Saudi Central Bank (SAMA) announced that it permitted several companies to offer Open Banking Solutions — a digital method enabling customers to securely share financial data with third parties — in its Regulatory Sandbox, a platform open to fintechs and financial firms to test new digital solutions before launching on the market.
This came after SAMA announced the licensing of two payment financial technology companies Arab Sea Financial Company and Fatoraah to provide payment services for e-commerce in the kingdom.
Saudi authorities announced and approved the kingdom’s FinTech Strategy Implementation Plan, which is the fourth pillar of the Financial Sector Development Program (FSDP). The FSDP seeks to create a diversified and efficient financial services sector to support the development of the national economy, diversify its sources of income and stimulate savings, finance, and investment.
In addition to the fintech strategy, the kingdom has introduced several regulatory policies and initiatives to advance the industry. These include the SAMA Open Banking Policy, the Payment Services Law, the Capital Markets Authority (CMA) Financial Technology Experimental Permit Instructions, supported by the SAMA Regulatory Sandbox, the CMA FinTech Lab and FinTech Saudi.
Companies are continuously looking for alternative lending solutions other than banks. Fintechs in this space can make quicker decisions and automate a big part of the process. The business model for lending is quite straightforward, where money is made from fees and/or interest.
Fintech has a lot of potential in the kingdom, but authorities will be cautiously supportive unless it causes systemic risks or disrupts existing banks too quickly.