What Is Fintech? How It’s Reshaping Banking in Saudi Arabia [Stats & Insights]

Introduction:

The world is witnessing a major transformation in economic and financial development. Across all developed nations, economies are shifting from cash-based to cashless systems.
Saudi Vision 2030 has placed great emphasis on this transition, making it one of its key objectives. In 2018, the Financial Sector Development Program was launched to strengthen and enhance the efficiency of financial institutions in the Kingdom, develop the financial market, and transform it into a globally competitive hub.
The program has already achieved several milestones, most notably the launch of Saudi Arabia’s Fintech Strategy.

In this article, we will explore financial technology (FinTech)—breaking down its definition, types, and key innovations- and how it has reshaped banking and financial transactions in Saudi Arabia in recent years.

What Is Financial Technology (FinTech)?

The term FinTech is a shorthand for Financial Technology, referring broadly to the application of technology in the financial industry to enhance market efficiency and improve customer experience.
Simply put, any transition from traditional financial transactions to faster, more convenient digital alternatives can be considered part of FinTech. This sector bridges finance and cutting-edge technology to provide faster, safer, and more flexible financial services.

FinTech solutions encompass a wide range of applications, from digital payments to advanced data analytics used by banks, insurance companies, and investment firms. Their core objective is to enhance customer experiences, reduce costs, and boost the overall efficiency of the financial sector.

The Importance and Benefits of FinTech in Financial Transactions

In recent years, financial technology (FinTech) has gained significant importance across various financial sectors, benefiting investors, business owners, and individual users alike. It represents a true revolution in the financial industry, offering groundbreaking advantages that have reshaped how financial transactions are conducted.

Here are some of the key benefits that make FinTech an essential pillar of modern finance:

• Automation and efficiency: Enhances and automates financial services, making them more accessible from anywhere.
• Speed, accuracy, and cost-effectiveness: Ensures high precision, lowers costs, and accelerates financial processes.
• Instant transactions and 24/7 accessibility: Enables near-instant money transfers and continuous account access.
• Personalized financial insights: Provides tailored recommendations based on spending habits and investment goals.
• New financial models and services: Supports innovative business models that were previously unattainable.
• Market efficiency and customer experience: Improves financial markets and delivers superior services to users.
• Financial inclusion: It lowers service costs and extends financial solutions to underserved populations.
• Risk reduction: Enhances security, transparency, and compliance, minimizing financial risks.
• AI and big data integration: Strengthens security, refines customer experiences, and optimizes costs.
• Alternative financing solutions: Expand access to crowdfunding and non-traditional insurance models.
• Digital transformation and global competitiveness: Positions Saudi Arabia as a leader in the financial sector, driving economic stability and sustainable development.
• Easier access to funding: Provides startups and entrepreneurs with lower-cost financing options.
• Simplified financial management: Reduces banking complexities, allowing businesses to handle financial data effortlessly.
• Real-time financial updates: Empowers business owners to adjust financial data instantly in response to market changes.

With these advantages, FinTech is not just a trend—it’s the future of finance, revolutionizing the way money moves and businesses operate.

FinTech Sectors in Saudi Arabia

One of the key drivers behind the rapid adoption of financial technology (FinTech) in Saudi Arabia is the country’s young, tech-savvy population—with 67% of residents under 35 years old. Additionally, Saudi Arabia boasts one of the world’s highest internet penetration rates and led the Middle East, alongside the UAE and Qatar, in rolling out 5G technology in 2021. So, which sectors in Saudi Arabia have embraced FinTech? Let’s explore them below:

1. Payments Sector

Saudi Arabia’s payments industry is undergoing a massive digital transformation, aligned with Vision 2030 and the Saudi Central Bank (SAMA) initiative to achieve 70% cashless transactions by 2030. Key FinTech solutions in this sector include:

• Digital wallets
• Point-of-sale (POS) payment acceptance
• E-commerce payment solutions
• Centralized billing service (SADAD)

2. Financing Sector

FinTech companies offer innovative alternatives to traditional financing, such as:

• Buy Now, Pay Later (BNPL)
• Micro-consumer financing
• Debt-based crowdfunding
• Digital brokerage platforms
• Peer-to-peer (P2P) lending

3. Open Banking

With the launch of SAMA’s Open Banking Policy, banks and financial apps can securely share customer financial data, enabling innovative services such as:

• Third-party service providers (TPPs): Companies offering data-driven financial solutions.
• TPP intermediaries: Platforms that connect customers with FinTech providers.

4. Investment Management & Advisory

This sector offers digital solutions to help individuals and businesses grow their wealth, including:

• Robo-advisors
• Social trading platforms
• AI-powered financial consulting

5. Alternative Investments

This category includes non-traditional investment opportunities with long-term returns, such as:

• Equity crowdfunding
• Diversified investment funds & real estate investments
• Debt securities issuance & trading
• Blockchain-based securities issuance & storage

6. Insurance Sector

The insurance market is evolving rapidly, integrating digital solutions to enhance efficiency. Key services include:

• Online insurance brokerage
• Digital reinsurance platforms
• Automated claims settlement

7. Digital Savings Associations

These platforms facilitate group savings in a secure, digital format instead of traditional manual methods. Examples include:

• Platforms like Wafeer and JamiyaTech connect users for structured group savings.
• Integration with digital wallets for seamless payments and withdrawals.

8. Digital Banks

Saudi Arabia’s digital banks operate without physical branches, leveraging AI and data analytics for a fully online banking experience. These banks promote financial inclusion and support SMEs. Examples include:

• STC Pay (STC Bank) – The first licensed digital bank in Saudi Arabia.
• D360 Bank & BSF Digital Bank – New entrants licensed by SAMA.

9. Business Tools

This sector includes digital solutions that help businesses streamline operations, such as:

• Cloud-based software (SaaS): ERP, HR management, and CRM solutions.
• Productivity & collaboration tools: Microsoft 365, Google Workspace.
• Robotic Process Automation (RPA): Used by banks and government institutions to accelerate workflows and reduce errors.

10. Regulatory Risk Management

Saudi financial institutions rely on automated compliance and governance solutions to meet legal and operational standards, including:

• Regulatory compliance with SAMA, the Capital Market Authority (CMA), and the National Cybersecurity Center.
• Cybersecurity solutions to combat rising financial-sector cyber threats.
• Big data analytics to predict and mitigate financial risks.

11. Infrastructure Service Providers

Saudi Arabia’s digital economy relies on cloud computing, data centers, and telecom networks. Key infrastructure players include:

• STC, Mobily, Zain – Leading telecom and cloud service providers.
• Google Cloud, Microsoft Azure, Oracle Cloud – International tech giants investing in local data centers.
• Data center providers like Dawiyat and Makin are building cutting-edge infrastructure to support digital growth.

As we've seen, FinTech is transforming key financial sectors, making banking faster, safer, more efficient, and accessible to all, including previously unbanked individuals who found traditional banking too complex or bureaucratic.

Initially, many predicted fierce competition between traditional banks and emerging FinTech services, particularly in payments and lending. However, unexpectedly, the two sectors have forged strong partnerships that continue to gain momentum. Rather than competing, Saudi banks are collaborating with FinTech startups to integrate cutting-edge solutions into their existing infrastructure. For example, a bank might partner with a FinTech firm to:

• Enable digital onboarding for new customers.
• Leverage AI-powered fraud detection.
• Enhance automated financial advisory services. These partnerships allow banks to stay competitive while FinTech companies gain access to a broader customer base and regulatory expertise.

With the support of government initiatives like FinTech Saudi Saudi and policies from SAMA (Saudi Central Bank) and the Capital Market Authority (CMA), Saudi Arabia has become an attractive hub for financial innovation. It welcomes both fast-growing startups and established financial institutions eager to stay ahead in the tech-driven financial landscape.

Curious about the technologies driving this radical shift in banking and finance? Below, we explore the most groundbreaking FinTech innovations shaping Saudi Arabia’s financial sector, based on a report by the Financial Knowledge and Communication Center.

Top FinTech Innovations Transforming Saudi Arabia’s Financial Landscape

Saudi Arabia’s financial sector is undergoing a revolutionary transformation, driven by cutting-edge FinTech solutions. Here are the most significant technologies shaping the future of banking and finance in the Kingdom:

1. Blockchain:

Blockchain technology is a game-changer in financial services. It offers tamper-proof records maintained by a decentralized network. It ensures security through consensus-based verification and enables cost-efficient transactions, reducing risks and improving efficiency.

2. Distributed Ledger Technology (DLT):

DLT, while similar to blockchain, allows financial institutions, such as central banks, to maintain some level of control over decentralized transaction processing. This makes it an attractive option for regulated industries that require oversight.

3. Smart Contracts:

Smart contracts are self-executing agreements that trigger actions automatically when predefined conditions are met. By eliminating the need for intermediaries such as banks or legal bodies, they enhance efficiency and reduce transaction costs.

4. Cryptocurrencies:

While Bitcoin is the most well-known cryptocurrency, other digital assets like Ethereum and tokenized financial instruments are gaining traction. These decentralized digital currencies use encryption for security and allow transactions outside traditional banking systems.

5. Artificial Intelligence:

AI is reshaping banking and financial services by enabling automated personal finance advisors, smart wallets for budgeting, voice-activated banking services, and AI-driven underwriting for loans and insurance. These applications enhance efficiency and improve customer experiences.

6. Payment Systems:

With Saudi Arabia moving towards a cashless society, digital payment platforms have become essential. They simplify processes such as utility bill payments, e-commerce transactions, and traffic fine settlements, making financial transactions faster and more accessible. From AI-powered banking to blockchain-backed security, Saudi Arabia’s FinTech revolution is setting the stage for a more efficient, inclusive, and digitally driven financial future.

FinTech Achievements and Key Figures

The 2023 Annual FinTech Report revealed impressive statistics that highlight the success of Saudi Arabia’s financial technology ecosystem, surpassing expectations and solidifying its position as a regional leader.

• 216 FinTech companies operating in the Kingdom.
• 2.7 billion SAR was raised in investments by FinTech firms.
• 6,726 direct jobs were created within the sector.
• 75 billion SAR in local and international transfers processed through e-money wallets.
• 614 billion SAR in transactions executed via point-of-sale systems.
• 406.9 billion SAR in e-commerce transactions processed by payment companies.
• 26.6 billion SAR in goods sold through BNPL services.
• 2.1 billion SAR raised through FinTech platforms for debt instruments and investment.1.4 billion SAR in assets managed by robo-advisory FinTech firms.
• 1.3 billion SAR raised through investment funds and real estate investment platforms.
• 29 million SAR raised via equity crowdfunding platforms in 2023.
• 6 million digital insurance policies issued through FinTech brokerage platforms.