Business & Economy

How Saudi Arabia is quietly becoming an important financial hub

A booming fintech sector, soaring non-oil credit, flexible regulation, new insurance products, more digital payments, and more support for smaller firms bodes well for Vision 2030 targets

Saudi Arabia's Stock Exchange (Tadawul) in the capital, Riyadh.
AFP
Saudi Arabia's Stock Exchange (Tadawul) in the capital, Riyadh.

How Saudi Arabia is quietly becoming an important financial hub

Abdel-Rahman Ayas
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In 2020, there were just 14 financial technology (fintech) companies in Saudi Arabia. Today, there is 261. In just five years, the sector has seen a 19-fold increase, yet it is no outlier. Rather, it is emblematic of a wider financial revolution.

This is good news for those keeping an eye on the targets included within the Kingdom’s ambitious Vision 2030, given that these numbers surpass the 2025 goal of 230 firms. In five years, the aim is to have as many as 525 fintech companies, creating a veritable ecosystem. Alongside that, venture capital (VC) is arriving. Cumulative investments in fintech now top $2bn, with more than 11,000 jobs created (8,500 of which fall under the Saudi Central Bank).

From mobile payments to blockchain solutions, Saudi fintech is riding a wave. Last year, four out of every five retail transactions (12.6 billion) were electronic, a 9% increase on the previous year. Samsung Pay is now integrated into the national payment system, Mada, with almost two million payment terminals across the country. E-commerce payments alone surpassed one billion transactions.

D360 Bank’s launch also marked a milestone, becoming the latest digital bank to go live with the Saudi Central Bank’s blessing. This kind of launch helps towards a broader goal of reducing the cash economy and propelling Saudi Arabia into a digital financial future, with capital market reforms at the heart of Vision 2030.

Stocks and funds

Progress is visible. Last year, 44 new companies listed on the Saudi exchange (Tadawul), pushing the total to 353. Tadawul also introduced the TASI 50 index and rolled out single-stock options for four major firms. And Saudi stocks are increasingly finding their wings.

AFP
The annual Future Investment Initiative conference in Riyadh in October 2023.

Two new investment funds focused on Saudi equities debuted in China (Shenzhen and Shanghai, raising $87mn and $82mn respectively). In Tokyo, the first exchange-traded fund (ETF) exclusively in Saudi stocks launched with backing from the Public Investment Fund (PIF) and Mizuho Financial Group, while in Hong Kong another ETF tracking Saudi equities rolled out.

At home, the asset management industry surpassed $270bn in assets under management by year-end, up 169% from 2017. The number of investment funds has tripled since 2017, now numbering 1,549, with revenues from asset management activities up 154% to $1.55bn. Foreign ownership of Saudi equities also surged to $112bn, a five-fold increase since 2017.

Debt and dollars

The Capital Market Authority (CMA) wants to keep up this momentum by deepening markets and expanding offerings. The Kingdom’s debt capital markets are maturing rapidly, the sukuk and bond market having grown 123% since 2017 thanks to streamlined regulations, broader investor participation, and innovative products.

From mobile payments to blockchain solutions, Saudi fintech is riding a wave

Saudi Arabia's first international dollar bond issuance under the Government's Global Bond Programme raised $12bn and was over-subscribed. The Ministry of Finance and the National Debt Management Centre (NDMC) also introduced Sah, the Kingdom's first government-backed savings product, which aims to instil a culture of saving by offering secure, flexible returns to retail investors. It complements broader initiatives like early debt buybacks ($16.8bn) and five new primary dealers in the domestic market.

Reuters
The King Abdullah Financial Centre (KAFD) in Riyadh on December 1, 2024.

Sovereign credit ratings glowed. Moody's upgraded Saudi Arabia to Aa3; Fitch to A+, and S&P assigned a positive outlook, all evidence of confidence in the Kingdom's fiscal and monetary stability. PIF, meanwhile, signed six memoranda of understanding with Chinese institutions worth up to $50bn, from debt instruments to capital markets, enhancing cross-border capital flow and expanding the investor base.

Insurance and credit

Often overlooked in broader economic discussions, Saudi Arabia's insurance sector is quietly booming. Gross written premiums grew by 16.3% year-on-year to $20.3bn, while the sector's contribution to non-oil GDP rose to 2.59%. Net profits jumped to $961mn, up from $854mn in 2023. Innovation is helping. The Insurance Authority launched a regulatory sandbox to pilot AI-powered insurance solutions and hosted InsurHack, a hackathon focused on digital disruption.

A slew of new products debuted in 2024, including coverage for coastal tourism, off-plan real estate development, and civil liability in populated areas. Perhaps more critically, all insurance product sales positions are now localised, boosting employment and national capacity, while in motor insurance, the Ashal initiative enables repairs instead of cash payouts, reducing fraud and improving service quality.

Small and medium-sized enterprises (SMEs) now have a higher share of total private credit, rising to 9.4% in the fourth quarter (Q4) of 2024, up from 8.4% a year earlier. SME Bank financing hit $400mn, benefitting 1,029 firms across the Kingdom, with the Kafalah guarantee programme supporting more than $28.5bn in SME loans to-date. VC investment in Saudi startups reached $750mn last year.

Building financial skills

Financial inclusion and literacy remain key pillars of Saudi education. The Malee initiative, for children aged 8-12, uses gamified learning to teach saving and budgeting. The Financial Academy, meanwhile, trained over 59,000 professionals and launched five new certifications, including in venture capital, regulatory compliance, and international banking. A leadership training programme titled 'Next CEO' was completed by 33 executives across financial services.

Reuters
The World Economic Forum's Special Meeting on Global Collaboration, Growth and Energy for Development in Riyadh, Saudi Arabia, from 28-29 April 2024.

Regulatory reform has kept pace. Updated debt crowdfunding rules now allow platforms to issue loans of more than $2mn to large commercial entities, while real estate financing laws have been revised to diversify risk, with banks now encouraged to offer structured savings products. The CMA has approved omnibus accounts (a type of trading or investment account used by financial institutions), eased rules on debt instrument offerings, and enabled more flexible share buybacks. These moves collectively enhance transparency, investor protection, and market competitiveness.

Future aspirations include raising asset management's GDP share to 31%, SME loan share to 11%, and the debt market's GDP size to 24.1%. The fintech sector is expected to double by 2030, while the Kingdom also aims to further increase foreign investor participation and deepen sukuk markets.

In 2024, Saudi Arabia's financial system became more diversified, resilient, and interconnected with the global economy. From fintech and asset management to debt markets and insurance, there is progress, with Saudi Arabia rapidly growing into a regional financial hub.

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