In 2016 the Kingdom of Saudi Arabia launched Vision 2030, an ambitious plan aimed at diversifying the country’s economy away from oil production dependency and into a vibrant, technology-based society. The reform plan established various milestones for the country’s government and citizens to achieve, one of which is to have 70% of transactions be cashless by 2030.
To help bring this goal to fruition, the Kingdom has created programs like the Financial Sector Development Vision Realization Program (FSDP) and has focused on developing three key pillars driving a cashless economy: a digitally literate population, internet & payment infrastructure, and a fintech innovation ecosystem.
A Digitally Literate Population
The Kingdom of Saudi Arabia has a population of 34.76 million, with a whopping 70% of its people under the age of 30 in 2009. The large number of young people in the country has led His Royal Highness the Crown Prince Mohammed bin Salman to declare the youth the “architects of our future,” and referred to them as the Kingdom’s wealth.
Not only are the population youthful, but they are digitally savvy as well. Urbanization—which has grown from 58% in 1975 to 83.8% in 2018—has played a primary role in creating a generation of globally-minded digital natives who are not only attuned to technological advancements but expect its integration into their daily lives.
Digital-Led Payment Infrastructure
The Kingdom believes that digital transformation will help accelerate the economy, and has launched digital programs across the sectors of healthcare, banking, and e-government service to address barriers to becoming a cashless society. By making these digital products more available and accessible to its people, Saudi Arabia hopes to lead by example and develop better infrastructure. These initiatives touch on various ways for the country to go cashless:
- In 2016, the contactless payment service Mada Atheer was introduced to boost digital transactions.
- In 2018 the Saudi Payments Company was created to develop a secure national payments infrastructure that will serve traditional banks and fintech players alike.
- The government has set a target to increase the number of POS machines that accept both contactless cards and digital wallets—from 397,000 terminals in 2019, to 648,000 by 2023.
- Traditional banks are also following suit by introducing mobile bank applications, blockchain, and quick pay options to align with Vision 2030.
Fintech Innovation Ecosystems
Aside from digital payment, the Kingdom wants to boost fintech innovation to further drive its digital transformation. In 2018 Fintech Saudi was created through the Financial Services Development Program to support the development of the fintech industry and to address any issues that might arise in setting up new fintech companies within the Kingdom. Fintech Saudi has three major roles in developing fintech innovation:
- To help develop infrastructure needed by fintech industry players
- To build the skills and knowledge required to grow the fintech industry
- To support fintech entrepreneurs at every stage of their development
The development of the fintech industry and the country’s growing acceptance of digital technology provides a unique opportunity for new fintech players to bring forth innovative and cutting-edge solutions that address the different needs of Saudi Arabia’s citizens. To learn more about these particular needs and to take a deeper dive into the Kingdom’s aggressive digital transformation, download our full report, Saudi Arabia's Road Towards Becoming a Cashless Society by 2030.