Riyad Bank has been one of the early investors in the kingdom's First UK-Saudi FinTech week is a sign of increasing collaborationFinTech sector, with a 100 million riyal fund announced last year.
The inaugural UK-Saudi FinTech Week, a public-private partnership taking place this week, is a concrete example of the UK’s commitment to Saudi Arabia as a strategic partner in its Vision 2030 implementation, and a further step in the journey to create a proposed UK-Saudi Tech Hub.
The high-profile event showcases the potential for a platform that could mobilise sources of capital and expertise to enable SME development and private sector growth in the kingdom. FinTech has been a recurring theme in Saudi Arabia’s ambitious Vision 2030 agenda from the start, when its details were announced in April 2016 by Crown Prince Mohammed bin Salman. Since then, the kingdom has revealed its clear objective and strategic goal to become the Middle East’s premier financial centre and FinTech hub, and to transform its economy from being a traditional oil-based structure.
The Future Investment Initiative that began in 2017 has become the most high-profile annual event on the kingdom’s business calendar and placed FinTech at the centre of its agenda. Private sector companies are already tapping into various opportunities and acknowledging the need to move with the emergence of FinTech, which is affecting business models and perpetuating the rise of the tech-savvy consumer.
For example, during the 2019 FII conference, Riyad Bank announced it had invested 100 million Saudi riyals (Dh97.8m/$26.7m) into its own FinTech start-up investment programme to hasten the release of new financial products across the kingdom.
The bank’s chief executive, Tariq Al Sadhan, who was given the mandate to take the company into a digital future, said: “We are locally aligning ourselves with Vision 2030. There’s no doubt that digital banking is the future.”
The events of 2020 have increased the perceived urgency of Saudi Arabia’s economic transformation. When I attended the G20 Domestic Capital Markets Development Summit in Riyadh on January 30, the year had got off to a good start and Saudi Arabia was looking forward to using its leadership of the group to advocate stronger capital markets and an enabling ecosystem for financial inclusion.
Fully aware that capital markets are the ultimate democratiser in terms of access to capital, Saudi officials were keen to build upon a successful year for the kingdom, which saw foreign cash injection into the Saudi capital market reach 76 billion riyals in 2019, with more than 800 licences for foreign investment being granted.
Addressing delegates from across the public and private sectors, Mohammed El-Kuwaiz, chairman of the Saudi Capital Markets Authority, summarised the kingdom’s hopes for its G20 presidency in a simple yet powerful message: the strengthening of capital markets and the development of local currency debt and bond markets is one of the kingdom’s key priorities during its presidency as part of its commitment to global economic prosperity.
Fast forward five months and the Covid-19 pandemic and oil price collapse have provided a sense of urgency to the kingdom’s digital transformation.
It is in this context that a tech-led collaboration between Saudi Arabia and the UK has been brought to the top of the stakeholders’ agenda.
The kingdom faces a unique opportunity to support its emerging FinTech scene by becoming a leading partner to some of the UK’s most successful FinTech companies and by adopting a homegrown version of some of Britain’s most effective FinTech initiatives.
Indeed, the UK is a recognised global FinTech leader with over 1,600 companies operating in the space and more than $3.5bn (Dh12.9bn) invested in the sector in 2019 alone. Meanwhile, Saudi Arabia is the giant dormant FinTech superpower waiting to be awakened.
One of the central pillars of the Saudi-UK tech collaboration is the leveraging of the UK’s experience in regulating its own FinTech industry in a way that it protects consumers and investors while enabling innovation.
In a welcome move, Saudi Arabia recently stepped up the regulatory transformation of its FinTech industry. In early 2019, the Saudi Arabian Monetary Authority began designing a Regulatory Sandbox to encourage innovative FinTech businesses to leverage existing or new technology and try out new products within a controlled framework.
Lendo, a Riyadh FinTech start-up that runs a peer-to-peer lending platform for SMEs, was one of Sama’s first permitted FinTech companies. Lendo’s chief executive Osama Alraee indicated that the company’s vision was to enable SMEs to fully focus on their growth in line with Vision 2030 objectives, while giving lenders access to new market segments that can provide higher returns.
Initiatives such as the UK-Saudi FinTech Week and the proposed UK-Saudi Tech Hub help provide an umbrella organisation for a collaboration between the two countries’ private and public sector participants by helping to grow the Saudi economy and connecting its start-ups to global markets.
Yet, the experience of other bilateral tech hubs around the world shows that in order to be successful, it does need to receive high-level commitment from private and public sector bodies in both countries.
Organisations such as Saudi Arabia’s Ministry of Investment are well-placed to ensure the UK-Saudi technology collaboration becomes a success, while organisations such as the FII Institute would be welcome supporters by helping to creating a platform to discover the tech trends that are guiding the future of finance and set a roadmap for future innovation beyond the crisis.
Roxana Mohammadian-Molina is chief strategy officer and board member at London-based FinTech company Blend Network