17 March 2022
Banks have been adopting digitalization at a faster pace driven by the covid-19 pandemic situation that entailed surge in contactless transactions. There is an increase in number of fintechs in the recent past and new neo banks are emerging across the globe. Almost 53 per cent of the global population is expected to access digital banking by 2026, according to Juniper Research. In 2018, the Middle East received less than 1% of worldwide FinTech funding, but it is growing at a 30 percent compound annual growth rate according to Finextra.
The KSA landscape is also expanding in digital banking supported by Government initiatives like SAMA’s FSDP - Vision 2030, SAMA open banking policy and Fintech Saudi. There are already 97 fintech start-ups operating in Saudi Arabia. Saudi Arabia has approved 2 digital banking licenses in 2021 and 1 digital banking license in 2022 so far. SAMA plans to go live with open banking in the first half of 2022 and the expected benefit from open banking includes direct innovation, increased competition, increased financial inclusion and greater efficiency in the banking system. We have listed down the five most important digital shifts that are happening in KSA due to digitalization of banking and how these shifts would affect the KSA banks.
What this trend leads to? We expect this trend to result in reduction of ROE for existing banks, increased IT spending by banks, mergers & acquisitions of fintech companies, provide banks with new market opportunities and hyper-personalization of services.To read more about digitalization of KSA banks, please click here
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