Saudi Arabia’s fintech sector nearly doubles with 79% YoY growth, rivalling UAE and Egypt

A new report by the US-Saudi Business Council reveals that the number of fintech companies in Saudi Arabia has almost doubled and is beginning to compete with other markets in the MENA region, such as the UAE and Egypt. The kingdom has experienced a 79% year-on-year increase in operating fintech firms as of August 2022, with a current total of 147 active fintech businesses compared to only 10 in 2018. Moreover, the sector has attracted SAR 1.5 billion ($402.2 million) in total investments between September 2021 and August 2022.

The report attributes this rapid expansion to liberalized business regulations, an active investment environment, and well-developed technology infrastructure in Saudi Arabia. Fintech businesses also accounted for the highest number of total investment deals in the first half of 2022, according to Albara’a Alwazir, the Director of Economic Research at the US-Saudi Business Council.

Saudi Arabia aims to expand the number of active fintech players to at least 230 businesses, accounting for 70% of non-cash transactions and boosting the sector’s GDP contribution to SAR 4.5 billion. By 2030, the kingdom’s fintech sector is expected to generate around 18,200 direct jobs and account for 525 active fintech companies, with a direct GDP contribution of SAR 13.3 billion ($3.6 billion) compared to SAR 1.2 billion in 2021.

The report states that fintech companies attracted investments from leading domestic and international firms, such as Sequoia, 500 Global, and Mastercard. This growth is supported by well-developed technology infrastructure, such as widely accessible 5G and cloud services, high domestic demand for financial services, and continued government support.

The council notes that there is a high demand for a variety of financial services among Saudi residents, particularly in the areas of banking, insurance, investment, asset management, and Shariah-compliant financing. Furthermore, the high level of smartphone penetration and banked youth population has facilitated a relatively rapid transition to the digital economy. The COVID-19 pandemic has also led to a growing number of Saudi consumers embracing the use of card and electronic payments.