Financial Services in Saudi Arabia

Fintech and Financial Inclusion in Saudi Arabia

According to the World Bank (2018), many people in the world do not have access to financial services regardless of progress made in development in the field of finance, causing inequality (Demirgüç-Kunt et al., 2018). As technology is constantly evolving, an innovation that has emerged as a solution to inaccessibility of financial services is fintech (World Bank, 2018). A study was conducted in 2022 to explore the state of financial inclusion with financial services in Saudi Arabia and its relation to fintechs, particularly how financial technology can assist in creating more financially inclusive banking systems. According to research, the level of financial inclusion in Saudi Arabia is relatively low compared to other high-income economies. The groups that are particularly affected by the lack of financial inclusion in Saudi Arabia are women, the elderly, and the poor. To promote financial equality, the fintech sector could be an asset in assisting these marginalized minorities of the Saudi population.

Firstly, it is important to note that although financial inclusion for all individuals, especially minorities, is justified morally speaking, it can contribute to economic growth. Over the past few years, with the rise of fintech, several studies have been conducted to explore the relationship between financial inclusion and financial technology. There are several examples of countries that benefitted from fintech regarding financial inclusion and economic growth. Two recent studies reported that fintech significantly and positively impacted financial inclusion in 49 countries in Africa by the increased use of mobile banking (Ouma, et. al, 2017; Chinoda & Kwenda, 2019). Another example is the increase in financial inclusion in Southeast Asia as well through the use of fintech (Al-Mudimigh, & Ansha-ri, 2020). Senyo and Osabutey (2020) reported that there is increased use of mobile banking in unbanked populations, and the reason for this is that because of fintech, users feel safer and more satisfied. An explanation as to why marginalized, unbanked populations feel safer and more satisfied is that fintech provides less documented and nearby financial services. According to a fintech Saudi Arabia annual report on ‘Fintech companies Saudi Arabia’, in 2020-2021, the average investment size in financial tech startups in Saudi Arabia is 2.7 million dollars compared to the global average of 7.3 million dollars. Therefore, there is room for investment in the fintech sector in Saudi Arabia. Investments could be specifically made in financial inclusion in Saudi Arabia to promote equality and economic growth using fintech.

To conclude, research has shown that the use of financial technology can assist in promoting financial inclusion, meaning all people, regardless of their economic status, gender, location of residence, and age, have access to financial services. Several studies have reported that the diversification of financial services globally has positively impacted economic growth and inclusion, for example, in Southeast Asia and Africa, as previously stated. Therefore, with increased investment in fintech in Saudi Arabia to promote financial inclusion, Saudi Arabia can grow economically and support marginalized minorities.