Fintech sector transformation accelerating thanks to Vision 2030 reforms, analysts confirm

Innovation has been encouraged through reforms in Saudi Arabia. Shutterstock
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Updated 17 January 2025
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Fintech sector transformation accelerating thanks to Vision 2030 reforms, analysts confirm

JEDDAH: Reforms across Saudi Arabia’s financial landscape have significantly transformed the sector, driven by the Financial Sector Development Program, experts have told Arab News.

One of the key initiatives of the Kingdom’s Vision 2030, the program aims to promote income diversification, enhance savings, and provide a range of financing and investment opportunities.

These reforms have been implemented under the close oversight of the Saudi Central Bank, known as SAMA, which has also played a crucial role in fostering the growth of fintech and digital banking through a supportive regulatory framework and various initiatives.

Speaking to Arab News, Yaseen Ghulam, associate professor of economics and director of research and consulting center at the Riyadh-based Al-Yamamah University, named five major reforms in Saudi Arabia’s financial sector that have had significant impact on the overall efficiency and competitiveness of financial institutions.

He noted that the FSDP, which was launched in 2017, has enhanced the Saudi Stock Exchange, or Tadawul, to become a globally competitive investment platform with robust market infrastructure.




Yaseen Ghulam, associate professor of economics and director of research and consulting center at the Riyadh-based Al-Yamamah University. Supplied

“The plan is to enhance trading infrastructure and settlement processes to meet international best practices, raising market capitalization, liquidity, and value to over $3 trillion, and facilitating the acquisition of money by overseas investors,” he said.

He added that this has led to greater online platforms, advanced fintech capabilities, integrated custody and clearing regimes, and greater investor rights, as well as increased alignment with sustainable finance norms, and improved transparency procedures.

He further added that Tadawul’s inclusion in the MSCI Emerging Markets Index in 2019 enhanced its standing as a global player.

Ghulam mentioned that fintech innovation has been a significant focus since the launch of the Fintech Saudi initiative in 2018, which has propelled Saudi Arabia toward becoming the leading hub for the sector in the region.

He added that by 2022, the program had helped the fintech ecosystem grow quickly, as seen by the establishment of many innovative businesses and the widespread use of digital payments.

“By enacting progressive laws, SAMA enabled this fintech revolution. In order to promote development, it built a regulatory sandbox for supervised testing of cutting-edge technologies, created specialist licenses for fintech businesses, and made banking infrastructure and application programming interfaces available,” he added.

This view was echoed by financial analyst Khalid Gaber Al-Zaidiy, who told Arab News that SAMA’s regulatory framework is key to the growth of fintech and digital banking in the Kingdom.

He added that some of the key impacts of this framework include encouraging innovation while maintaining financial stability.

“SAMA supports fintech innovation through initiatives like the Fintech Sandbox, enabling startups to develop and test products within a regulated environment,” he said.

By enforcing strict cybersecurity standards and regulations related to the protection of personal financial data, he added, SAMA enhances consumer trust in using fintech solutions. “This helps the sector grow sustainably and securely,” Al-Zaidiy said.

He added that by licensing new digital banks, SAMA fosters competition and supports digital economy growth, advancing the sector.

“The Central Bank’s policies promote financial inclusion and expand access to banking through digital solutions, creating opportunities for fintech companies,” the analyst added.

Green growth and international trust

Ghulam also highlighted the Kingdom’s commitment to green finance, stating that it has made strides in promoting environmentally friendly investments and projects in line with global sustainability trends.

This includes the issuance of green bonds as part of its Vision 2030 goals. “Saudi Arabia has positioned itself as a key player in the worldwide transition to a more environmentally responsible economic model through these proactive initiatives,” he said.

Ghulam emphasized that Saudi Arabia has implemented strategic policies to increase international investor participation, which has led to a record increase in foreign capital inflows and a boost in confidence in the Saudi financial system.

“Growing inflows reflect a global increase in trust in the stability of Saudi Arabia’s financial system,” he said.

He praised the establishment of the National Debt Management Center, adding that by creating specialized bodies to oversee the management of the country’s debt, Saudi Arabia has taken decisive action to improve public financial control and preserve a sound fiscal position.

Explaining how the rise of fintech and digital banking is reshaping customer expectations and experiences in the financial services industry, Ghulam stated that one of the most significant initiatives of the FSDP is the implementation of open and digital banking through fintech.

“As a result, Saudi Arabia is leading the fintech revolution, with over 226 fintech enterprises already in existence, due to its well-functioning telecommunication sector and heavy investment by government and telecom companies in infrastructure set up to bring higher speed and reliability of connections,” he said.

More importantly, the economist added, STC Bank, the Saudi Digital Bank, and the payment system of Sarie are leading the way in consumer digital banking and payment systems.

Ghulam further stated that digital banking saves customers time, reduces transaction costs, and fosters competition and economic growth.

“It is enhancing the financial sector by introducing new products and services for Saudi consumers and businesses. With consumer consent, these banking facilities allow third-party providers access to financial data, driving innovation in the industry,” he said, adding that digital wallets, smartphone apps, and online banking have become essential for managing accounts and transactions.

“Opening a bank account can now be done online, benefiting rural areas by eliminating the need for in-person visits. This shift has also improved financial inclusion by providing credit, insurance, and services to previously marginalized individuals and regions,” Ghulam said.

SMEs thriving

Highlighting how financial reforms are addressing the specific funding challenges faced by small businesses in Saudi Arabia, Ghulam noted that the Kingdom has over 1.3 million SMEs.

He noted that, like other developed countries, these companies face challenges in securing necessary financing due to collateral limitations and higher credit risk.

“The impetus for reforms in relation to SMEs funding has come from Vision 2030 and is related to FSDP. One of the main objectives of FSDP and related reforms is to amplify the financing of micro, SMEs within the banking system and to set up institutions such as SME Bank, Monsha’at, and Venture Capital companies to help improve thefinancing and ecosystem,” he said.

He noted that the FSDP aims to expand the current 10 percent ratio of SMEs financing in the banking system to 11 percent by 2025.

More importantly, to show its continued and strong support for these businesses, he said, the government is recommending that financial institutions devote 20 percent of their loan portfolios to this industry.

“Monsha’at has introduced several schemes in this regard. These include Funding Gate, an online one-stop-shop for financing, aggregating lenders and services, KAFALAH program, a loan guarantee service to help reduce risk and increase appetite for lenders, and Saudi Venture Capital Co., as well as Esterdad Initiative, and loans facilitated through the Indirect Lending Initiative,” he said.

The academic added that the fintech revolution resulting from reforms is also helping increase funding for SMEs in this regard, saying: “B2B FinTech solutions are highly sought after as they solve issues with credit availability, payment processing, and money management.”

Ghulam further said that the Public Investment Fund is also helping improve SMEs funding, along with oil giant Saudi Aramco’s Taleed program which offers more than SR3 billion in funding to eligible firms.

“All these varied funding channels would have not been possible without reforms and government push to help the smaller businesses that are the backbone of the future Saudi economy that is less reliant on fossil fuel income,” the economist said.




With capital of over SR3 billion, the Taleed Program targets sustainable growth of SMEs (File/AN)

The establishment of the Financial Literacy Entity within the FSDP is a key strategy in Saudi Arabia’s efforts to boost financial literacy and promote digital banking, aligning with Vision 2030’s goals.

“Several fintech businesses, such as Darahim and Fatafeat, are attempting to increase financial literacy in the Kingdom. In a significant step, the Saudi Ministry of Education mandated the inclusion of a ‘Financial Knowledge’ course in school curricula,” Ghulam said.

He further said that Thameen and Smart Investor, two awareness efforts run by the Capital Market Authority, are targeted at the financial literacy of adults and young people, respectively.

“A 2023 report from the SAMA states that citizens’ financial literacy has increased due to these activities. These policies are indeed bearing fruit: as of 2023, 38 percent of adults were estimated to have a basic understanding of financial concepts, up from 30 percent in 2021,” the academic said.


Saudi e-commerce sales using Mada cards hit $53bn in 2024

Updated 07 February 2025
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Saudi e-commerce sales using Mada cards hit $53bn in 2024

  • Year-on-year growth of 25.82%, according to Saudi central bank data
  • Spending power, nation’s economic strength are ‘fueling market growth’

RIYADH: E-commerce sales using Mada cards in Saudi Arabia reached SR197.42 billion ($52.64 billion) in 2024, a year-on-year growth of 25.82 percent, according to data from the Kingdom’s central bank.

Figures released by the institution showed that in December, sales totaled SR19.37 billion, representing a 42.06 percent increase compared to the same month in the previous year.

These figures include payments for online shopping, in-app purchases, and e-wallet transactions, but exclude transactions using credit cards such as Visa and MasterCard.

Mada, the Kingdom’s national payment card system, supports both debit and prepaid services within its network. The cards utilize near-field communication technology for contactless payments, enabling secure transactions at both physical retailers and online.

Mohammed Dhedhi, partner in the consumer and retail practice team at Kearney Middle East and Africa, told Arab News: “The growing spending power in Saudi Arabia, driven by factors such as dual-income households and higher overall economic strength, is fueling market growth.”

He added: “Additionally, the proliferation of NFC-capable devices has significantly boosted the penetration of digital payment channels like Mada, further supporting the shift toward a more digital economy.”

In addition to the surge in sales, the number of e-commerce transactions also experienced a significant rise, increasing by 28.86 percent year-on-year to nearly 1.13 billion transactions in 2024.

December saw a 30.47 percent annual increase, reaching 105.73 million transactions.

According to Dhedhi: “Today, local Mada cards account for over 90 percent of cards issued in the country and over 95 percent of the total transactions made. One of the main reasons for Mada’s popularity is because of how convenient it is to use.”

He added that Mada is widely accepted both in-store and online across Saudi Arabia, providing secure transactions as it is operated by Saudi Payments, a subsidiary of the Saudi Central Bank.

The growing adoption of Mada aligns with the government’s push toward a cashless society, promoting the transition from cash to digital payments.

Dhedhi explained that the COVID-19 pandemic significantly accelerated e-commerce penetration in Saudi Arabia, driving faster digital adoption across various sectors.

This growth was further supported by increased investments from both regional and global players looking to expand their operations.

He noted that in 2022, noon.com opened a Customer Fulfillment Center in Riyadh to improve delivery speed and meet the growing demand from consumers.

Saudi Arabia’s growing spending power, supported by factors including dual-income households and a robust economy, continues to drive market expansion.

At the same time, the widespread adoption of NFC-enabled devices has propelled the use of digital payment solutions like Mada.

As a result, the Kingdom is witnessing a rapid shift toward a more digital economy, with seamless and secure transactions becoming an integral part of the evolving e-commerce landscape.

The rise in e-commerce activity aligns with Saudi Arabia’s goal to make digital transactions account for 80 percent of the retail sector by 2030, with 70 percent conducted online by the same year.

According to the International Trade Administration, the Saudi e-commerce market, valued at $5.15 billion in 2023, accounted for 6 percent of the Kingdom’s $92.6 billion retail market.

Dhedhi said: “To improve online shopping experiences, Saudi Arabia’s Ministry of Commerce has introduced reforms focusing on refunds, delivery options, and payment choices.”

He added: “These changes aim to address consumer concerns such as unclear warranties, limited delivery coverage, slow complaint resolutions, and delayed refunds. Retailers are now required to submit performance reports and conduct consumer awareness campaigns.”

According to Dhedhi, Saudi Arabia’s e-commerce market growth will be driven primarily by appliances and electronics, which will account for 23 percent of total growth, with a compound annual growth rate of 8 percent from 2024 to 2028.

The fashion sector is expected to contribute 18 percent, also growing at 8 percent CAGR, while health and beauty will make up 14 percent, expanding at a much faster 16 percent CAGR.

The dominance of electronics and appliances reflects a strong demand for advanced technology and gadgets, particularly among younger, tech-savvy consumers.

In addition, the rising popularity of beauty and home care products aligns with an increasing focus on self-care and wellness across the Kingdom.

Meanwhile, the food and beverage segment is projected to experience the highest growth rate at 25 percent CAGR, although its overall market size remains smaller compared to other leading categories, according to Dhedhi.

“The rise in food and beverage e-commerce reflects a growing demand for convenience. Quick commerce has been growing rapidly, and while it historically took players much longer to achieve profitability, the current focus on dark stores and improved unit economics is accelerating this process,” Dhedhi said.

He also noted that while this shift has accelerated growth in the sector, it has also intensified competition. This dynamic ultimately benefits market players in Saudi Arabia by fostering innovation and enhancing service quality.

According to the International Trade Administration, Saudi Arabia’s digital economy is expanding rapidly, driven by substantial government investments and widespread adoption of emerging technologies.

As of 2023, the Kingdom’s Information and Communications Technology sector was the largest and fastest-growing in the Middle East and North Africa region, valued at $40.94 billion and contributing 4.1 percent of gross domestic product, the report stated.

The Kingdom ranked second among G20 countries on the UN International Telecommunication Union’s ICT Development Index in 2023, highlighting its strong digital infrastructure.

Over the past six years, Saudi Arabia has invested $24.8 billion in this area, leading to a 99 percent internet penetration rate and mobile internet speeds of 215 megabits per second, nearly double the global average.

These advancements place the Kingdom among the top 10 countries globally for mobile internet speed, according to the ITA.

Saudi Arabia was an early adopter of 5G technology, with coverage reaching 77 percent of the country — significantly above the global average — and 94 percent in Riyadh, positioning it among the world’s leading cities for 5G accessibility.

This high-speed internet expansion is fueling growth in e-commerce, telecommunications, and digital services, the ITA added.

The number of e-commerce users is projected to reach 34.5 million by 2025, with penetration rising from 66.7 percent in 2023 to 74.7 percent by 2027, according to the report.

Digital payments are also surging, aligning with Vision 2030’s goal of a cashless society. Electronic payments in retail transactions surpassed 57 percent in 2021, exceeding the 55 percent target set by the Financial Sector Development Program.

This shift is expected to further accelerate e-commerce growth, attracting more investment in digital financial services.

Dhedhi said: “Millennials, who constitute around 50 percent of the population, are key drivers of e-commerce growth due to their digital fluency and tech-savviness.”

He added: “Expats, on the other hand, prioritize the delivery experience more than locals and show a strong preference for international brands or diverse product offerings, contributing to a broader assortment in the offerings.”

Dhedhi said quick commerce players are tapping into the demand for fast delivery, affordable subscriptions, and influencer partnerships to target younger consumers.

By offering low delivery costs, they are setting new convenience standards. Chinese e-commerce giants including Shein and Temu have successfully attracted Gen Z and millennials with trendy, affordable products, despite occasional compromises in product quality, he said.

Urbanization and rising female workforce participation are further fueling the shift to online retail, with families increasingly relying on e-commerce for groceries, fashion, and household items.

Dhedhi noted that these demographic shifts are broadening the customer base, diversifying consumer behavior, and fueling the expansion of Saudi Arabia’s e-commerce sector, which plays a pivotal role in the Kingdom’s economic transformation.


Oil Updates — crude set for 3rd straight weekly decline amid tariff concerns

Updated 07 February 2025
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Oil Updates — crude set for 3rd straight weekly decline amid tariff concerns

SINGAPORE: Oil prices rose marginally in Asian trade on Friday but were on track for a third straight week of decline, hurt by US President Donald Trump’s renewed trade war on China and threats of tariff hikes on other countries.

Brent crude futures rose 32 cents to $74.61 a barrel by 8:00 a.m. Saudi time, but were poised to fall 2.8 percent this week. Meanwhile, US West Texas Intermediate crude was up 24 cents at $70.85 a barrel, down about 2.3 percent on a weekly basis.

“Oil prices saw some stability return this morning following a volatile session overnight, as traders react to news of US sanctions on Iranian crude exports to China,” said Yeap Jun Rong, market strategist at IG.

The US Treasury said on Thursday it is imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to boost pressure on Tehran.

“Nevertheless, (today’s) oil gains are limited, reflecting persistent concerns over supply and demand headwinds, including the potential for increased production from OPEC+ and the US, as well as tariff risks weighing on global oil demand,” IG’s Yeap added.

Trump had announced a 10 percent tariff on Chinese imports as part of a broad plan to improve the US trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.

“Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fueling fears of weakening oil demand,” analysts at BMI said in a note on Friday.

“This has eclipsed US President Trump’s Feb. 4 executive order reimposing his maximum pressure campaign on Iran, including a commitment to drive the country’s oil exports down to zero, from above 1.5 million barrels per day currently,” the BMI analysts said.

Oil prices settled lower on Thursday after Trump repeated a pledge to raise US oil production, unnerving traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.

The benchmarks were also under pressure from swelling US crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.


PIF’s SIRC, Germany’s Concord Blue to launch first phase of sewage to renewable hydrogen station

Updated 07 February 2025
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PIF’s SIRC, Germany’s Concord Blue to launch first phase of sewage to renewable hydrogen station

  • Both parties will offer innovative solutions that contribute to environmental sustainability and promote the circular carbon economy
  • Plan will see around 100 million tonnes of waste recycled annually

RIYADH: A new agreement between the Saudi Investment Recycling Co. and the German company Concord Blue will lead to the construction of a station in the Kingdom that converts sewage into renewable hydrogen.

The Public Investment Fund firm inked the memorandum of understanding with the engineering company for the first phase of the development, whereby the plant will use Concord Blue Reformer technology to develop sludge treatment projects resulting from sewage and other organic waste, according to a statement.

Concord Blue Reformer’s non-combustion reforming process uses the principles of staged reforming to efficiently and cleanly recycle waste into energy.

This falls in line with SIRC’s goal of actively leading the charge in implementing impactful waste reduction strategies, accelerating the widespread adoption of renewable energy solutions, and championing the principles of environmental justice.

It also aligns with the comprehensive plan announced by the Kingdom’s Ministry of Environment in January 2024, which targets recycling a significant portion — up to 95 percent — of the country’s waste.

“Under this memorandum, SIRC will provide sewage and agricultural waste as raw materials, while Concord Blue will convert this waste into renewable hydrogen, in addition to transferring knowledge in this field and training national cadres to build, operate and maintain facilities for converting waste into hydrogen,” said Faisal Al-Solami, executive vice president of finance and strategic planning at SIRC.

When fully implemented, the plan will see around 100 million tonnes of waste recycled annually, showcasing the nation’s commitment to sustainability.

Under the terms of the newly signed MoU, both parties will offer innovative solutions that contribute to environmental sustainability and promote the circular carbon economy by producing high-quality green hydrogen and manufacturing biochar and industrial-activated coal. 

Al-Solami said signing the agreement is a key step toward achieving Vision 2030’s recycling and sustainability goals, as it promotes environmentally friendly energy solutions from waste, reduces emissions, and supports an eco-conscious economy.

This comes as the first phase of the project will achieve several goals, including reducing the volume of waste sent to landfills, enhancing hydrogen production on a large scale, and developing innovative solutions to reduce carbon emissions.

It will also support local manufacturing projects and contribute to achieving a zero-carbon future by producing clean fuel that supports the transition to a hydrogen economy in the industrial and transportation sectors.


Closing Bell: Saudi main index edges up to close at 12,433

Updated 06 February 2025
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Closing Bell: Saudi main index edges up to close at 12,433

RIYADH: Saudi Arabia’s Tadawul All Share Index edged up on Thursday, gaining 19.18 points, or 0.15 percent, to close at 12,433.58. 

The total trading turnover of the benchmark index was SR6.88 billion ($1.83 billion), as 123 of the listed stocks advanced, while 96 retreated.  

The MSCI Tadawul Index increased by 2.23 points, or 0.14 percent, to close at 1,545.99. 

The Kingdom’s parallel market Nomu also rose, gaining 135.68 points, or 0.43 percent, to close at 31,386.27. This comes as 40 of the listed stocks advanced, while 39 retreated. 

The best-performing stock was Almasane Alkobra Mining Co., with its share price surging by 7.49 percent to SR68.9. 

Other top performers included the Thimar Development Holding Co., which saw its share price rise by 5.76 percent to SR56.9, and Makkah Construction and Development Co., which saw a 4.42 percent increase to SR108.60. 

Mutakamela Insurance Co. saw the largest decline of the day, with its share price dropping 2.19 percent to SR18.72. 

The Tanmiah Food Co. saw a decline of 1.99 percent, with its share price dropping to SR127.80, while the Saudi Industrial Investment Group fell by 1.69 percent to SR17.40. 

On the announcements front, Saudi Industrial Investment Group reported its annual financial results for 2024, with net profits reaching SR11 million, matching the previous year’s figure. 

Saudi Arabian Mining Co., known as Ma’aden, also announced the official launch of its US dollar-denominated trust certificates offering.

The offering is available to eligible investors both in Saudi Arabia and internationally, as part of Ma’aden’s strategic initiative to strengthen its financial position and expand investment opportunities. 

To facilitate the issuance, Ma’aden has appointed 10 companies as joint lead managers for the transaction, including Citigroup Global Markets Limited, HSBC Bank, Al Rajhi Capital Co., BNP Paribas, and GIB Capital.

The other five include J.P. Morgan Securities plc, Natixis, Saudi Fransi Capital, SNB Capital Co., and Standard Chartered Bank. 

In a statement to Tadawul, the company stated that the sukuk will be issued in two tranches, with maturities of 5 and 10 years. The minimum subscription amount is set at $200,000, with the final value and terms of the offering to be determined based on market conditions. 

Following the announcement, Ma’aden’s shares closed at SR48.15, up 4.05 percent in today’s session. 


Saudi crown prince launches ‘King Salman Automotive Cluster’ at KAEC

Updated 06 February 2025
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Saudi crown prince launches ‘King Salman Automotive Cluster’ at KAEC

RIYADH: Saudi Crown Prince Mohammed bin Salman has named the automotive manufacturing hub within King Abdullah Economic City the “King Salman Automotive Cluster,” the Saudi Press Agency reported on Thursday.

The King Salman Automotive Cluster will serve as a pivotal center for the automotive industry, housing the headquarters and manufacturing facilities for both local and international companies.

Notable brands, such as Ceer—the first Saudi electric vehicle brand—and Lucid Motors, which opened its first international factory in KAEC in 2023, are set to be key players in the cluster.

The site will also host multiple Public Investment Fund joint ventures with global manufacturers, including a highly automated factory with Hyundai Motor for car production in Saudi Arabia and a partnership with Pirelli to establish a tire factory.

This new cluster marks a significant milestone in Saudi Arabia’s economic diversification efforts, supporting the development of the automotive sector and advancing sustainable transportation. It will contribute to boosting the non-oil gross domestic product and increasing exports.

The King Salman Automotive Cluster will accelerate local manufacturing capacity, promote research and development, and optimize supply chains, making them more efficient for both regional and international markets.

The project is expected to create numerous investment opportunities for the private sector, fostering the growth of promising industries within the Kingdom.

By 2035, the cumulative GDP contribution from companies within the cluster is projected to reach approximately SR92 billion.

The cluster will generate thousands of direct and indirect jobs, support local manufacturing, and boost Saudi exports, positively impacting the nation’s balance of payments.

Leveraging KAEC’s robust infrastructure and its strategic location near a well-developed port, the cluster offers significant advantages for both local private sector entities and international companies. These factors will provide ample opportunities for collaboration between partners, suppliers, and investors within the automotive industry and related sectors.

The King Salman Automotive Cluster will play a key role in advancing the National Industrial Development and Logistics Program, which aims to position Saudi Arabia as a leading industrial hub and global logistics center by fostering high-growth sectors and attracting foreign investment.