Fintech is expected to play an important role in Saudi Arabia’s efforts to further diversify its economy, according to commentary from the nation’s Budget 2021 report.
Padmini Gupta from Fintech Rise notes in an update published by Arab News that sustained support this year from the Saudi Central Bank (previously called Saudi Arabian Monetary Authority or SAMA) has led to a dramatic increase in the number of Fintechs based in the Middle Eastern country.
Gupta, the Co-Founder and CEO at remittances focused Fintech Rise, points out that startups in the Kingdom are now serving a key role in expanding the economy.
She remarked:
“As Saudi Arabia continues its reforms, diversifies away from the oil sector and sustains its privatization efforts, startups have become a critical component of that transformation. Sustained support … from SAMA … [is] … helping Saudi companies and residents get faster and fairer access to financial services.”
Gupta also mentioned that her firm thinks that Fintech will serve a critical role in Saudi Arabia’s diversification strategy in 2021. Financial technology platforms should help with “enabling faster transmission of credit and capital to fuel GDP growth, especially given ongoing consolidation within the financial services sector,” Gupta said.
She explained that Fintech services enable omnichannel banking, “greater diversification” in the types of financial services offered, enhanced security, and “eventually cost savings.”
Gupta continued:
“Despite the unprecedented challenges of the [COVID-19 pandemic,] we have seen progress in government policies and regulations, infrastructure, and an increasing number of investments in Fintech companies, which have built a solid foundation to support the Fintech industry in Saudi Arabia that will contribute in a meaningful way to Vision 2030.”
As reported earlier this month, the Governor of SAMA has emphasized the importance of Fintech innovation while supporting competitive businesses. Saudi Arabian capital of Riyadh (along with the Kingdom of Bahrain) have been named as the top Fintech ecosystems to watch closely, according to a recent report.
As reported in November 2020, Western Union acquired a 15% stake, valued at $200 million, in Saudi Arabia’s telecom’s digital payments unit, STC Pay.
As covered in October 2020, the Governor of SAMA had said that central bank digital currencies or CBDCs seem promising and are worth exploring.