Skip to main content

Saudi Arabia opens up to new fintech players

While Saudi Arabia’s fintech sector presents opportunities for entrepreneurs, VC investors and consumers, there are specific, long-standing challenges hindering the market’s full potential.
Screenshot from Kingdom of Saudi Arabia Financial Sector Development Program.

Financial technology (fintech) is set to play a key role in Saudi Arabia’s economic and financial development. Over the past couple of years, the kingdom has taken a series of steps to introduce policies and initiatives to develop an ecosystem that not only boosts the domestic financial sector but also competes against other fintech ecosystems.

On Sept. 29, the Saudi Central Bank (SAMA) announced that it permitted a number of companies to offer Open Banking Solutions — a digital method enabling customers to securely share financial data with third parties — in its Regulatory Sandbox, a platform open to fintechs and financial firms to test new digital solutions before launching on the market. These companies include Wally Global Arabia, Sanam Aliliddikhar for Information Technology, Istishraf Al-Bayanat for Financial Technology and Spare Arabian Financial Company.

This came after SAMA announced the licensing of two payment financial technology companies — Arab Sea Financial Company and Fatoraah — to provide payment services for e-commerce in the kingdom. The latest licensing brings the number of licensed payment companies in the country to a total of 21, in addition to five companies that obtained "in-principal approval,” according to a SAMA statement.

The latest licensing follows an update by SAMA to its Framework Regulatory Sandbox at the end of August. The updated framework allows flexibility by enabling financial institutions as well as local and international startups to apply anytime throughout the year rather than applying at a specific time.

In June, Saudi authorities announced and approved the kingdom's FinTech Strategy Implementation Plan, which is the fourth pillar of the Financial Sector Development Program (FSDP). The FSDP seeks to create a diversified and efficient financial services sector to support the development of the national economy, diversify its sources of income and stimulate savings, finance and investment.

The FinTech Strategy aims to position the kingdom as a global leading center for fintech and increase the sector’s contribution toward the gross domestic product to 13 billion Saudi riyals ($3.46 billion) by 2030. Among the strategy’s key commitments is to increase the number of fintech companies operating in the kingdom to 230 by 2025 and 525 by 2030. In addition, it aims to increase the share of non-cash transactions (digital transactions) to 70% by 2025.

Ivo Detelinov, partner at Oryx Fund, a MENA-focused fund that invests in early stage technology startups, said that in addition to the fintech strategy, the kingdom has introduced a number of regulatory policies and initiatives to advance the industry. These include the SAMA Open Banking Policy, the Payment Services Law, the Capital Markets Authority (CMA) Financial Technology Experimental Permit Instructions, supported by the SAMA Regulatory Sandbox, the CMA FinTech Lab and FinTech Saudi. 

The FSDP’s FinTech Strategy objectives and timelines are ambitious and wide-reaching. However, Saudi Arabia has encouraging characteristics that make it an attractive destination for fintechs and startups.

The kingdom’s population of 35 million is the largest in the Gulf Cooperation Council and has a median age of 31.5 years. The youthful Saudi population is also one of the most interconnected in the world with internet and smartphone penetration rates of 98% and 92% respectively. This is set to increase in the years to come.

Anna Zeitlin, legal director at PwC Legal Middle East and director of Fintech, believes that there are opportunities in three business areas: payments, buy-now-pay-later and digital banking services.

Others like Ibrahim Alhejailan, partner at Plus Venture Capital, told Al-Monitor that all sectors within fintech have their own set of opportunities and challenges, and the biggest opportunities lie in the lending component.

“Companies are continuously looking for alternative lending solutions other than banks. Fintechs in this space are able to make quicker decisions and automate a big part of the process. The business model for lending is quite straightforward, where money is made from fees and/or interest,” said Alhejailan.

A fintech policy analyst familiar with the Saudi ecosystem, who requested to remain anonymous, said that non-financial sectors are also embracing and entering the fintech space. He said sectors including real estate, tourism and hospitality are getting involved in fintech, which opens new opportunities in embedded finance.

While Saudi Arabia’s fintech sector presents opportunities for entrepreneurs, venture capital investors and consumers, analysts note that there are specific, long-standing challenges that continue to hinder the market’s full potential.  

Zeitlin said that finding skillful talent and recruitment might be the main challenge faced by fintechs in Saudi Arabia. She said that a recent PwC Hopes and Fears Survey found that 58% of Saudi Arabia respondents feel that their country has a shortage of people with the necessary skills.

“This challenge is not only present in the kingdom, but rather a reflection of a global trend in the wider technology industry,” said Zeitlin. “Acquiring talent acquainted with fintech concepts who can design and develop digital financial solutions requires an understanding of both the market and the customers' needs, which doesn’t come easily.”

Similarly, Muhannad Ebwini, founder and CEO of HyperPay, a Riyadh-based payment platform, said that his biggest challenge is always finding and recruiting digital talent to design, develop and enhance digital financial services.

“This requires relevant experience and the skill set to match, plus an ability to understand customer needs,” he said. “Sometimes it’s hard to find the right person.”

He added that the evolving regulations and public policy as well as the customer testing process, which can lead to higher operating costs, also pose potential challenges.

Another challenge is the involvement of incumbent Saudi banks and financial institutions in the fintech space.

“Traditional banks are adopting fintech solutions that could compete with the new startups,” said Alhejailan. “They have the financial power to withstand crises and are more likely to survive.”

He added that despite a supportive regulatory environment, there are still tight regulations, with only a few startups receiving full licenses to operate. He said SAMA and the CMA are still quite conservative.

Tarek Fadlallah, chief executive officer at Nomura Asset Management (Middle East), said that although the current framework is supportive, regulations have historically been geared toward standard commercial banks.

“[It is] not clear that they are flexible enough to accommodate small firms with limited capital and modest operations,” he told Al-Monitor. “Fintech has a lot of potential in the kingdom, but authorities will be cautiously supportive unless it causes systemic risks or disrupts existing banks too quickly.”

Join hundreds of Middle East professionals with Al-Monitor PRO.

Business and policy professionals use PRO to monitor the regional economy and improve their reports, memos and presentations. Try it for free and cancel anytime.

Already a Member? Sign in


The Middle East's Best Newsletters

Join over 50,000 readers who access our journalists dedicated newsletters, covering the top political, security, business and tech issues across the region each week.
Delivered straight to your inbox.


What's included:
Our Expertise

Free newsletters available:

  • The Takeaway & Week in Review
  • Middle East Minute (AM)
  • Daily Briefing (PM)
  • Business & Tech Briefing
  • Security Briefing
  • Gulf Briefing
  • Israel Briefing
  • Palestine Briefing
  • Turkey Briefing
  • Iraq Briefing

Premium Membership

Join the Middle East's most notable experts for premium memos, trend reports, live video Q&A, and intimate in-person events, each detailing exclusive insights on business and geopolitical trends shaping the region.

$25.00 / month
billed annually

Become Member Start with 1-week free trial
What's included:
Our Expertise

Memos - premium analytical writing: actionable insights on markets and geopolitics.

Live Video Q&A - Hear from our top journalists and regional experts.

Special Events - Intimate in-person events with business & political VIPs.

Trend Reports - Deep dive analysis on market updates.

We also offer team plans. Please send an email to and we'll onboard your team.

Already a Member? Sign in