Arab News, Thursday, Jul 12, 2018 | Shawwal 28, 1439
First fintech licenses show Saudi Arabia is a ‘serious player’
Saudi Arabia kick-started the evolution of its
financial technology sector on Tuesday by approving the first fintech licenses
for companies in the Kingdom.
The move, which granted permission to Manafa Capital and Scopeer to offer
crowdfunding investment services on a trial basis, marked an important first
step in realizing Saudi Arabia’s ambitions to become a fintech hub for the
region, experts said.
“There’s huge potential in Saudi Arabia,” said Paul Alfing, a senior consultant
at Payments Advisory Group, a Netherlands-based consultancy specialized in
payments and financial transactions.
Actions like this show the Kingdom is becoming “a serious player in this field.”
This first step “is perhaps the most difficult” but subsequent licenses will
follow more easily, he added.
The Capital Market Authority — the Saudi
government’s financial regulatory authority — said it would be reviewing
applications for more fintech licenses later in the year.
The Kingdom is driving development in the sector as part of its plan to
diversify the economy away from oil and meet the targets outlined in the Vision
2030 reform plans.
Ambareen Musa, founder and CEO of souqalmal.com, a successful fintech startup
based in the UAE, said: “With everyone from regulators, customers and businesses
embracing fintech, and even established financial institutions ramping up
investment in non-traditional technologies, the opportunity for fintech is
enormous, in Saudi Arabia and in the region as a whole.”
Fintech expert Jim Marous said that new players and new innovations from
existing financial services organizations across the MENA region are allowing
firms to compete more effectively on a global stage.
“With innovation and digital transformation occurring across all industries, the
consumers in the region are increasing their expectation of all organizations
they engage with regularly. To keep pace with these expectations, new financial
technology firms will emerge that are able to apply data and advanced digital
technologies to improve the consumer experience,” Marous said.
“This disruption of the finance sector provides a tremendous opportunity for the
Saudi fintech sector (and financial services firms in general).”
Pointing to the Kingdom’s large youth population, Alfing described a strong
demand for “new solutions and products in the market.”
Competition is fierce in the region as other MENA countries look to take the
leader in fintech but as the largest economy in the Arab world, Saudi Arabia is
a stronger contender, Alfing said.