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Fintech: Saudi Arabia’s Rising Frontier for Growth and Economic Sustainability

Saudi Market Outlook

28 Jun 2024

Dunya Hassanein

With the ongoing digitalization of public services backed by a well-developed digital infrastructure and government initiatives under Vision 2030, Saudi Arabia’s fintech sector has remained a transformative force shaping the country’s diversified economy.

With the ongoing digitalization of public services backed by a well-developed digital infrastructure and government initiatives under Vision 2030, Saudi Arabia’s fintech sector has remained a transformative force shaping the country’s diversified economy.

Together, entities such as the Saudi Arabian Monetary Authority (SAMA) and the Capital Market Authority (CMA) continue to provide regulatory support that encourages innovation and ensures that novel fintech solutions can be tested and scaled successfully.

Collectively, these elements have made Saudi Arabia’s digital infrastructure among the strongest in the region, positioning the fintech sector for further growth and expansion.

Key Highlights

  • Saudi fintech is expected to reach $87 billion in value by 2029.
  • Cashless transactions are set to account for 70% of transactions in 2025, up from 62% in 2021.
  • Digital wallets dominate the fintech landscape in the Kingdom, with beneficiaries accounting for half of the Saudi population.
  • Funding poured into fintechs in Saudi reached $1 billion over 2018–2023.
  • The number of fintechs operating in the Kingdom increased twentyfold over the same period.

Increasing Adoption of Fintech Solutions and Alternative Financing Methods

In terms of market size, according to a report released by Mordor Intelligence, the sector is estimated to reach $63.90 billion in 2024, growing at a CAGR of over 6% to reach $87.14 billion by 2029, highlighting a significant growth opportunity for fintech companies seeking rapid scaling in a sector ripe for innovation.

Key drivers of growth include steady economic growth that drives consumption of online services and ubiquitous mobile connectivity, as well as the increasing prevalence of cashless payments, which is expected to account for 70% of all transactions in the country by 2025, up from 62% in 2021.

The increasing adoption of new payment solutions such as digital wallets, QR code payments, and the bill payment system, SADAD, has contributed to the market's continued bullish outlook.

Recent figures from the Saudi Arabian Monetary Authority (SAMA) highlighted a rise in digital wallet use among Saudis and non-Saudis residing in the country, adding that nearly half of the Saudi population is using digital wallets to perform transactions.

Alternative financing methods such as buy now, pay later (BNPL) have gained popularity among Saudi customers, with the number of customers surging from 76,000 in 2020 to over 10 million in 2022.

Saudi Arabia-based BNPL Tabby and Tamara dominate the space, accounting for the largest number of beneficiaries both locally and regionally.

On the business finance front, debt crowdfunding has emerged as a fundamental funding source for SMEs. Since 2019, investors have provided over 1,800 loans totaling more than SR1.1 billion, with the total value of the loans disbursed in 2022 alone worth SR 770 million.

Building Momentum: Record Levels of Funding Spur Economic Growth

Advancements and innovations in fintech across numerous industries, including retail, healthcare, and telecommunications, have proven to have a direct, positive impact on the broader economy. This has, in turn, made the sector more attractive to direct funding inflows channeled into fintechs with headquarters in the Kingdom, further strengthening its standing as a center for fintech innovation.

Fintech Saudi and the Financial Sector Development Program (FSDP) are the two main institutions tasked with creating a conducive environment for innovation and entrepreneurship. Moreover, since its launch in 2018, Fintech Saudi Arabia has stimulated this growth through a series of initiatives, including the Fintech Accelerator Program, the Fintech Saudi Innovation Hub and an online Fintech directory.

Consequently, the number of fintech companies operating in Saudi Arabia has increased twentyfold, from around 10 to over 200 by the end of 2023. This period also saw more than SAR 4 billion (approximately $1 billion) invested in the fintech sector, representing a large influx of capital going towards developing tech companies.

The positive momentum witnessed in the local fintech scene is the result of efforts rooted in Vision 2030, which seeks to promote the establishment of at least 525 fintech companies by 2030, up from 200 in 2023, resulting in the creation of 18,000 fintech job opportunities, up from 5,400 in 2023.

Saudi Arabia Spearheads Fintech Innovation Across Sectors

One major factor catapulting the industry forward is the fact that Saudi has been attracting a greater influx of international companies hoping to get in on the ground floor of a thriving landscape poised for further disruption and innovation. A notable example of this is Zenda, which specializes in creating cashless education systems, operating at the intersection of education, technology and financial services.

The company has not only captured the Kingdom's appeal to global fintech businesses but has also benefited from the opportunities the fintech sector presents.

Just three years after its founding in 2021, Zenda has quickly gained traction among its primary market and managed to achieve a 30% market share. The company has also been recognized as a Future 100 company by the Ministry of Economy, Government Development, and the Future Office.

Zenda's expansion was also supported by AstroLabs, which helped the company navigate the Saudi market dynamics. By supporting Saudi Arabia's shift towards a cashless and knowledge-based economy, Zenda's innovative solutions in the education sector reflect the Kingdom's broader fintech ambitions.

Highlighting AstroLabs' critical role, Hassan Ahmed, co-founder of Zenda, stated: “AstroLabs' proactive assistance and comprehensive responses to our inquiries have further empowered us to make informed decisions and drive impactful outcomes in this dynamic landscape.”

By continuing to foster innovation and support fintech startups, Saudi Arabia is set to become a global fintech powerhouse that will drive economic diversification and technological advancement aligned with its Vision 2030 goals.

Get in touch with a setup consultant to learn more about expanding your fintech company to Saudi Arabia.

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