In accordance with its plan for economic transformation, Saudi Arabia’s banking authority is changing the rules governing its “sandbox” regulatory environment. The Saudi Central Bank, also known as Sama, said in a statement on its website on Thursday that the move is in line with objectives to advance the economy of the kingdom, diversify its revenue streams, enable financial institutions to support the expansion of the private sector, and permit new businesses to offer a variety of financial services.
“The updated framework will also support the objectives of the FinTech strategy by making the kingdom one of the world’s leading countries in the field, and it will contribute to the economic empowerment of Saudi society and its citizens by promoting further innovations in technology-based financial services,” Sama said.
Sama launched the regulatory sandbox initiative back in 2018 to attract local, regional and international FinTech companies seeking to take advantage of current and new technologies to provide financial products and services to Saudi markets.
The sandbox environment is linked to the country’s Vision 2030, an overarching road map that aims to overhaul and diversify the country’s economy away from hydrocarbons.
The financial sector development programme, geared to transform and diversify the sector and support the national economy through financing and investment initiatives for the private sector, are among the key pillars of Vision 2030.
Other regulators in the Gulf have made similar moves to understand and assess the effect of new technologies on the financial services market.
Regulators in the Gulf states, including the UAE and Bahrain, are already taking steps to test financial technology and formulate regulations to better govern FinTech and crypto assets such as digital currencies.
The updated framework of the regulatory sandbox is open for local and international applicants to apply as entrepreneurs, non-regulated companies or existing regulated entities, Sama said.
“The key differentiator of the updated framework is to move from a cohort-based approach to an Always Open approach which will give greater flexibility to those applying. This transition will allow applicants to apply to the regulatory sandbox when they are ready and in addition bring their chosen business model/concept and not work to a specific one determined for the cohort,” it said.
The Saudi Central Bank in co-operation with Saudi Fintech, will in the coming days hold an introductory workshop on the updated regulatory framework for the legislative experimental environment.
The number of certified companies in Sama’s regulatory sandbox reached 38, it said in the statement.
“The initiative proved to be very successful as it enables Sama to adopt many services and products by issuing instructions and regulations, as well as launching many of those products and services to the clients within the financial sector by capitalising on the experiences of regulatory sandbox certified companies,” Sama said.
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