Last Updated on November 13, 2023 by newseditor
In today’s commercial era, there is high demand for more effective financial systems. This is due to the increase in increase in international trade and the need for fast and accessible payments. However, traditional financial services largely lack these features. Most of these traditional services are slow and often require physical presence. The inadequacies of traditional financial services led to the emergence of digital financial services.
Digital financial services have built a stronghold in Saudi Arabia. This is because the Saudi Arabian government has been intentional about transforming the kingdom into a fintech hub. In 2018, Saudi Arabia created a regulatory sandbox for fintech companies to test their innovations before market release. In June 2022, the Kingdom approved the Fintech Strategy Implementation Plan. This plan was aimed at creating a robust and diversified fintech sector in Saudi Arabia.
So far, many digital financial services have emerged in KSA. Most of these activities are regulated by the Saudi Arabian Monetary Authority (SAMA).
Forms of Traditional Services Offered in Saudi Arabia 2024
- Digital Banking: Digital banking is one of the most significant sub-sectors in the fintech industry. As the name implies, digital banking involves the services that deliver banking products to users through an electronic platform. These products include fiat currency transfers, bill payments, and even investments. Saudi Arabia currently has a comprehensive regulatory framework governing digital banking services. So far, three digital banks have been licensed under this regulation. They include D360 Bank, STC Bank, and Saudi Digital Bank.
- Payment Services: Saudi Arabia’s e-commerce sector has been booming in recent years. This success can mostly be ascribed to payment service providers. Payment service providers enable businesses to execute users’ payments through digital payment methods. Essentially, your ability to order online from a digital Saudi Arabian store is due to the services provided by PSPs (Payment Service Providers). Like digital banking players, PSPs are also regulated by the SAMA.
- Debt-Based Crowdfunding: Crowdfunding is an age-long concept. Businesses have utilized crowdfunding as a tool to get financial support and investment. However, digital services have transformed the concept of crowdfunding. One of the pointers to this transformation is debt-based crowdfunding. This involves raising funds for companies through digital platforms. In 2021, the Saudi Arabian Monetary Authority released the Crowdfunding Rules to regulate the conduct of debt-based crowdfunding in the Kingdom.
Saudi Arabia has established itself as a globally-recognized financial hub. As the internet continues to get more sophisticated, digital financial services will likely improve.