In a world where financial technology is rapidly reshaping global economies, Saudi Arabia is positioning itself to become the Middle East’s premier financial hub. The Kingdom’s ambitious Saudi Vision 2030 plan, aimed at diversifying the economy and modernizing the financial sector, is opening doors for international collaboration, particularly with French FinTech companies known for their innovation and technological prowess.
Saudi Arabia’s Fintech Sector
Saudi Arabia is undergoing a significant digital transformation, positioning itself as a burgeoning hub for financial technology (fintech) in the Middle East. The Kingdom’s investment in high-speed internet, data capacity, and mobile technology has laid a robust foundation for the fintech sector’s exponential growth. As one of the first countries to offer commercial 5G services, Saudi Arabia currently ranks 13th on the World Economic Forum’s Digital Capacity Index, underscoring its commitment to technological advancement.
Central to Saudi Arabia’s fintech evolution is the Financial Sector Development Program (FSDP), a cornerstone of the ambitious Vision 2030 initiative. This program aims to create a thriving financial sector that supports national economic development. It has already spurred the launch of several digital government platforms, such as Absher, Etimad, and Fasah, which have revolutionized citizen-government interactions and created a fertile environment for private sector growth, particularly in fintech.
Thanks to this, the fintech sector in Saudi Arabia has seen remarkable growth. From just 89 fintech firms in 2022, the number has surged to over 200 by August 2023, marking a 300% increase from 2021. This growth is fuelled by substantial investments and a supportive regulatory environment. In 2023 alone, Saudi fintech companies raised a combined $854 million, a 270% increase from the previous year, despite a global downturn in fintech investments.
Moreover, in 2022, the sector generated approximately $746.4 million in revenue. By 2030, the fintech industry is expected to contribute SAR 13.3 billion ($3.6 billion) directly to the GDP, up from SAR 1.2 billion ($317 million) in 2021. This growth is part of a broader strategy to position Riyadh as a global fintech hub, focusing on innovation, global positioning, and talent development.
The fintech sector is also a major driver of job creation. In 2021, there were 1,640 jobs directly related to fintech in Saudi Arabia. The government aims to nearly double this number every two years, targeting over 18,000 jobs by 2030. Initiatives like the Fintech Saudi bootcamp, in partnership with the Financial Academy and AstroLabs, are training young professionals and supporting them in developing fintech prototypes, addressing the talent and recruitment challenges previously faced by the sector.
Saudi Arabia also aims to increase foreign direct investment (FDI) levels by 20%, targeting $3.2 billion by 2030. The Saudi Central Bank (SAMA) has established a Regulatory Sandbox to support local and international firms looking to test their products in the Saudi market. This initiative creates new opportunities and lowers the risk for foreign-owned companies setting up in Saudi Arabia.
Finally, the Saudi fintech market is expected to reach USD 63.90 billion in 2024 and grow at a compound annual growth rate (CAGR) of over 6.07%, reaching USD 87.14 billion by 2029. This growth is driven by the increasing adoption of smartphones and the internet, making digital solutions more accessible to consumers. The COVID-19 pandemic has further accelerated the shift towards digital payments and investments, as consumers adapt to remote and contactless transactions.
France’s Expertise in Fintech Industry
Meanwhile, France has firmly established itself as a leader in the fintech sector. The introduction of progressive regulations such as the General Data Protection Regulation (GDPR) and the Second Payment Services Directive (PSD2) has provided a clear framework for fintech companies to operate securely and efficiently.
In 2023, French fintech companies raised a combined €1 billion, despite a 79% drop from the previous year’s figures. This decline in overall funding was in line with a broader European trend but still reflected the resilience of the French fintech sector, with an average deal size of $6.8 million. The market is projected to grow at a compound annual growth rate (CAGR) of 10.7% between 2024 and 2032, driven by innovations in algorithmic trading, AI integration in portfolio management, and the rise of digital payments.
Several French fintech companies have made significant strides in both domestic and international markets. Lydia, for example, is known for its mobile payment solutions. The app has over 5 million users and continues to expand its services. The digital bank for businesses and freelancers Qonto offers a range of services, from expense management to invoicing. It has attracted over 250,000 customers and raised substantial funding to fuel its growth across Europe. Finally, the digital health insurance provider Alan simplifies health coverage for individuals and companies. The company has raised over €125 million and serves more than 100,000 members, making healthcare more accessible and transparent.
Sustainability is also becoming a significant focus since, according to New Alpha Asset Management, there were 168 sustainable fintechs in France by the end of 2023, making it the third-largest market in Europe for sustainable fintechs. These companies are leveraging technology to promote economic ethics, environmental sustainability, and social responsibility without compromising profitability.
All this makes the French fintech sector not only a hub of innovation but also a significant contributor to the economy. In 2023, the sector saw 147 deals, reflecting a robust entrepreneurial spirit despite a decrease in overall deal activity. The market is expected to continue its upward trajectory, with projections indicating a market size of €70 billion by 2024, driven by advancements in AI, cybersecurity, and responsible digital practices.
Opportunities of partnership between France and Saudi Arabia
The synergies between Saudi Arabia’s digital transformation and France’s FinTech innovations present numerous opportunities for collaboration.
Both France and Saudi Arabia have established comprehensive regulatory frameworks that prioritize data protection and secure financial transactions, creating a conducive environment for fintech innovation. France’s General Data Protection Regulation (GDPR) sets stringent standards for data privacy. This regulation has become a benchmark for data protection globally, influencing policies beyond Europe. Similarly, Saudi Arabia has implemented robust data protection laws, such as the Personal Data Protection Law (PDPL), which aligns closely with GDPR principles. The PDPL mandates strict guidelines for data collection, processing, and storage, ensuring that individuals’ privacy rights are safeguarded. This regulatory alignment between the two nations provides a solid foundation for cross-border fintech collaborations.
In addition to data protection, both countries have introduced progressive financial services directives that support fintech growth. France’s Second Payment Services Directive (PSD2) has revolutionized the payments landscape by promoting open banking and enhancing competition. PSD2 mandates that banks open their payment services and customer data to third-party providers, fostering innovation and improving consumer choice. Saudi Arabia has mirrored this approach with its Open Banking Policy, which encourages financial institutions to share customer data securely with licensed third-party providers. This policy aims to stimulate competition, drive innovation, and enhance the overall customer experience in the financial sector. The shared vision of open banking between France and Saudi Arabia creates a fertile ground for fintech companies to develop and deploy innovative solutions that can thrive in both markets.
Moreover, the bilateral tax agreement between France and Saudi Arabia, extended in 2011, eliminates double taxation and prevents tax evasion, providing a stable fiscal environment for businesses operating in both countries. This agreement is particularly beneficial for fintech companies looking to expand their operations internationally, as it reduces the tax burden and simplifies cross-border financial transactions. This tax agreement encourages French and Saudi fintech firms to explore joint ventures, partnerships, and investment opportunities.
The regulatory synergy and tax agreement between France and Saudi Arabia set the stage for a dynamic partnership in the fintech sector. French fintech companies, known for their innovation in mobile payments, digital banking, and health insurance, can bring their expertise to the Saudi market, which is rapidly embracing digital transformation. Conversely, Saudi fintech firms can benefit from France’s mature fintech ecosystem and regulatory experience, gaining insights that can help them scale and innovate.
Moreover, both countries are committed to fostering a vibrant entrepreneurial ecosystem. France’s La French Tech initiative and Saudi Arabia’s Vision 2030 program share a common goal of supporting startups and driving economic diversification through technology and innovation. Collaborative efforts, such as joint accelerator programs, fintech conferences, and knowledge-sharing platforms, can further strengthen the ties between the two nations.
The recent collaboration between French Lab Accelerator and Saudi Industries 4.0 at VivaTech, in May 2024, in Paris, already provided a good example of such a partnership. It shows that the collaboration between Saudi Arabia and France has the potential to shape global FinTech trends and drive the future of financial services. It could lead to the development of innovative FinTech solutions that enhance financial inclusion, streamline services, and improve customer experiences worldwide.
As the FinTech sector continues to evolve, with more companies adopting digital solutions and innovative business models, Saudi Arabia and France have the opportunity to lead in developing new products and services that set industry standards.