Introduction

The emergence of Fintechs have been forged during two global crises in the past 13 years; the 2008 Global Financial Crisis and the 2020 Global COVID19 Pandemic.

The 2008 Global Financial Crisis that shifted and drove consumer demand away from traditional banking systems, coupled with recent technological advancement created the perfect opportunity for the widespread birth of the Fintech Industry. Consumers asked for greater transparency, lower- cost products and services delivered with enhanced, digital customer experiences – and the Fintech revolution answered many of these consumer demands.

The global fintech industry has seen widespread adoption, consistently doubling every two years. 64% of global consumers adopted fintech services in 2019, compared to 16% in 2015, a cumulative annual growth rate of 43%. What’s most interesting about the growth of Fintech worldwide, is that global leaders in Fintech are also found predominantly in the emerging markets, in places such as China (87% consumer adoption) and India (87%) followed by Russia (82%) and South Africa (82%).

Saudi Arabia’s Fintech ecosystem may be in its nascent stages, having only publicly recorded its first rounds of Fintech seed-stage fundraising in the late 2000’s. In 2009, for example, Quara Finance (formerly Maalam Financing), a Riyadh-based shariah-compliant consumer lending platform for the Arab world, raised 300 million SAR for its’ paid-up capital. Since then, over $787 million USD of capital has been fundraised and disclosed by Saudi-born Fintechs operating in the Kingdom. Saudi Arabia only established both of its regulatory testing environments in 2018, just three years ago, of which half of the time was mired in challenges brought on by the COVID19 Pandemic; but the pace of adoption has been swift and aggressive, and the market potential massive. The Kingdom is home to the strongest economy, as measured by GDP, in the Middle East and North Africa (MENA) region. Saudi is also the 25th wealthiest economy in the world (measured in GDP-PPP)5, just behind Canada – a country that Saudi Arabia also has a similar population to, with approximately 35 million people.

Some interesting drivers for faster fintech adoption include a youthful, and thus digitally-inclined population, where 67% of the population is under the age of 35. It is also a tech-savvy population with some of the highest internet usage rates in the world; the Kingdom boasts 96% internet penetration and 97% smart phone penetration amongst its population between the ages of 18-75. Saudi Arabia is also leading the Middle East, along with the United Arab Emirates and Qatar, in preparing for the adoption of 5G technology. In 2021, a Fintech Adoption Survey found that the overall use of cash was declining in the Kingdom, but that the majority of the population (57%) still used cash at least once per week, but 25% claim only to use cash once per month. Interestingly, 18% of the Saudi population claim that they only use cash once or twice a year. All of these factors, and more covered within the report, have contributed to the Fintech industry in Saudi Arabia reaching a market- size of US $20 Billion in 2019, and is expected to reach transaction values over US $33 billion by 2023.

* Information taken from the special report "An ultimate guide to Fintech in the Kingdom of Saudi Arabia", Entrepreneur Middle/East.