Saudi Arabia is making great strides towards becoming a global FinTech hub, in line with the goals set by Vision 2030’s Financial Sector Development Program (FSDP). The latest report by KPMG titled “Unlocking the future: An overview of the FinTech opportunity in Saudi Arabia,” showcased the Kingdom’s growing FinTech landscape at the finale of FinTech 24, an event hosted by various financial sector bodies. Despite challenges faced by the global FinTech market in the first half of 2024, Saudi Arabia continued to attract investments, with over $1.14 billion invested in the sector between September 2020 and December 2023. This marked a significant 231 percent increase from the previous year.
Antony Ruddenklau, Global Head of Financial Services Innovation and FinTech at KPMG International, highlighted the transformational impact of Saudi Arabia’s strategic vision in fueling a FinTech revolution. The growth in digital payments and Buy Now Pay Later (BNPL) products signifies a financial transformation that will reshape the Kingdom’s economy. The commitment to FinTech in Saudi Arabia, driven by the FSDP and FinTech Strategy Implementation Plan, has led to a surge in investments, startups, and digital payments adoption. The number of FinTech companies has grown from 89 in 2021 to over 226, exceeding FSDP targets.
Regulatory bodies like the Saudi Central Bank (SAMA) and the Capital Markets Authority (CMA) have played a crucial role in creating a conducive ecosystem for FinTech companies to thrive. Initiatives such as regulatory sandboxes, consistent direction, and open dialogue between regulators and FinTech players have supported the growth of the sector in the Kingdom. Key growth drivers in the FinTech sector include the transition towards a cashless society, with non-cash payments exceeding 70 percent in 2023. Developments have expanded beyond payments to include areas such as cybersecurity, RegTech, SME lending, trade finance, ClimateTech, open banking, capital markets, and digital banking.
Saudi Arabia’s proactive approach to open banking, including the launch of the Open Banking Lab in 2023, has further accelerated FinTech adoption in the Kingdom. With over 1.3 million SMEs in the country, there is high demand for B2B FinTech solutions that address challenges in accessing credit, processing payments, and managing finances. Additionally, innovations in alternative financing options like BNPL and crowd-funding have gained traction, with a significant increase in customer numbers in recent years. The digital banking sector in Saudi Arabia is also poised for growth, with three digital banking licenses issued and two banks preparing for a full public launch in the near future.
Looking ahead, Saudi Arabia is investing in cutting-edge technologies such as Web3, the metaverse, augmented reality, and clean energy innovation. Investments in climate tech and sustainable finance have also seen significant growth, with $443 million invested between 2018 and 2023. The Kingdom’s focus on digital banking and innovation presents promising opportunities for investors, founders, and established organizations. High-growth sectors like digital payments, alternative financing, open banking, and SME financing offer attractive returns for investors, while founders can leverage scaling opportunities in collaboration with FinTech companies. Established organizations can tap into collaborations with FinTechs to access innovation, agility, and new customer segments in the evolving FinTech landscape of Saudi Arabia.
