Saudi Arabia’s New Financial Technology Strategy: 5 Ways Fintechs are Impacted
Saudi Arabia has been bullish in the past decade on its tech drive. The country’s moves have indicated that it intends to transform its borders into a globally recognized tech hub. The most recent move towards this objective is the launch of the financial technology strategy.
This article discusses features of the Saudi Arabian financial technology strategy and its possible effects on the country’s fintech industry.
What is Financial Technology Strategy?
On May 24, 2022, the Saudi Arabian cabinet approved the Financial Technology Strategy. The strategy represents a series of action plans to enhance Saudi Arabia’s fintech ecosystem and prepare the country for a broader tech revolution. These objectives are slated for eight years (2022-2030). The strategy document lists eleven initiatives expected to help achieve the strategy’s goals. These initiatives include increasing lending and strengthening technological infrastructure. Aside from these features, the strategy will significantly affect Saudi Arabia’s fintech space.
Significant Effects of the Strategy on Fintech Companies
Increased Sectorial Support
The strategy has grand objectives. One of such objectives is to increase digital transactions by 70% by 2025. As a strategy toward achieving the objective, digital payment solutions that fintech companies introduce will expectedly receive more support from the government.
As stated earlier, the strategy’s primary goal is to improve Saudi Arabia’s fintech sector. This informs the need for business-friendly regulations to ease fintech operations in the country. According to the strategy, the number of fintech firms is expected to increase from 82 to 230 by 2025. Beneficial sector-wide regulations will attract more companies to the fintech sector. Saudi Arabia already started this fintech regulation drive with the launch of a fintech regulatory sandbox in 2018.
Higher Compliance Requirements
As earlier stated, the Saudi Arabian government is expected to adopt business-friendly regulations to boost the growth of fintech companies. However, these regulations will increase oversight of the fintech sector. In return, fintech companies will be expected to increase their compliance by aligning their operations to the regulations.
Increased Contribution to the Overall Economy
Fintech Companies are the primary enablers of the digital economy. The strategy’s action plans are positioned to expand the digital economy through these companies. As more innovations are supported, and the sector expands, fintech companies will have increased access to investment opportunities both within and outside Saudi Arabia.
Access to Infrastructure
The fintech strategy document lists infrastructural development as one of the initiatives toward increasing the fintech industry’s growth. These infrastructural initiatives are set to impact the operations of fintech companies through ease of operations, access to skilled labor, and increased growth opportunities. The Saudi Arabian government recently partnered with Cyprus to promote technology across both countries.
Conclusion The Saudi Arabian government has consistently been making moves to strengthen the country’s technology ecosystem. In the coming years, Saudi Arabia will be well-positioned to emerge as a global technology hub.