsible for developing digital portals and services that provide access to financial services.
Can you please share more about the importance of integrating Saudi corporates with banks and how this enhances the business sector?
Each corporate has its own system to manage its resources. While implementing any financial transaction, the corporate finds it necessary to process the transaction through two procedures; its systems and banks, and both require a group of employees to prepare and approve the transaction. Additionally, errors may happen as the transactions are being recorded in the corporate’s systems separately from the bank.
Through electronic integration, the transaction is recorded only once either in the corporate’s systems for payments or in the bank’s system for deposits. In both scenarios, systems electronically align with each other to record the transaction, saving too much effort and reducing errors. The electronic integration also enables the corporate to have all financial statements available immediately in its systems, raising the operational efficiency of its businesses.
On the other side, electronic integration is an expensive and complicated process that requires specific expertise and becomes more complicated when the company needs to integrate with several banks. Here appears BwaTech’s role in facilitating this process as the corporate only needs to connect with BwaTech to be integrated with all banks without any extra effort.
How do you see the future of open banking in Saudi Arabia?
The Saudi banking sector is evolving and SAMA promotes open banking to explore potential opportunities to provide new products and services, increase competitiveness, and facilitate the entry of fintech companies
Open banking is the system of allowing access and control of customer banking and financial accounts through third-party applications. Looking at the services provided by the National Information Center (NIC) to individuals, it became easy for banks to have the customer’s permission online, thus, I believe these services will boom in the individual sector.
In contrast, dealing remotely with corporates in general, except for one-person companies, is not as easy as individuals as corporates find some challenges in opening accounts and building banking relationships. Therefore, developing a centralized system is crucial to facilitate ascertaining the reliability and validity of required documents as well as the corporates’ representatives.
The efforts of the Ministry of Commerce and the Federation of Saudi Chambers to tackle such challenges are remarkable, however, more is needed in regard to the corporates’ representatives and their specialties. I urge the ministry to launch an initiative to fill this gap in collaboration with SAMA and the NIC.
Can you please share more details about BwaTech’s achievements in 2023 and its plans for 2024?
We primarily focused on building the systems infrastructure, developing some products, and obtaining necessary licenses, but in 2023 we started launching our services.
Our LG ecosystem yielded good results as it facilitated paperless communication between the bank and the beneficiary, which accordingly attracted most banks to join the LG ecosystem that BwaTech manages.
In 2024, BwaTech's plans include broadening clientele and launching some new products.
What are the company’s future plans and investments in Saudi Arabia? and do you plan to expand businesses beyond the Kingdom?
We target expanding our products. For instance, the LG product is planned to cover the field of document accreditation locally and globally, in addition to other services related to accounting and payments.
We are currently working on launching a new product licensed by the Capital Market Authority (CMA), through our subsidiary, to distribute investment and real estate funds. We also plan to partner with other service providers to offer integrated services to our customers.
Expanding our footprint beyond the Kingdom is on the cards, but it is better now to focus on the Saudi market.
How do you evaluate the performance of the Saudi fintech sector in 2023 and what are the main challenges the sector faces?
The performance of the Saudi fintech sector is promising; it provides valuable products and services and strives for more.
The Kingdom became a destination for local and foreign entrepreneurs as well as distinctive initiatives, backed by the endeavors of regulatory and supervisory entities to foster the sector. However, the sector faces a lot of challenges notably the high cost at the beginning with zero returns.
In your opinion, what are the promising opportunities in the Saudi fintech sector?
There are several promising opportunities to develop innovative banking solutions through open banking, leveraging cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), and blockchains. The cybersecurity and data protection fields also enjoy a lot of opportunities to develop new methods to detect fraud and prevent cyberattacks.
What do fintech startups in the Kingdom need to thrive? and how do entrepreneurs contribute to realizing Vision 2030’s objectives?
They need a set of elements: reliable cloud services, data security services, big data analytics, and AI, in addition to regulatory sandboxes and laws that stimulate their growth and attract investors.
Government entities and regulatory organizations are working together to provide a robust framework that stimulates innovation and bolsters the fintech sector.
Entrepreneurs can also contribute to realizing Vision 2030’s goals by providing groundbreaking ideas and solutions that enhance digital transformation, improve the user experience, and meet market needs. Similarly, startups participate in creating new jobs and developing human capabilities, in alignment with Vision 2030’s localization goal.
How do weigh the Kingdom’s efforts to bolster the fintech sector and boost digital transformation?
Fostering the fintech sector is one of the key goals of Vision 2030 and the concerned entities in the Kingdom spare no effort to achieve this goal and drive digital transformation. For instance, SAMA and CMA launched a sandbox to explore innovative technologies and provide the necessary support to nurture innovative entrepreneurs, in addition to introducing regulations that facilitate their businesses.
Nor can we forget the pivotal role of Fintech Saudi to provide entrepreneurs in this promising sector with the guidance, consultancies, and support they need.
Moreover, the Ministry of Communications and Information Technology is a key player in enhancing the growth of fintech startups.
Translation: Noha Gad
