Saudi Fintech Sector Exceeds Targets
Posted on
Saudi Arabia’s fintech sector has experienced significant growth over the past years, exceeding targets in areas such as the number of fintech companies, job creation, investment, and contributions to the nation’s gross domestic product (GDP), according to data from Fintech Saudi, a government initiative supporting the development of fintech in the country.
At the end of 2023, Saudi Arabia boasted 216 active fintech companies, marking a staggering 140% increase from 90 companies in 2021. This figure surpassed the initial target of 150 companies set for 2023 by 44%, underscoring the sector’s surge as well as its increasing importance within the national economy.
The growth in the number of fintech companies has been accompanied by a significant increase in fintech-related employment. In 2023, the number of direct jobs in the fintech sector stood at 6,726, a fourfold increase from 1,640 in 2021. That number overshot the initial target of 3,045 for 2023 by 121%, highlighting the sector’s increased contribution to employment.
Investment in Saudi Arabia’s fintech sector is also skyrocketing, reaching a cumulative total of SAR 6.9 billion (US$1.8 billion) in 2023 and surpassing the initial goal of SAR 742 million (US$198 million) by a staggering 830%. This surge reflects growing investor confidence in the sector’s potential.
Finally, the fintech sector is playing an increasingly prominent role in Saudi Arabia’s economy. In 2023, the sector’s contribution to GDP reached SAR 3 billion (US$1 billion), 39% higher than the initial 2023 goal of SAR 2.2 billion (US$586 million).
Key developments in 2023
The growth of fintech in Saudi Arabia in 2023 was fueled by several key initiatives. New rules were introduced to regulate emerging sectors such as buy now, pay later (BNPL), insurtech, and payment services. Initiatives to foster fintech talent were also launched, including the Fintech Career Fair, which offered 600 jobs and internship opportunities, and was attended by 8,000+ job seekers.
Support for fintech companies expanded through infrastructure programs such as Makken, which supports fintech companies by providing service for cybersecurity and cloud computing; the Open Banking Lab, a regulatory sandbox for open banking services; as well as the Cyber Anti-Fraud Program, which aims to train and develop the local cyber fraud talent pool.
Finally, international collaboration also grew, with partnerships between the Saudi Central Bank (SAMA) and the Monetary Authority of Singapore and the Hong Kong Monetary Authority. Fintech Saudi also forged alliances with industry players Mastercard, Kyndryl and D360 Bank.
In Saudi Arabia, the growth of fintech is being driven by Vision 2030, a national plan launched in 2016 to diversify the country’s economy and promote non-oil sectors including finance and technology. As part of the plan, the Fintech Strategy for 2030 was introduced in 2022, setting out clear objectives for the fintech sector. These goals include growing the industry to 525 companies, create 18,000 fintech direct jobs, boost fintech contribution to GDP to SAR 13.3 billion (US$3.5 billion) and attract cumulative venture capital (VC) fintech investments of SAR 12.2 billion (US$3.3 billion) by then.
The Saudi fintech sector
Saudi Arabia is home to a diverse fintech ecosystem, with companies offering a wide range of products and services.
The payments sector is currently the largest vertical, accounting for 33.3% of all fintech companies operating in the country. It’s followed by business tools (15.7%), alternative investments (15.3%) and finance (14.8%), according to Fintech Saudi. Other emerging verticals include investment management and advisory, insurtech, open banking and digital banking.
Among the 216 players comprising Saudi Arabia’s fintech sector, 113 are entities operating under the supervision of SAMA, including 48 licensed fintech companies operating in payments and finance, 46 certified non-licensed fintech companies operating under the technical certification framework, 16 authorized fintech companies operating in the regulatory sandbox, and 3 licensed digital banks.
Additionally, 44 fintech companies operate under the Capital Market Authority (CMA) supervision, which oversees firms engaging in investment-related activities. These companies include 8 authorized entities and 38 entities permitted to operate in the Fintech Lab, a regulatory sandbox.
In the insurance sector, nine insurtech companies are now regulated by the Insurance Authority (IA).
Finally, there are 50 fintech companies operating in non-regulated business models in Saudi Arabia. These companies either do not engage in any activities regulated by SAMA, CMA or the IA, or they provide services to regulated entities. 34 of these 50 companies operate in the business tool segment.
