First fintech licenses show Saudi Arabia is a ‘serious player’

Riyadh’s Kingdom Center Tower. 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. (Reuters)
Updated 15 July 2018
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First fintech licenses show Saudi Arabia is a ‘serious player’

  • Manafa Capital and Scopeer to offer crowdfunding investment services on a trial basis
  • The Kingdom is driving development in the fintech sector as part of its plan to diversify the economy and meet the targets outlined in Vision 2030

LONDON: 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.

Decoder

What is fintech?

Financial technology — known as fintech — has been a major growth area in the Internet space. Many startups in the field aim to compete with traditional financial services operators, ranging from the use of smartphones for mobile banking, online investing services and cryptocurrency exchanges. Some of the biggest players in the sector include Coinbase, a cryptocurrency exchange, payments processing startup Stripe, and online lender SoFi. Many established players in the financial services sector have attempted to offer high-tech offerings to compete with often more agile startups.


Saudi Arabia and UAE launch a new joint cryptocurrency

Updated 20 January 2019
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Saudi Arabia and UAE launch a new joint cryptocurrency

  • The cryptocurrency will be limited to banks during its first stages
  • The program will also help the two countries evaluate the monetary policies of a centralized currency

Saudi Arabia and the UAE have launched a joint cryptocurrency during the first meeting of the Saudi-Emirati Coordination council Saturday in Abu Dhabi, UAE’s national press agency WAM said.

The cryptocurrency will be limited to banks during its first stages, until the governments have a better understanding of how Blockchain technology operates cross-borders.

The currency operates on the use of a “distributed database between the central banks and the participating banks from both sides,” aiming to protect customer interests, set technology standards and assess cybersecurity risks. The new program will also help evaluate the impacts of a central currency on monetary policies.

During the meeting, representatives of Saudi Arabia and the UAE also signed the Joint Supply Chained Security Cooperation program, which tests the two countries abilities to provide vital supplies during times of crisis and national emergencies, as well as share expertise and knowledge in the field.

All 16 members of the executive committee of the council followed up on the execution of the initiatives mentioned in the Strategy of Resolve.

Representatives also set five other initiatives to enhance the cooperation between the two countries, such as facilitating the traffic between ports, improving airports to make it easier for people with disabilities to travel, creating a financial awareness program for children aged 7-18, starting a joint platform to support local SMEs, and the integration of civil aviation markets,

The committee was headed by Mohammad bin Abdullah Al-Gergawi, minister of cabinet of affairs and the future of UAE, and Mohammed bin Mazyad Al-Twaijri, minister of economy and planning in Saudi. The committee will also monitor the implementation of the initiatives.