Reaffirming its resolve to transform Riyadh into a formidable global fintech hub, the Saudi government has equipped itself with a new strategy to more than double the size of its fintech community by 2025, an exciting development for Islamic fintech.
Spearheaded by the Financial Sector Development Program (FSDP), the FinTech Strategy Implementation Plan seeks to increase the number of fintech companies to 230 from 82. It also endeavors to raise the share of digital payment transactions to 70% by 2025.
In addition to 22 indirect objectives, the strategy has been designed with the overarching goal of realizing Saudi Vision 2030, namely through: enhancing ease of doing business, increasing the private sector’s economic contribution, attracting foreign direct investment, developing the digital economy, nurturing and supporting an innovation and entrepreneurial culture, increasing SME contribution to the economy and developing an e-government.
This new pillar within the FSDP is a crucial addition underscoring the government’s determination to reduce its hydrocarbon dependency by diversifying its financial sector to expand its income streams as well as stimulate savings and investments.
Finance Minister Mohammed Al Jadaan, who is also the chairman of the FSDP committee, opined that enhancing fintech services would contribute toward mobilizing other sectors including retail, hospitality, real estate, transportation and healthcare. He forecasted that innovation, particularly through artificial intelligence, in these sectors could drive the growth of assets under management to 50% by 2030.
As one of the world’s most influential Islamic finance powers, Saudi Arabia’s national fintech strategy bodes well for the Islamic fintech sector, locally as well as globally. It is understood that fintech start-ups in the Kingdom are required to align their business proposition with Shariah principles even in the absence of explicit instructions, making Saudi a natural high-potential jurisdiction for Muslim-friendly technology-mediated financial services.