Regulating the fintech sector in Saudi Arabia

In our previous article, we focused on the fast-evolving financial sector in the Kingdom due to digitization and digitalization, highlighting the transformation underway and how it is changing every aspect of our lives.

Truth be told, technological advancement is changing all fields and professions, with new occupations being created and new terms being coined regularly.

One such term is financial technology, also known as fintech. Simply put, fintech is banking and finance combined with the power of technology to offer innovative services to individuals and institutions.

This article explores fintech in the Saudi context.

Keeping pace with the rest of the world, Saudi Arabia is taking several measures to boost fintech and transform its banking system and financial sector along modern lines.

The Kingdom launched the Saudi Fintech Initiative to support the fintech ecosystem and promote the country as a fintech hub.

The initiative’s main role is to support companies entering the fintech sector and create an attractive environment for financing from different sources.

It also aims to improve the infrastructure for digital transactions and has already seen a 36 percent improvement compared with past results.

Since the launch of the initiative, more than 31 licenses have been issued to fintech companies in the Kingdom.

Fintech is still evolving around the world, and the Kingdom is presently focused on strengthening the basics of the new sector to help it establish firm roots, introducing innovative technologies that process large amounts of data and offer solutions to meet customer demand.

Once past this stage, the focus will shift to providing solutions that are tailor-made for Saudi Arabia and the Saudi people.

It is, undoubtedly, a vital sector that will create thousands of job opportunities for the Saudi youth.

Given the importance of this sector, we need more legislation to govern and regulate it.

New rules and regulations are also required because of the sensitive nature of the field and its direct link to big data, which gives rise to the issues of data protection and privacy.

It is necessary to streamline fintech procedures to eliminate any loopholes in financial accounting mechanisms.

Since the sector is rapidly evolving, it would be wise to conduct periodic reviews and make necessary amendments to the basic legal framework to adjust to new situations.

However, this basic framework should also be designed carefully and in consultation with fintech experts. Regular reviews and careful amendments will ensure the safety of clients and the Saudi financial market, helping it thrive.

• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif