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.


Apple Watch, FitBit could feel cost of US tariffs

Updated 20 July 2018
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Apple Watch, FitBit could feel cost of US tariffs

SAN FRANCISCO: The latest round of US tariffs on $200 billion of Chinese goods could hit the Apple Watch, health trackers, streaming music speakers and other accessories assembled in China, government rulings on tariffs show.
The rulings name Apple Inc’s watch, several Fitbit Inc. activity trackers and connected speakers from Sonos Inc. While consumer technology’s biggest sellers such as mobile phones and laptops so far have faced little danger of import duties, the rulings show that gadget makers are unlikely to be spared altogether and may have to consider price hikes on products that millions of consumers use every day.
The devices have all been determined by US Customs and Border Patrol officials to fall under an obscure subheading of data transmission machines in the sprawling list of US tariff codes. And that particular subheading is included in the more than 6,000 such codes in President Donald Trump’s most recent round of proposed tariffs released earlier this month.
That $200 billion list of tariffs is in a public comment period. But if the list goes into effect this fall, the products from Apple, Fitbit and Sonos could face a 10 percent tariff.
The specific products listed in customs rulings are the original Apple Watch; Fitbit’s Charge, Charge HR and Surge models; and Sonos’s Play:3, Play:5 and SUB speakers.
All three companies declined to comment on the proposed tariff list. But in its filing earlier this month to become a publicly traded company, Sonos said that “the imposition of tariffs and other trade barriers, as well as retaliatory trade measures, could require us to raise the prices of our products and harm our sales.”
The New York Times has reported that Trump told Apple CEO Tim Cook during a meeting in May that the US government would not levy tariffs on iPhones assembled in China, citing a person familiar with the meeting.
“The way the president has been using his trade authority, you have direct examples of him using his authority to target specific products and companies,” said Sage Chandler, vice president for international trade policy at the Consumer Technology Association.
The toll from tariffs on the gadget world’s smaller product lines could be significant. Sonos and Fitbit do not break out individual product sales, but collectively they had $2.6 billion in revenue last year. Bernstein analyst Toni Sacconaghi estimates that the Apple Watch alone will bring in $9.9 billion in sales this year, though that estimate includes sales outside the United States that the tariff would not touch.
It is possible that the products from Apple, Fitbit and Sonos no longer fall under tariff codes in the $200 billion list, trade experts said. The codes applied to specific products are only public knowledge because their makers asked regulators to rule on their proper classification. And some of the products have been replaced by newer models that could be classified differently.
But if companies have products whose tariff codes are on the list, they have three options, experts said: Advocate to get the code dropped from the list during the public comment period, apply for an exclusion once tariffs go into effect, or try to have their products classified under a different code not on the list.
The last option could prove difficult due to the thousands of codes covered, said one former US trade official.