24 Fintech: The role of Saudi fintech firms in economic development

Saudi Arabia’s fintech market remains a hotbed of innovation and growth despite a sobering few years in funding and valuation terms.

The latest data from Dubai-based data platform MAGNiTT shows that the kingdom secured more venture capital (VC) investments in the MENA region for the second year running, with $412m raised in the first half of 2024, down 7 per cent compared to the same period a year ago.

However, with the advent of innovative technologies, government initiatives such as Fintech Saudi and increased investments under Vision 2030, the Saudi fintech ecosystem has so much more room for growth.

The economic diversification strategy sets ambitious targets for its burgeoning fintech sector while outlining four key objectives, each representing significant milestones on this path.

“Saudi Arabia’s fintech ambitions signify a robust growth trajectory,” said Annabelle Mander, senior vice president of Tahaluf, co-organiser of 24 Fintech. “We believe 24 Fintech will be a defining moment in helping to realise these goals by showcasing innovation that can cross borders.”

Saudi Arabia is set to host the inaugural ‘24 Fintech’ Summit from September 3 to 5 in Riyadh. The summit seeks to accelerate the Gulf state’s ambitions to be one of the fastest-growing fintech hubs in the Middle East region.

An enabling environment

Over the last five years, Saudi Arabia has made great advances in developing its fintech sector into a flourishing industry marked by rapid growth, diversifying services and increasing contribution to its national economy.

The Arab world’s biggest economy plans to establish at least 525 fintech companies by the end of the decade, a substantial increase from the 200 firms operating in 2023. This growth will be complemented by the creation of 18,000 fintech job opportunities, a more than threefold rise from the 5,400 jobs recorded in 2023.

Furthermore, Saudi Arabia’s Vision 2030 sets a target of contributing SAR13.3bn directly to the Kingdom’s GDP through the fintech sector, up from approximately SAR 1 billion in 2023. This economic impact will be bolstered by an increase in direct venture capital (VC) contributions, with a goal of reaching SAR12.2bn compared to SAR1.4bn in 2023.

The growth in the country’s venture capital market is being driven by the government’s focus on innovation, a dedicated unicorn project, and investments from sovereign funds such as SVC, Jada, and Sanabil.

Fintech Saudi, an initiative that was co-founded by the Saudi Central Bank (SAMA) and the Saudi Capital Markets Authority in April 2018, has been a pivotal force in promoting the kingdom as the leading fintech hub in the Middle East region.

Success stories

The launch of Fintech Saudi was a catalyst for change that led to initiatives such as the Fintech Accelerator program, the Fintech Saudi Innovation Hub and various flagship events like the fintech tour and hackathon – contributing to a 20-fold increase in fintech companies in the country.

According to global consultancy firm Arthur D Little, over $1bn (SAR4bn) has been invested into fintech companies in Saudi Arabia and over 100,000 people have engaged in fintech-related events, training courses, and internships organised by Fintech Saudi.

Saudi fintech firm Rasan raised $224m (SAR841m) from its initial public offering on the Saudi Exchange in May. Founded in 2016, the fintech firm operates online insurance platforms such as Tameeni and Treza.

Similarly, Tamara raised $340m in a Series C equity funding round in December 2023, valuing the buy-now, pay-later platform (BNPL) at $1bn. Founded by three Saudi co-founders, Alsukhan, Turki Bin Zarah, and Abdulmohsen Al Babtain, the fintech firm counts SHEIN, IKEA, Jarir, Noon, eXtra and Farfetch among its regional and global partners.

Tamara, which operates in the UAE, Saudi Arabia, and Kuwait, was one of the first fintech firms to receive a licence from the SAMA to provide BNPL services.

Furthermore, Tabby, one of the Middle East’s first fintech unicorns, bolstered its balance sheet with an asset-backed credit line of as much as $700m from JPMorgan Chase last December. More than 30,000 global brands and small businesses, including SHEIN, Amazon, Adidas, IKEA, H&M, Samsung and Noon, use the BNPL platform.

Read: Inaugural ’24 Fintech’ edition to host global finance industry leaders