Abstract
FinTech is a disruptive international phenomenon that is expected to shape the future of the financial sector. This study describes the features and characteristics of the current Saudi Arabian FinTech landscape and ecosystem. Examples of innovative financial startups in Saudi Arabia, including online banking, transfer and payment services, crowdfunding platforms, peer-to-peer lending, and blockchain initiatives, are discussed. Several changes have occurred within the ecosystem in the last five years; for example, Saudi banks are taking a more cautious approach. However, FinTech initiatives are also being internally developed, encouraging technology companies and startups to focus their efforts on innovations aimed at improving current processes rather than novelty. The government directs its effort mainly toward initiatives related to regulations and laws. Customers are interested in new products that are convenient and easy to use. We compare the Saudi FinTech ecosystem to the United Arab Emirates’ FinTech ecosystem and conclude with recommendations for the different stakeholders.
Highlights
Worldwide, financial technology (FinTech) attracted huge investments in 2018: 2196 deals with a total value of USD 111.8B according to KPMG (2019), double the value of the previous year
We look at the international ecosystem and link it with the local ecosystem in Saudi Arabia for the analysis
The findings indicate that the FinTech industry is still in its early stages, but has the potential to be disruptive in certain product and consumer categories in the near future
Summary
FinTech attracted huge investments in 2018: 2196 deals with a total value of USD 111.8B according to KPMG (2019), double the value of the previous year. According to the annual FinTech 100 report published by Pollari and Ruddenklau (2018), the U.S and China are leading in FinTech startups and companies. The World Economic Forum, for example, defines FinTech as “new entrants that promised to rapidly reshape how financial products were structured, provisioned and consumed” (McWaters and Bruno 2017). Another more comprehensive definition is “organizations combining innovative business models and technology to enable, enhance and disrupt financial services”, emphasizing that FinTech incorporates early-stage startups and new entrants, and scale-ups, maturing firms, and even non-financial services firms, as reported by EY (2017)
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