The Persian Gulf Economies Watch as Saudi Bets on FinTech

The Persian Gulf countries are witnessing Saudi Arabia’s strategic shift away from its traditional oil-based economy towards a new focus on financial technology (FinTech). In the last quarter of 2023, its economic growth rate was 1.5%, a deceleration from the preceding quarter. The expansion was primarily fueled by the non-oil sector, which saw a 2.6% jump, in contrast to the oil sector that experienced a decline of 2.1% due to reduced production.

Overall GDP growth for Saudi Arabia in 2023 was approximately 2.3%, a slight increase from the 2.1% seen in 2022. Factors contributing to this growth include increased government expenditures and investments, as well as a resurgence in the nation’s non-oil industries.

Saudi Vision 2030

This strategic shift to FinTech is a central pillar of Saudi Arabia’s Vision 2030 initiative. The Kingdom aims to leverage FinTech as a vehicle for economic diversification and to enhance financial inclusion, with a target of extending financial services to 80% of adults by the end of the decade. A noteworthy player in this burgeoning sector is AlJazira Bank, one of the emerging neobanks. Meanwhile, peer-to-peer (P2P) lending is gaining momentum, with the Saudi Arabian Monetary Authority (SAMA) projecting the P2P lending market to reach a valuation of $1.2 billion this year.

The International Monetary Fund (IMF) anticipates moderate growth for Saudi Arabia over the medium term, primarily driven by the non-oil sector. Despite the potential for reduced GDP growth during the transition, Riyadh remains committed to transforming its economy. This commitment is evident in the growing contribution of the digital economy to the Kingdom’s GDP, now accounting for 15%.

In its 2023 Global Competitiveness Report, the World Economic Forum (WEF) ranked Saudi Arabia 17th out of 64 countries in global competitiveness, underscoring the nation’s significant progress.

Digital Infrastructure Fuels Saudi Arabia’s FinTech Push


Central to this economic transformation is the advancement of digital infrastructure. The Saudi government is actively engaged in projects to expand fiber optic networks, underwriting up to 40% of the costs from state funds. These efforts have significantly enhanced network speed and connectivity, allowing over 3.5 million households to access optical fiber broadband services—more than a twofold increase from five years earlier.


The reimagined economic framework of the Kingdom also encompasses the creation of Smart Cities, which are fundamentally dependent on cutting-edge FinTech solutions such as artificial intelligence (AI), biometrics, blockchain, and more. In alignment with Vision 2030, the work is underway to roll out and evolve 5 use cases of 5G/Internet of Things (IoT) technologies at Khobar Corniche, in collaboration with the Sharqia Development Authority (SDA), the Eastern Region Municipality, and STC Solutions. 


These projects aim to generate investment opportunities, drive the demand for modern tech use cases in Smart Cities, and promote the adoption of 5G networks and IoT technologies. 


The government is progressing the “Stimulating Growth of Smart Home Market” program by implementing 14 initiatives designed to model smart home technology. These initiatives will include the integration of AI assistants within smart homes to empower residents with enhanced financial decision-making capabilities in their daily lives.

Additionally, the digitization of state services is ongoing, with 335 government services already available on the Absher platform. This trend of digitization is prevalent not just in government technology (Govtech) but also in the financial sector.  This trend extends to the financial sector, with mobile banking users expected to reach 22.7 million this year, representing over 60% of the population (37.4 million as of January, 2024).

Major banks (including Samba Bank, Al Rajhi Bank, and Riyad Bank) offer mobile apps, while digital wallets like Saudi Pay and STC Pay boast millions of users.

Funding, Grants, and Incubators: Saudi Arabia’s Multifaceted Support for FinTech

On the government’s part, substantial efforts towards FinTech development are underway. The Ministry of Communications and Information Technology (MCIT) operates the Center of Digital Entrepreneurship (CODE), which hosts Tech Champions, manages accelerator and incubator programs, and collaborates with other ministerial bodies and private entities. CODE also organizes the Blockchain Challenge, fostering innovation in blockchain applications across smart contracts, supply chains, and the creative industries.

To bolster the FinTech ecosystem, the Saudi Capital Market Authority (CMA) introduced the Financial Technology Experimental Permit (FinTech ExPermit). As of early 2024, the Kingdom has granted licenses to 13 FinTech companies, with an additional 15 enterprises participating in the FinTech Lab established in 2018.

Beyond CODE and FinTech ExPermit, the government’s “Tech Pioneers” program prioritizes FinTech development too. Targeting FinTech entrepreneurs, the “Tech Pioneers” program provides crucial tools and support, covering technological, administrative, and financial issues. Launched to fuel FinTech innovation, it empowers entrepreneurs and local companies, aiming to establish the Kingdom as a tech hub and achieve Vision 2030 goals. The program’s second batch saw 10 winning projects, with the top three receiving 60,000 SAR each. Additionally, 12 new projects evaluated by Riyadh Techstars Accelerator were showcased.

The Saudi government is intent on fostering the integration of small and medium-sized enterprises (SMEs) into the dynamic FinTech ecosystem. This led to the inauguration of the National Technology Development Program (NTDP), backed by a substantial $660 million budget, designed to stimulate the growth of startups and SMEs, attract investments, forge strategic partnerships, and draw in global talent and research and development into the Kingdom.

The NTDP encompasses various initiatives, including an SME loan guarantee scheme to bolster the confidence between tech companies and financial institutions, as well as other measures to improve access to finance, enabling local tech firms to scale their operations.

In its quest for international collaboration, the NTDP aims to attract foreign investment and enterprises to Saudi Arabia. The Kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), announced a partnership in 2023 with China’s eWTP Capital to create the Saudi Chinese eWTP Arabia Capital Fund. With a capital of $400 million, the fund’s mission is to support technological startups within Saudi Arabia.

Private FinTech Startups See Investment Surge

A significant turning point in the development of Saudi Arabia’s FinTech landscape occurred in the fourth quarter of 2022, when venture capital investments in Saudi FinTech startups surged to $987 million. This figure not only doubled the total investments made in 2020, 2021, and the first three quarters of 2022 combined but also established a record for FinTech funding by venture capitalists within the Persian Gulf region, surpassing Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, and the United Arab Emirates.

The PIF plays a pivotal role in funding private FinTech initiatives too. In December 2023, Sanabil Investments, a PIF subsidiary, along with SNB Capital, led a Series C funding round for Tamara, a “buy now, pay later” (BNPL) platform. Tamara garnered $340 million in investments, propelling it to unicorn status with a valuation of $1 billion. As Saudi Arabia’s first homegrown unicorn, Tamara boasts over 10 million users across Saudi Arabia, the UAE, and Kuwait, offering various innovative financial services.

Another FinTech startup, Soum, established in 2021, at the end of 2023 secured $18 million in a series A funding round aimed at integrating advanced financial technologies into its marketplace. Soum is poised to expand its services beyond Saudi Arabia, with the United Arab Emirates as its first target for regional growth.

The Case of Saudi Arabia for other Persian Gulf Countries

For decades, Persian Gulf nations have relied on oil and gas exports as their economic lifeblood. However, Saudi Arabia’s recent pivot towards FinTech investments, seeking a more balanced and innovative economy, is attracting keen attention from its neighbors. This shift is further fueled by external pressures:

  • Security challenges: Heightened security concerns in the Red Sea logistics threaten traditional oil and gas export routes, pushing for diversification.
  • The Green Agenda: Western energy importers’ active promotion of sustainability compels exporting nations to rethink their economic policies.

On January 30th, 2024, a significant decision was made: Saudi Aramco, the world’s largest oil company, abandoned plans to raise its oil output capacity to 13 million barrels per day (mb/d) by 2027. This clearly indicates a strategic shift in the oil strategy of the whole country.

One can expect increased investments in FinTech from various Saudi companies including Saudi Aramco. Notably, in June 2020, through its Saudi Aramco Entrepreneurship Ventures arm, Aramco poured $25 million in Wahed, an Islamic FinTech startup offering an online investment platform. This project also received funding from UAE’s BECO Capital in 2020, and in 2023 Wahed expanded its services to the UAE.

These developments signal a clear intention: Saudi Arabia is shifting gears, moving away from oil dependence and embracing FinTech innovation as a key driver of future economic growth and prosperity. This focus sets an example for other Gulf countries to follow, demonstrating that diversification and embracing new financial technologies are crucial for sustainable development in the 21st century.Konstantin Tserazov, fintech expert, business consultant, economist, former Senior Vice President of Otkritie Bank

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