Kholoud Hussein 

In recent years, mobile payments have surged in popularity in Saudi Arabia, transforming consumer behavior and reshaping the financial landscape. This shift, fueled by technological advancements and changing consumer preferences, reflects a broader trend toward digitalization in the Kingdom's economy. Here’s a brief look at how mobile payments are influencing consumer behavior in Saudi Arabia.

1. Enhanced Convenience and Speed

One of the most significant impacts of mobile payments is the convenience they offer. Consumers in Saudi Arabia are increasingly embracing mobile payment apps for their ease of use and speed. With just a few taps on their smartphones, users can complete transactions instantly, bypassing the need for cash or physical credit cards. This seamless experience is driving higher adoption rates and changing the way people conduct everyday transactions.

2. Increased Digital Engagement

The rise of mobile payments has also led to increased digital engagement among consumers. As mobile payment apps often come integrated with loyalty programs, discounts, and promotional offers, users are more likely to engage with brands through these platforms. This digital engagement not only enhances the consumer experience but also provides businesses with valuable data to tailor their marketing strategies.

3. Shift Toward Cashless Transactions

Mobile payments are contributing to a gradual shift away from cash transactions. Saudi consumers are increasingly using their smartphones for a range of activities, from purchasing groceries to paying for services. This trend aligns with the Saudi Vision 2030 initiative to reduce reliance on cash and promote a cashless economy. As more merchants accept mobile payments, the trend toward cashless transactions is expected to continue.

4. Boost to E-Commerce

The growth of mobile payments is closely linked to the expansion of e-commerce in Saudi Arabia. With the convenience of mobile payments, consumers are more inclined to shop online, driving growth in the digital retail sector. Mobile payment solutions streamline the checkout process, reducing cart abandonment rates and encouraging more frequent online purchases.

5. Enhanced Financial Inclusion

Mobile payments are playing a crucial role in enhancing financial inclusion in Saudi Arabia. By providing an accessible and user-friendly alternative to traditional banking, mobile payment solutions are reaching underserved populations and individuals without access to conventional financial services. This inclusivity supports broader economic participation and financial

Kholoud Hussein 

Over the past few years, Saudi Arabia has managed to take the lead and take advanced steps to boost the fintech sector and develop it into a flourishing industry marked by rapid growth, diversifying services, and increasing contribution to its national economy. Yet, the kingdom is facing challenges to become a leading global fintech hub. 

Key players 

In April 2018, the Saudi Arabian Monetary Authority (SAMA), in collaboration with the Saudi Capital Markets Authority (CMA), kickstarted the nation’s fintech growth journey with the launch of Fintech Saudi, an initiative aimed at cementing KSA’s position as the leading fintech hub in the MENA (Middle East and North Africa) region. Fintech Saudi continuously strives to boost, support, and represent the fintech industry in KSA through initiatives such as its Accelerator program, Career Fair, Fintech Tour, and the Summer Sessions. Since the launch of Fintech Saudi, there has been a 20-fold increase in the number of fintechs operating in the kingdom. Over SAR 4 billion ($1 billion) has been invested into fintech companies in KSA, and over 100,000 people have engaged in fintech-related events, training courses, and internships organized by Fintech Saudi.

According to a recent report by Arthur D. Little, the development and approval of the national fintech strategy in May 2022 marked the next stage of fintech development for KSA. The strategy was based on six pillars:

1. Developing KSA as the fintech hub for the Middle East
2. Creating a regulatory environment supportive of growth and innovation
3. Funding for start-ups
4. Training and skill enhancement
5. Accelerating support infrastructure
6. Driving local and international collaboration

KSA’s Vision 2030 plan for fintech has four key objectives, constituting clear milestones toward its aspirations of being a global fintech leader: 

1. Establish at least 525 fintech companies (versus 200 in 2023)
2. Open 18,000 fintech job opportunities (versus around 5,400 in 2023)
3. Account for $13.3 billion in direct GDP (versus around $1 billion in 2023)
4. Achieve $12.2 billion in direct venture capital (VC) contributions (versus $1.4 billion in 2023)

The number of fintech companies in KSA more than doubled in one year, from 89 in 2022 to ~200 in 2023. This impressive growth has been catalyzed by a range of measures to stimulate innovation, with three in particular standing out:

1. Fintech Saudi: The establishment of Fintech Saudi was a catalyst for change, leading to such measures as the Fintech Accelerator program, the Fintech Saudi Innovation Hub, an online fintech directory, regulatory enhancements in collaboration with SAMA, and various flagship events (e.g., Fintech Tour and hackathon)
2. Fintech Regulatory Sandbox: The SAMA-established sandbox allowed controlled live testing of fintech innovations, facilitating a smooth transition to the open market
3. Start-up funding: Various financial-support mechanisms have been deployed in the Saudi fintech ecosystem, some of which are industry-agnostic. For example, the Saudi Venture Capital Company (SVC), supported by CMA and the Financial Sector Development Program (FSDP), launched a SAR 300 million fund focused on fintech start-ups and plans to invest SAR 6 billion more into start-ups and SMEs across other sectors.

So far, SVC has invested in 35 VC funds, which have facilitated over 900 deals and SAR 1.9 billion in investments. The Saudi National Technology Development Program (NTDP) has launched the Technology Development Financing initiative that supports start-ups with debt funding.

Key progress areas

The report pointed out that the three key areas illustrate the major progress already made in KSA fintech: digital payments, alternative financing, and financial product aggregation.

For digital payment, the kingdom embarked on a journey to transform society to be less dependent on cash transactions. A cornerstone was the FSDP, which played a pivotal role in introducing new players to the financial services landscape. According to the Saudi Vision 2030, there is a plan to escalate the proportion of non-cash transactions to 80% by 2030, a significant leap from its 18% baseline in 2016.

The fintech landscape has been enriched through collaborative synergies between Saudi Payments and fintech companies. Among the various developments, digital wallets, local transfers, QR code payments, and SADAD system bill payments stand out as the most prominent. According to data released by SAMA, digital wallet usage has seen an exponential rise from 315,000 in 2018 to 17 million by 2022, representing over half of KSA’s population. In 2018, bank transfers were the primary method for topping up these wallets, accounting for approximately 70% of all top-ups. However, by 2022 around 80% of top-ups were being made via debit or credit cards.

On the other hand, the alternative financing sector, particularly “buy now, pay later” (BNPL) and debt crowdfunding, has emerged as the second-largest fintech subsector in Saudi Arabia, trailing only behind Saudi Payments. This growth reflects a shift in consumer and business financing preferences, increasingly leaning toward more flexible and accessible options than traditional banking models.

Debt crowdfunding has become a vital avenue for financing, especially for small and medium-sized enterprises (SMEs) facing challenges in securing traditional bank loans. The platforms operating now in KSA offer a streamlined digital process for businesses to sell invoices and secure funding, alleviating cash flow issues and aiding growth.

As reported by SAMA, the investor base in the KSA crowdfunding market has seen significant growth, from 302 in 2019 to over 92,000 in 2022. These investors have collectively issued over 1,800 loans worth more than SAR 1.1 billion since 2019, with about SAR 770 million in loans disbursed in 2022 alone.

Challenges 

Saudi Arabia’s fintech landscape is still young and nascent. It does not have the deal flow we see in Egypt, the advantage of Bahrain’s long experience in financial markets, nor the pull of the UAE’s ecosystem, whose financial landscape is also further ahead in terms of crypto and blockchain regulations.

Talent is also a big issue. A report from Fintech Saudi shows that hiring qualified talent was the main obstacle for 40% of fintech startups, followed by regulations at 37%, then access to customers/customers testing at 28%.

In addition, there is a gap in Saudi Arabia, like most of the other countries in the region, between the education system and work requirements. Universities need to bridge this gap by preparing students for the labor market in different tech spaces. 

Further, the kingdom’s startup ecosystem is still young, and attracting talent requires hefty salaries that most startups cannot afford. It still lags behind Dubai as a hub for global companies and talent, while processes tend to be more laborious and time-consuming. Riyadh and Jeddah both lack the quality of life that has proven to be so crucial for attracting talent and that is visible in the makeup of the fintech sector in the country. According to recent data, 80% of the fintech startups operating in Saudi Arabia are headquartered in the kingdom and are founded primarily by Saudi entrepreneurs.

However, the Saudi government has made its intentions very clear – it wants a diversified economy where entrepreneurs, startups, and innovators should be able to flourish. If it continues to progress in its current trajectory, Saudi Arabia certainly has the potential and capacity to become the best market for fintech for many reasons, including the spending capabilities of the population, the advancement of the financial sector, and the progression of the regulator.

Kholoud Hussein  

Fintech is one of the prominent highlights among different technology trends which have been gaining attention worldwide. Many of you would assume that fintech is a new-age transformative technology that could change the definition of financial services altogether. While the assumption is valid to an extent, fintech is not some alien technology to users of financial services.

The increase in fintech usage is reshaping our financial world. People’s money is easier to access, and there is more they can do with it. Fintech provides new ways to share, save, invest, and manage money, making life better for the people it touches while helping reach those underserved by legacy financial options.

What is Fintech? 

Fintech is a portmanteau of the words “financial” and “technology”. It refers to any app, software, or technology that allows people or businesses to digitally access, manage, or gain insights into their finances or make financial transactions.

Over the last decade, as consumers increasingly adopted digital tools, fintech arose as a means to help consumers address financial challenges and make progress toward financial goals. In turn, consumers have come to rely on fintech for a range of uses, from banking and budgeting to investments and lending, as well as for its tangible everyday benefits.

What is a fintech company?

A fintech company refers to any company that offers financial services or applications that rely heavily on technology. Fintech companies are often industry disruptors—they use technology to change how consumers interact with the financial industry. This often includes expanding access to financial products, lowering fees, and providing faster, more personalized service.

Types of Fintech and Fintech Products

Fintech covers a wide range of use cases across business-to-business (B2B), business-to-consumer (B2C), and peer-to-peer (P2P) markets. The following are just some examples of the types of fintech companies and products that are changing the financial services industry.

1. Fintech banks 
2. Digital payments 
3. Personal financial management (PFM)
4. Fintech lenders 
5. Wealth management
6. Embedded finance 

 Kholoud Hussein

Blockchain and fintech interact in at least two ways. Firstly, the blockchain is an essential part of all cryptocurrency operations. The blockchain is the key processing tool whenever you use Bitcoin or Ethereum to pay for something on the Internet. All fintech platforms integrating cryptocurrency inevitably have to interact with some form of blockchain. Secondly, blockchain technology is a potent upgrade path for future financial operations with traditional currencies.

Blockchain technology has emerged as a transformative force in the field of fintech. Its decentralized and transparent nature provides enhanced security, efficiency, and trust in financial transactions. Blockchain has the potential to revolutionize various aspects of fintech, including payments, remittances, smart contracts, and identity verification, making it a crucial part of the industry’s future.

Benefits of Blockchain

Blockchain and fintech will likely produce promising innovations in the banking sector. The key reason stems from the unique characteristics of blockchain, which offers major advantages to financial institutions and the average users. Here are some of the key positives the blockchain technology provides:

1. Enhanced security 
2. Increased transparency 
3. Bettered efficiency 
4. Faster transactions 
5. Cost savings 
6. Enhanced traceability 
7. Smart contracts 
8. Financial inclusion 
9. Data integrity 
10. Scalability

Further, Blockchain solves several challenges facing the fintech industry, such as: 

1. Decreasing the dependence on the centralized systems 
2. Decreasing the common trust issues 
3. Increasing the speed of transactions 
4. Decreasing operational expenses 

How Blockchain Revolutionizes the Financial Services Sector? 

Blockchain in the fintech industry will likely become essential for most companies. Here are the key positives that the technology can bring about in long-term scenarios:

1. Lowering transaction costs 
2. Minimizing the problems with identity theft 
3. Making payments available globally 
4. Improving regulation and auditing
5. Automating credit history reports
6. Simplify lending 
7. Enabling safe trading 

Shaimaa Ibrahim 

In light of the recent developments taking place in the promising fintech sector in the Saudi Arabia, Sharikat Mubasher interviewed Maria Medvedeva, Country Business Manager at Mastercard Saudi Arabia to shed light on the services Mastercard provides for the SME sector in line with Saudi Arabia’s Vision 2030. Medvedeva also reveals details on the company’s recent partnership with Fintech Saudi to accelerate the digital transformation of the fintech industry in the Kingdom. 

What are the services Mastercard provides for the SME sector in line with Saudi Arabia’s Vision 2030? 

As a global technology company in the payments industry, we recognize that innovation is key to unlocking potential, accelerating digital transformation, and creating an accessible, thriving digital economy. 

In Saudi Arabia, we are working to fuel this acceleration and drive this growth by co-creating solutions and offering access to our partners, expertise, technologies, markets, and customers so fintechs can build, launch, and grow. 

From our best-in-class APIs and data assets to our trusted ecosystem of partners, we provide the services and tools fintech innovators need to grow at each stage of their journey, transform bold ideas, and achieve scale at pace to bring more people into the digital economy.

We provide a trusted technology platform and best-in-class API connectivity for fintech innovators to achieve scale with speed and agility. Our collaborative approach to innovation means investing in solutions that instill trust and secure every transaction and interaction. 

Our curated portfolio of solutions enables fintech companies to operate as a trusted players in the market, spanning licensing of our brand as well as payments, data, security, analytics and fraud management, and consulting services.

This could be seen with offerings such as Mastercard Fintech Express: a program designed for all both established fintechs wanting a direct license from Mastercard; as well as fintechs with the ambition to innovate through collaborating with ready-to-go Mastercard Engage partners. The program is split into three core modules: Access, Build, and Connect. Tech-savvy startups can be connected with traditional players such as banks. It also supports digital payment innovators by making it simple to collaborate with Mastercard and its partners to launch new products, add payment solutions, embed fraud tools, access consulting services, and innovate through collaboration. 

Similarly, Mastercard Engage is a free global program that identifies qualified technology partners to help build and deploy solutions for fintechs, making it quicker and easier to work together. 

Mastercard Developers provide a simple gateway to easily access Mastercard products and services by seamlessly integrating Mastercard APIs across payments, data, loyalty, and security into their applications, to be used by customers, regardless of industry or size, anywhere the internet exists. 

What about your partnership with Fintech Saudi to accelerate the digital transformation of the fintech industry in the Kingdom? 

As part of our worldwide commitment to financial inclusion — has pledged to bring a total of 1 billion people and 50 million micro and small businesses into the digital economy by 2025 — we aim to serve as a partner to the Kingdom by advancing the growth and development of the Saudi fintech industry. Our collaboration with Fintech Saudi is fully in line with this work. 

Together, we aim to create a sophisticated Small and Midsize Enterprise (SME) sector, cultivating an enabling environment in which fintechs are empowered to grow and realize their business potential. 

We will utilize our expertise, advisory, and solutions to support local and homegrown fintechs to scale, grow, and go to market faster. The partnership is wholly geared towards enabling Fintech Saudi to build on its work to support 525 Fintech startups in the kingdom by 2030. 

How do you see the performance of digital payments in the Kingdom? And what is the future of digital payments?

Over the years, what we have seen is that more people and businesses in Saudi Arabia are adopting digital payments. According to Mastercard’s 2022 New Payments Index, adoption of a broader range of digital payment methods is accelerating in Saudi Arabia and the technology fueling the future of payments is already here.

The 2022 iteration of the report found that 89% of people in Saudi Arabia have used at least one emerging payment method in the last year. They include 42% who have used a tappable smartphone wallet, and 31% who have used a digital money transfer app. Consumers are also making purchases in increasingly diverse ways, including through voice assistants and social media apps.

In keeping with the Kingdom’s Vision 2030 goals, we aim to play a key role in creating a 70% cashless society. We have outlined a strategy to promote payment innovation across all digital rails, empowering businesses, consumers, and entities to send and receive money how, where, and when they choose, across both card and account-to-account payment rails.

To this end, we have launched partnerships with a diverse range of entities. For instance, we recently signed an exclusive agreement with Alhulul Almobassatah Financial Company (SiFi) to empower small and medium-sized enterprises (SMEs) in Saudi Arabia with a broad selection of innovative offerings.

Our first-ever collaboration with a specialized SME fintech, our partnership will leverage our comprehensive suite of solutions, enabling SiFi to issue corporate cards with ease to SMEs and enterprises across the Kingdom.

How do you see the Kingdom’s efforts in supporting the Fintech ecosystem as a whole? What does the sector need to achieve Vision 2030?

The Kingdom has led the way in building a brighter future for Saudi fintechs, laying the foundations for sustained success. This could be seen with Vision 2030 and the establishment of national initiatives, projects, and agendas such as the Financial Sector Development (FSDP).

FSDP contributes directly to three strategic objectives of Vision 2030. It enables financial institutions to support private sector growth, ensures the formation of an advanced capital market, and promotes and enables financial planning (retirement, savings, etc.).

Notably, FSDP contributes to the advancement of the Saudi fintech space by cutting costs, improving efficiency, and increasing access to financial services. The program has also helped to develop a regulatory framework for the fintech sector.

At Mastercard, we have worked diligently to set ourselves apart as the partner of choice for the Kingdom’s top fintech brands, embracing every opportunity to partner and collaborate across formal lines.

As an experience-centric company, we support fintechs to pioneer innovation and drive creative disruption by delivering with a Developer First mindset. That means setting out to provide a best-in-class developer platform, ensuring all APIs are published to a high standard for easy integration into our partner solutions, and enabling more consumer choice.

We’re facilitating interoperability between our products and rails in a way that is inclusive, sustainable, and digital — providing one point of connectivity for multiple applications.

To Sum up, the Saudi fintech sector has witnessed a significant increase in the number of financial technology companies in recent years. The growth of the fintech sector in the Kingdom will support and enable startups to introduce innovative and modern financial products.