Several Islamic fintech start-ups have gained regulatory licenses to operate in Saudi Arabia, underscoring the world’s largest Shariah financial market’s latent potential for Islamic digital finance and investments.
New fintech licensees
The Saudi Central Bank (SAMA) has granted licenses to two Islamic fintech companies: Lendo, a Shariah compliant debt-based crowdfunding platform, and FinZey, an Islamic digital microfinancier.
Lendo secured the license after a successful trial run in SAMA’s regulatory sandbox. Equipped with a capital of SAR5 million (US$1.33 million), the Islamic fintech company serves the local SME market with instant short-term invoice financing.
FinZey, on the other hand, was established with a capital of SAR20 million (US$5.33 million) and offers consumer microfinance based on the Shariah concept of Tawarruq.
SAMA also extended a license to Mobily Pay, also known as Etihad Fintech Company, which is owned by Etihad Etisalat Company, a telecommunications services firm. With the license, Mobily Pay will be able to carry out payments and electronic wallets businesses. Mobily Pay is the 17th payment company to be licensed by the regulator, which has also granted eight other companies in-principle approvals.
“These initiatives come as part of SAMA’s role in strengthening the sectors of finance and payments processing services by allowing them to engage in new activities and to entice a wider pool of investors and companies, while ensuring efficient operation by adhering to SAMA’s control and supervisory requirements related to corporate governance and risk management, as well as displaying commitment to consumers and seeking to guarantee their protection,” shared the central bank.
New regulatory sandbox participants
SAMA also recently issued permits to three other fintech companies to operate under its regulatory sandbox, bringing the total number of permitted fintech companies to 35. These three companies – Bwatech, Rabet and Mala’a – are authorized to provide open banking services, allowing consumers to access their banking information and share it securely with consent.
“These services will consequently enable consumers to benefit from new and innovative financial products and services, ranging from the integration of all bank accounts under a single control panel, to the discovery of seamless patterns of operation for daily banking activities,” explained SAMA.
Mala’a is a personal wealth management platform which counts Shariah compliant Albilad Bank as a partner while Rabet offers open banking solutions and Bwatech provides digital services connecting the commercial sector with the financial sector.
Accepting these three companies into its sandbox is part of SAMA’s open banking strategy as it seeks to lay a solid foundation for an open banking system in the Kingdom by testing new business models and identifying potential challenges while addressing these prospective challenges.