Saudi Arabia is delivering on its ambitions to become a global FinTech hub, as set out by Vision 2030’s Financial Sector Development Program (FSDP). KPMG"S latest report, "Unlocking the future: An overview of the FinTech opportunity in Saudi Arabia," was launched in the finale of FinTech 24, the flagship event hosted by the Financial Sector Development Program, the Saudi Central Bank (SAMA), the Capital Market Authority (CMA), and the Insurance Authority (IA) and organized by FinTech Saudi. The event explores the Kingdom"s rapidly expanding FinTech landscape, highlighting growth drivers, emerging trends, and strategic opportunities for investors and businesses. The report noted that in the first half of 2024, the global FinTech market encountered significant challenges largely due to geopolitical uncertainty and persistently high interest rates. However, FinTech investment in Saudi Arabia continued to surge. Between September 2020 and December 2023, Saudi FinTechs attracted more than $1.14 billion, with $791 million invested in 2023 alone – a 231 percent increase from the prior year. “Saudi Arabia’s strategic vision is fueling a FinTech revolution. The growth in digital payments and Buy Now Pay Later (BNPL) products marks the beginning of a financial transformation that will reshape the Kingdom’s economy,” said Antony Ruddenklau, Global Head of Financial Services Innovation and Fintech at KPMG International. The Kingdom"s commitment to FinTech, propelled by the FSDP and FinTech Strategy Implementation Plan, has led to a surge in investments, startups, and digital payments adoption. The number of FinTech companies has risen from 89 in 2021 to over 226, exceeding FSDP targets. Regulatory bodies like the Saudi Central Bank (SAMA) and the Capital Markets Authority (CMA) have played a pivotal role, with initiatives such as regulatory sandboxes, a consistent direction and open dialogue between regulators and FinTech players. "Saudi Arabia has built a conducive ecosystem for FinTechs to flourish," said Ovais Shahab, Head of Financial Services at KPMG in Saudi Arabia. "Strong regulator-backed enablers, access to capital, and collaboration among banks, coupled with favorable demographics, make it a space to watch." Key growth drivers include the transition towards a cashless society, with non-cash payments surpassing 70 percent in 2023. Robust payment infrastructure like Mada and SADAD have proven to be pivotal. Developments in the sector have widened beyond payments and point of sales systems, now including across cybersecurity and data protection, RegTech, SME lending, trade finance, ClimateTech, open banking, capital markets and savings, investments and digital banking. Alternative financing options like BNPL and crowd-funding are also gaining traction, with BNPL customer numbers continuing to increase, from just 76,000 in 2020 to 10 million in 2022 and onwards. Similarly, debt crowd-funding is witnessing more than 2.5x year-on-year growth, highlighting the sector"s potential. SAMA"s proactive approach to open banking, including the launch of the Open Banking Lab in 2023, has further accelerated FinTech adoption. Meanwhile, with SMEs representing over 1.3 million businesses, B2B FinTech solutions are in high demand, addressing challenges in accessing credit, processing payments, and managing finances. Looking ahead, Saudi Arabia is investing in technologies like Web3, the metaverse, and augmented reality. The Kingdom"s focus on clean energy innovation is driving investments in climate tech and sustainable finance, with $443 million invested between 2018 and 2023. The digital banking sector is also poised for growth and set to drive further innovation. At present, there are three digital banking licenses issued – of these SAMA has allowed two banks to operate with pre-selected customers to test their systems and operational effectiveness. They are expected to be prepared for a full public launch in the next few months. These trends present promising opportunities for investors, founders, and established organizations. “High-growth sectors like digital payments, alternative financing, open banking, and SME financing offer attractive returns. For founders, scaling opportunities abound, with successful examples like Tamara and Tabby achieving unicorn status in the BNPL space. Established organizations can leverage collaborations with FinTechs to access innovation, agility, and new customer segments,” Shahab concluded.