By Hussan Ara on 23/08/2023, 19:37:16
Can you picture this?
Saudi Arabia and the United Arab Emirates locked in a fierce battle to dominate the fintech landscape. The stakes are high as these two Gulf powerhouses go head-to-head in a race that is reshaping the future of banking. Fintech, with its disruptive potential, has become the talk of the town, and both countries are eager to claim the crown of fintech supremacy.
In this blog, we at Genify invite you to witness the clash between the KSA and the UAE as we analyze the latest banking fintech trends and examine whether Saudi Arabia has what it takes to surpass its UAE counterpart, is fintech the future of finance? Join us on this captivating journey as we unravel the secrets of the fintech revolution and unlock the potential of these dynamic economies.
The growth of the UAE’s fintech ecosystem is remarkable. Dubai, in particular, has established itself as a worldwide hub for innovation and entrepreneurship, attracting a slew of fintech companies and investments, As a result, Dubai has a vibrant ecosystem of more than 600 fintech startups and rising, encompassing a wide spectrum of financial services sectors. The UAE’s supportive government policies, robust regulatory framework, advanced infrastructure, and favorable business environment have undoubtedly contributed to its success.
In the UAE, prominent fintech players have risen in payment solutions, digital banking, peer-to-peer lending, and more. Companies like Beehive, YAP, Sarwa, and Tabby have disrupted traditional financial services, promoting financial inclusion and convenience for individuals and businesses alike.
While the UAE has relished a head start in the fintech race, Saudi Arabia has set out on a deliberate mission to overcome it and establish itself as a financial powerhouse. The Kingdom’s Vision 2030 is an ambitious blueprint for economic diversification that places a high emphasis on technical innovation and the digital revolution.
According to a new report, the number of companies in Saudi Arabia’s fintech sector has nearly doubled and is starting to rival other markets in the MENA region, including the UAE and Egypt. Through August 2022, the kingdom saw a 79% year-on-year (YoY) increase in the number of operating fintech firms, according to the US-Saudi Business Council. As of the latest count, Saudi Arabia has 147 active fintech businesses and counting, compared to just 10 in 2018.
One of the key driving forces behind Saudi Arabia’s fintech revolution is the Financial Sector Development Program (FSDP), aimed at fostering innovation, expanding access to financial services, and attracting investments. The launch of the Fintech Saudi Initiative has been instrumental in promoting collaboration between regulators, financial institutions, and fintech startups.
Notably, Saudi Arabia boasts a largely untapped market with a young and tech-savvy population. The rapid smartphone penetration and high internet connectivity rates present immense opportunities for fintech disruption. Startups like PayTabs, Hala, and Tamara have emerged as game-changers in the payment and e-commerce sectors, catering to the evolving needs of Saudi consumers and businesses.
By 2030, the kingdom’s fintech sector is expected to generate around 18,200 direct jobs and account for 525 active fintech companies. Saudi Arabia’s fintech sector is booming. While fintech across the MENA region may be proliferating, it is growing exponentially in Saudi Arabia, especially when compared to previous years.
In 2022, fintech emerged as the most funded industry in the kingdom, with $239 million raised a 167% increase compared to 2021, according to Magnitt’s 2022 Saudi Venture Capital Report. This growth can be largely attributed to the extensive digital transformation taking place in the country as part of Saudi Vision 2030.
According to Deloitte, only 22 percent of Middle Eastern banking consumers have embraced FinTech, and barely a quarter are even aware that they employ FinTech solutions. The majority of consumers benefit from FinTech products occasionally, with only 20% indicating frequent use. Usually, they use FinTech features primarily for money transfers and account aggregation.
Focusing on individual markets, Saudi Arabia is taking the lead with a 40% adoption rate. Earlier this year, fellow Big Four firm KPMG reported that FinTech had made its way to the top of tech disruption in the Kingdom, to the point where existing financial institutions regard them as a threat.
The UAE follows, with a 34% adoption rate. FinTech companies in the country have been at the forefront for a number of years now, and the customer base is gradually catching up. Egypt and Qatar follow with 25% and 24% adoption rates, respectively, while Kuwait, Bahrain, Oman, Jordan, and Lebanon all have adoption rates well below 20%.
A Deloitte survey across nine key markets.
As the rivalry for Gulf fintech dominance heats up, Saudi Arabia and the UAE are both determined to take the lead. Each country has its own unique strengths and challenges, shaping its respective trajectories in the fintech landscape.
The UAE’s established ecosystem, global connectivity, and business-friendly policies provide a strong foundation for continued growth. Dubai’s strategic partnerships with international fintech hubs and its innovation-focused free zones have attracted global investors and positioned the emirate as a magnet for fintech talent.
To wrap things up, Saudi Arabia has emerged as a frontrunner in the battle for fintech supremacy, spurred by its ambitious Vision 2030 and phenomenal growth in the fintech sector. The KSA is poised to overtake the UAE and establish itself as a true fintech powerhouse, thanks to a rapidly growing number of fintech firms and a supportive ecosystem. The unexplored market, young population, and intensive digital transformation activities by the monarchy are crafting a solid platform for future success. While the United Arab Emirates has established itself as a worldwide fintech center, Saudi Arabia’s rapid rise and determination are clear. The tremendous competition between these countries serves as a driving factor for innovation, offering game-changing advances in fintech and keeping the region on its toes.