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A new version is the sixth launched by “Saudi Fintech” in eight Saudi cities in order to stimulate the financial technology sector, which the Kingdom aspires to have a contribution to the domestic product worth approximately 13 billion riyals ($3.4 billion) by the year 2030, as part of the goals of “Vision 2030.” », which reinforces its trend in diversifying sources of income and enabling financial institutions to support the growth of the private sector and opening the way for new companies to provide financial services.

On Sunday, “Saudi Fintech” – one of the initiatives of the Saudi Central Bank (SAMA) in partnership with the financial market – launched its sixth edition of the “Fintech Tour”, which includes more than 30 speakers with experience in the financial technology sector, and continues for 10 days in eight… Different cities.

There is no doubt that the issue of “fintech” or financial technology is gaining growing importance in the world, as it directly affects raising the level of financial services available to customers on the one hand, and is considered a fundamental driver in the economic cycle on the other hand.

From this standpoint, the Kingdom decided to reserve its place in the world of financial technology, so in 2018 it developed a comprehensive program targeting financial development, which is one of the 11 executive programs launched by the Council of Economic and Development Affairs to achieve the goals of “Vision 2030”.

This program plays a major role in strengthening the Saudi financial sector and transforming it into a powerhouse for economic growth and diversification.

The Saudi Central Bank expects the financial technology sector’s contribution to reach two billion riyals ($533 million) by the end of this year.

The progress achieved by Saudi Arabia in this field is remarkable, as the number of active companies in it reached 200 by the end of August of this year, with a growth rate of 26 percent compared to last year.

The numbers contained in the annual “Financial Technology” report issued by the Central Bank of Saudi Arabia show that the number of individuals registered in the electronic wallet service reached 13 million, 64 percent of whom are between the ages of 20 and 40 years.

Globally, publicly traded financial technology companies represented a market value of $550 billion as of July 2023, a two-fold increase over 2019, according to McKinsey figures.

While a report issued by Research and Markets expected that the global financial technology market will achieve a compound growth of 27.5 percent between the years 2021 and 2026.

As for the Middle East and North Africa, the Mordor Intelligence Research Center expects the sector to record an annual growth rate of 8 percent over the next five years.

In a statement to Asharq Al-Awsat, Deputy Chairman of the Board of Directors of Tamra Financial Company, Salah al-Din Khashoggi, said: “Any emerging company must have a side specialized in financial technology, and we will see many companies moving to cover technical financial services because the world in general is moving towards them.”

Financial technology companies in the Kingdom are subject to a set of strict regulations. In order to be able to achieve the required innovation, it must have the support of the Capital Market Authority, which is the official regulatory body for the financial markets in Saudi Arabia. In 2018, the regulatory authority launched the “Financial Technology Lab”, which is the experimental environment for innovative products and financial technology services.

Venture capital investment in financial technology

Saudi Arabia aspired to raise the cumulative value of venture capital investment in financial technology companies to reach 2.6 billion riyals ($693,000) by 2025.

The Chairperson of the Board of Directors of Tahaluf Financial Company, Nouri bint Dhaifallah Al-Matani, explains in a statement to Asharq Al-Awsat that “venture investment is a form of equity financing through investors owning private equity shares in emerging companies,” explaining that investors support emerging companies in Its initial stages so that it has the ability to expand and grow and thus achieve long-term capital gains.

She adds, “Investors seek to finance emerging companies that are still in the growth stage and that have great potential and opportunities for expansion… Investors in emerging companies pay greater attention to the company’s growth in the long term, out of their desire to achieve greater financial compensation upon exit through listing on the financial markets.” Or through the acquisition of the startup from a major company.”

Al-Matani explains, “This form of investment is considered a high-risk investment, so it is called venture investment. However, the potential profit margin that can be achieved with the growth of the startup is much greater than other forms of investment.”

She continued, “Venture investment companies mitigate these risks by closely monitoring investments and supporting entrepreneurs to ensure their success.”

Regarding the experimental environment proposed by the financial market, she said that it is a stimulating environment for financial technology companies to deal in securities, and allows the development of the securities investment sector. The venture investment report issued by the Saudi Venture Capital and Private Equity Association revealed that Saudi Arabia ranked first among countries in the Middle East and North Africa region in terms of the value of venture investment in the first half of the current year, with 446 million riyals ($124 million). It is followed by Egypt, the Emirates, Bahrain, and Morocco.

The report showed that the e-commerce sector accounted for an 83 percent share of the total venture investment, while the financial technology sector ranked fourth after health care and corporate software.

For its part, “Saudi FinTech” refuted the classifications of financial technology companies in the Saudi market according to their specialization, including collective ownership financing, automated advisor services, distribution of investment funds and real estate investment funds, offering and investing in debt instruments, using distributed ledger technology, and social trading services.

It is noteworthy that the “Fintech” tour will take place in Riyadh, Jeddah, Dammam, Al-Ula, Tabuk, Dhahran, Al-Khobar, Buraidah, and Abha.