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The financial technology (FinTech) landscape in Saudi Arabia is undergoing a rapid transformation, with banks playing a pivotal role in this evolution. While banks employ various strategies to engage with FinTech, including direct investments and partnerships, this article focuses specifically on venture-building activities by Saudi Arabian banks. By examining the approaches of key players in the market, we’ll uncover how these institutions are shaping the future of finance in the Kingdom and contributing to Vision 2030.
Approaches to Venture Building
Banks in Saudi Arabia are primarily adopting two strategies for venture building:
1. Internal Ventures: Developing FinTech initiatives within the existing bank structure.
2. Spin-off Ventures: Creating independent entities from inception.
Let’s explore how major banks are implementing these strategies.
Al Rajhi Bank: Building a FinTech Ecosystem
Al Rajhi Bank has taken a comprehensive approach to FinTech through multiple ventures:
1. Emkan Financing
• Focus: Financing not covered by traditional bank financing
• Recent Development: Obtained a license for Buy Now, Pay Later (BNPL) services
2. URpay
• Focus: Digital wallet targeting the unbanked population, particularly low-wage workers
3. Neo Leap
• Focus: Payment products, services, and infrastructure
• Offerings: POS systems, corporate expense cards, payment gateways, cashier solutions, issuing, and processing
• Innovation: Provides infrastructure as a service, enabling offerings like co-branded corporate spending cards
Neo Leap’s 2023 Performance Metrics:
• Merchants registered: 183,000+
• POS devices installed: 188,000+
• Cards processed: 6 million+
• App registrations: 4.8 million
• Market share:
o Neogate payment gateway: 16%
o Card processing: 13%
Al Rajhi’s strategy has created a synergistic ecosystem. For example, NeoLeap provides POS systems while Emkan offers financing through these systems, demonstrating effective integration across ventures.
Riyad Bank: Strategic Investment in FinTech’s Future
Under the leadership of Chief Digital Officer Mazen Pharon and venture arm head Emad Kashgari, Riyad Bank is reshaping its FinTech strategy:
• Established the 1957 fund with 800 million SAR to transform Saudi Arabia’s FinTech landscape
• 1957 Ventures aims to build unicorns and accelerate progress towards Vision 2030 and the Financial Sector Development Program (FSDP)
• Focus on fostering innovation through investments, resources, mentorship, and strategic insights
Alinma Bank: Driving Digital Financial Innovation
Alinma Bank’s venture arm, Saudi Financial Technology Company, focuses on:
• Digital financial products and services
• Digital financial platforms
• E-commerce payment services
Key Achievements (as of 2023):
• 250% increase in active e-wallet users
• 417% surge in cash-out transactions
• 294% increase in bill payment transactions
• 278% growth in international remittance transactions
• 200% increase in live virtual cards
The company has expanded its payment solutions, including the ClickPay online payment gateway, and invests in innovative FinTech solutions through its venture capital operation.
SNB: Enhancing Digital Capabilities
SNB Digital Ventures, the bank’s venture capital arm and innovation hub, focuses on:
• Investing in and partnering with innovative FinTech startups
• Enhancing SNB’s digital capabilities
• Contributing to Saudi Arabia’s broader FinTech ecosystem
A notable venture is the NEO digital banking app, aimed at advancing the financial system in alignment with Vision 2030.
Other Notable Players
• BSF: Venture-building activities include JB financing solutions
• SAB Alawwal: Under Innovation Banking Chief Saeed Assiri and ventures head Odai Al Shareef, the bank is launching numerous FinTech initiatives, including a tech-focused venture capital private fund announced at the 24 Fintech event in Riyadh
The venture-building strategies employed by Saudi Arabian banks reflect their individual visions and goals. There’s no one-size-fits-all approach, but rather a diversity of strategies contributing to the Kingdom’s FinTech ecosystem. The 2030 Vision Financial Sector Development Program (FSDP) and regulatory sandboxes provided by SAMA, CMA, and AI are empowering banks to leverage their financial expertise and resources.
By connecting this deep industry knowledge with innovation and a forward-looking perspective, Saudi banks are poised to drive significant advancements in the financial technology sector. As these ventures continue to evolve and new ones emerge, they will play a crucial role in realizing Saudi Arabia’s ambitions for a diverse, innovative, and technologically advanced financial system.
