The UK can offer Saudi Arabia help when it comes to FinTech
As FinTech Week descends on the UK once again during the first week of April, it could not be a more exciting time for financial technology collaboration between Saudi Arabia and Britain.
The announcement of a recent partnership between Engine, a fintech hub launched by the UK Investment Association in 2018 to fuel the adoption of technology within asset management, and Fintech Saudi, the initiative launched by the Saudi Central Bank, known as SAMA, also in 2018, to drive the Kingdom’s fintech ecosystem, is the latest example of the strategic alliance between the two nations.
The first Monday in April will once again see fintech founders, former senior bankers, technologists, entrepreneurs, investors, regulators, policymakers, politicians, academics, and media from around the world come together in the UK to debate and network at the world’s leading fintech week. The landmark event traditionally attracts a global audience eager to be a part of the conversation and showcase their brands, and this year we are likely to see particular interest from Saudi Arabia as the Kingdom looks to step up its fintech innovation.
Saudi Arabia’s renewed focus on financial services is a move toward diversifying its economy as part of its Vision 2030 strategy. Concrete action to support entrepreneurship to drive innovative products and services within its finance industry over recent years has begun to yield results and we are witnessing early-stage fintechs attract much-needed capital.
Malaa Technologies, a Saudi-based consumer wealth management startup launched in 2020 that was incubated by Aramco Wa’ed entrepreneur’s unit, last month raised SR6.4 million in seed capital after obtaining an open banking license from SAMA to become Saudi Arabia’s first open banking product. EdfaPay, another Saudi fintech that offers small firms a tap-to-pay system using smartphones instead of point-of-sale terminals, raised SAR6 million in a pre-seed round in February.
According to the Fintech Saudi 2021 Annual Report, there was a 37 percent increase in the number of operating fintech companies in Saudi Arabia over the previous year and a record level of over SAR1.3 billion in venture capital investment into Saudi Arabian fintech companies.
It is not surprising then that a renewed momentum has emerged for fintech collaboration between the UK and Saudi Arabia. Both countries find themselves at strategic junctions in their economic, political, and social trajectories and are seeking strategic partners to help them deliver their goals.
The UK is home to forward-looking cluster of financial and professional services firms and a consumer base with one of the highest fintech adoption rates in the world at 71 percent. Saudi Arabia has an emerging and vibrant fintech ecosystem and an ambition to become a leading regional fintech player.
Also, the diversity of the UK’s fintech ecosystem means that a number of UK-founded fintech firms present close synergies with the profile of the Saudi customer. One example is London-based fintech Kestrl, a fast-growing Islamic fintech, dubbed the Muslim money app, that helps Muslims budget, save and invest in line with their values.
But collaboration between The UK and Saudi Arabia across financial technology is not new. In June 2020, the UK Department of International Trade in partnership with the Saudi British Joint Business Council hosted the first UK-Saudi FinTech Week, an event where delegates shared their views on fintech trends across both markets.
Fintech is also one of the three strategic sectors included in the Saudi/UK Tech Hub, launched last October, with a mission to connect the tech ecosystems of the UK and Saudi Arabia by amplifying existing initiatives and helping create new ones.
A collaboration between the UK and Saudi Arabia across a variety of areas, from the regulation of the fintech sector to sandbox innovation, would support Saudi Arabia’s goal of positioning itself at the top of the region’s fintech centers. As the director of Fintech Saudi Nejoud Al-Mulai recently said: “We would love to be ranked among the first ones when it comes to fintech innovation”.
But she also recognizes that the global fintech scene is competitive and more needs to be done in the Kingdom to support fintechs to grow, navigate market challenges, and connect to the ecosystem of regulators, banks and universities. Let’s look forward to increased collaboration through the umbrella of initiatives such as the Saudi/UK Tech Hub.
• Roxana Mohammadian-Molina is Board Member of the Saudi British Joint Business Council, Chief Strategy Officer of UK FinTech company Blend Network, Board Member and Special Adviser to several organisations in the fields of technology and digital transformation