RIYADH:  With the pandemic abating, a new crop of fintech companies is heralding the winds of change in the way businesses are run in Saudi Arabia.

From facilitating cashless payments to offering financial data analytics to providing loans, these firms are coming out with simpler and customized alternatives to traditional banking.

“The GDP in Saudi Arabia is just impressive. You have much bigger potential for what you do in Saudi Arabia. You have 10 times the potential in Egypt and at least five times the potential in the UAE,” Ahmad Coucha, co-founder and CEO of FlapKap, told Arab News.

FlapKap, an Egypt-based company, provides AI-based insights and financial data analytics and is planning to set shop in the Kingdom.

The company offers e-commerce firms cutting-edge insights to optimize their advertising spending and maximize profits.

It also provides these businesses with flexible payment terms on advertising spending to ensure sustainable growth without cash constraints.

Another innovative fintech company making its presence felt in the Kingdom is HyperPay, a Jordan-based online payment company.

The company recently obtained a technical permit from Saudi Payments, a wholly owned subsidiary of the Saudi Central Bank, or SAMA.

The technical permit allows e-payment service providers to activate Mada services, a central payment scheme connecting all ATMs and sales points across the country.

“After years of hard work to establish a proper digital infrastructure, Saudi Arabia is now ready to adopt digital payments. And that is why they are way ahead of anyone in the region,” said Muhannad Ebwini, co-founder and CEO of HyperPay.

Of late, there has been a lot of traction in the fintech space thanks to SAMA’s role in promoting the sector’s development by allowing the entry of new players and new products as part of its Fintech Saudi program launched in 2018.

The initiative, aimed at pushing fintech companies to compete locally and globally, is now bearing fruits with an increasing number of innovative companies enhancing financial stability and supporting the economic development in the Kingdom.

According to a Fintech Saudi report, fintech transaction values between 2017 and 2019 increased by over 18 percent year-on-year, reaching over $20 billion in 2019.

With an increasing number of first-generation entrepreneurs competing with large financial institutions, the report stated that the transaction value will surpass $33 billion by 2023.

Additionally, there is also ample room for growth, with the average investment deal size at $2.7 million compared to the global average of $7.3 million, the report revealed.

Also noteworthy is the drastic change in the financial industry, which was earlier governed by a complex set of rules and regulations to ensure monetary safety. Fintech Saudi has tackled the problem by taking the bull by the horns.

The financial authority is now supporting these startups by walking them through the regulations and providing a more straightforward way to obtain an operating license from SAMA.

The result: The Kingdom witnessed a massive jump in venture capital investments in the fintech sector, hitting 16 deals in the first eight months of 2021, totaling $157.2 million. In 2021, it witnessed a 37-percent rise in new fintech launches over the previous year.

Factoring this instant rise in fintech companies, the Saudi Central Bank and the Capital Markets Authority launched the first-of-its-kind Financial Technology Center last month in Riyadh.

Located in Riyadh’s King Abdullah Financial District, the center aims to provide these fintech startups with investment opportunities. There’s no doubt that the prospects of fintech companies based in the Kingdom are far brighter now.
Last month, Saudi-based digital broker for personal loans Arib raised $2.3 million in a seed round investment led by venture capital firm Merak Capital.

The fintech will use its acquired funds to meet the requirements set by the Saudi Central Bank to finalize its licensing process and introduce new services to its portfolio.

Founded in 2019, Arib provides its users with auto financing options to match their credit profiles and get easy access to loans.

“The Kingdom is witnessing a huge technological revolution and a remarkable acceleration in digital transformation, especially in the financial technology sector,” said Arib CEO Walid Talaat, confirming the warm winds of change sweeping the Kingdom.