April 2020 - As a part of its Vision 2030, the Kingdom of Saudi Arabia has set an ambitious target in the financial sector development to achieve 70% of non-cash transactions by 2030. Opportunities arise for fintech players looking to enter a new market with high consumer demands, as the Kingdom pushes with government-backed initiatives and incubators, according to our latest white paper titled “Saudi Arabia’s Road Towards Becoming a Cashless Society by 2030”.
Three Key Pillars Towards Saudi’s Cashless Society
1. Digitally-Enabled and Financially Literate Population
The Saudi population that understands how to utilize digital payment solutions will be the prominent driver towards a cashless economy. Around 70% of the Kingdom’s population is under the age of 30 with high smartphone penetration at 93.3%. The demand for contactless payment cards or digital wallets is driven primarily by high smartphone penetration and technologically savvy millennial populations with a high desire to try new solutions. On top of that, online shopping is growing at four times the speed of traditional retail in Saudi, and improvements in the online payments landscape are bound to drive Saudi’s cashless economy transformation forward.
2. A Digitally-Enabled Payment Infrastructure
Saudi Arabia lags behind its counterparts in terms of digital payment infrastructure, and to address this the Saudi Arabian Monetary Authority (SAMA) introduced its own contactless payment services, Mada Atheer, to boost digital transactions, and its subsidiary, Saudi Payments Company, to develop secure national payment infrastructure. The government also set a target to increase the number of point-of-sale (POS) coverage to 648,000 terminals, with an estimated transactions’ value of USD 102 billion by 2023.
3. Entrepreneurial Fintech Ecosystems
The government of Saudi Arabia is committed to launching entrepreneurial ecosystems, as they believe investing in a digital future will not only create 200,000 new jobs by 2025 but also drive the development of more sustainable, intelligent cities and a digital economy. A vibrant ecosystem for fintech innovations, comprising digitally innovative banks and a strong start-up culture with accelerators and venture capitalists funding, should be pushed within the Kingdom to further fuel the adoption of cashless transaction methods.
The government has launched FinTech Saudi in 2018 to make the country a pioneer in the fintech industry by supporting the development of infrastructure, skills, as well as entrepreneurs. The fintech ecosystem has started to show signs of growth, with 14 out of 23 registered and licensed fintech players are in the digital payment space.
Explore more opportunities in Saudi Arabia’s fintech sector by downloading our full report.