Saudi Central Bank Vice Governor Discusses Fintech Ecosystem at 24 Fintech Event

In a recent event hosted in Riyadh, H.E. Dr. Khaled Al-Dhaher, the Vice Governor for Supervision and Technology at the Saudi Central Bank (SAMA), emphasized the pivotal role of fintech within Saudi Arabia’s Vision 2030. His insights highlighted SAMA’s commitment to fostering innovation in the financial services sector while maintaining crucial stability and consumer trust.

As Saudi Arabia positions itself on the global economic stage, the fintech sector has emerged as a critical component of its Vision 2030 initiative. This ambitious plan aims to diversify the economy, reduce dependence on oil, and develop public service sectors such as health, education, infrastructure, recreation, and tourism. Given this context, the central bank’s engagement with fintech innovation is timely and essential in bolstering economic resilience and attracting global investment.

Fintech, a contraction of ‘financial technology,’ refers to integrating technology into offerings by financial services companies to improve their use of financial services. In recent years, it has played a transformative role in enhancing customer experience, promoting efficiency, and enabling financial inclusion. However, with rapid innovation comes the challenge of ensuring financial stability and security, which SAMA has addressed directly through its policies and initiatives.

Key Points:

1. SAMA’s Role in Innovation and Stability:
   According to Dr. Al-Dhaher, SAMA prioritizes monetary and financial stability, which is vital for fostering an environment encouraging innovation. He noted that SAMA has built a supportive framework for fintech, ensuring these new market entries do not jeopardize the existing stability of the financial sector.
2. Sandbox Initiative:
   SAMA has implemented a Sandbox program to facilitate experimentation with new financial business models. Dr. Al-Dhaher asserted that this initiative allows fintech companies to test their innovations under a controlled regulatory environment, which helps them refine their offerings without the risk of immediate penalties for non-compliance.
3. Support Programs for Compliance:
   Another key initiative highlighted is the Mekin program, which serves as an enablement platform that guides fintech firms, especially smaller ones, in meeting the central bank’s regulatory requirements without overwhelming their operational capabilities. This program emphasizes the need for compliance in cybersecurity, combating fraud, and anti-money laundering (AML).
4. Importance of Talent Development:
   Dr. Al-Dhaher stressed that building the right talent pool is crucial for the growth and sustainability of the fintech sector. Cooperation with organizations like Fintech Saudi and the Financial Academy aims to nurture skilled professionals who can drive innovation and adapt to evolving market demands.
5. Balancing Innovation with Consumer Protection:
   The effective management of risks associated with new technologies, particularly in the realms of artificial intelligence (AI) and quantum computing, was discussed in depth. Dr. Al-Dhaher emphasized that while SAMA encourages innovation from fintech, it maintains a steadfast commitment to consumer protection and system stability.

Dr. Al-Dhaher’s reflections on SAMA’s approach were underscored with the following statements:

• “Stability, trust in the system, and sustainability are unquestionable. These are red lines.”
• “Be close to your regulators. We are open to discussions and dialogue. We welcome innovation, but we need to be clear on our expectations.”

SAMA’s ongoing dedication to integrating fintech into the broader economic framework signifies a crucial shift in how traditional banking interacts with technological innovation. By establishing a robust regulatory landscape, Saudi Arabia positions itself as a potential global fintech hub, attracting investments and talent. The effective use of the Sandbox and other initiatives will enable startups to experiment safely, leading to more robust solutions that can address the financial needs of Saudi nationals and the wider Middle East region.

In conclusion, the dialogue led by H.E. Dr. Khaled Al-Dhaher at the Riyadh event illuminated the Saudi Central Bank’s commitment to fostering an innovative fintech ecosystem while ensuring that the necessary safeguards for stability and consumer protection remain firmly in place. As Saudi Arabia strides toward realizing Vision 2030, the collaborative efforts between regulators, fintech entrepreneurs, and educational institutions will pave the way for a resilient financial future.