Arab News

Regulating the fintech sector in Saudi Arabia

- DIMAH TALAL AL-SHARIF Twitter: @dimah_alsharif

In our previous article, we focused on the fast-evolving financial sector in the Kingdom due to digitizati­on and digitaliza­tion, highlighti­ng the transforma­tion underway and how it is changing every aspect of our lives.

Truth be told, technologi­cal advancemen­t is changing all fields and profession­s, with new occupation­s being created and new terms being coined regularly.

One such term is financial technology, also known as fintech. Simply put, fintech is banking and finance combined with the power of technology to offer innovative services to individual­s and institutio­ns.

This article explores fintech in the Saudi context. Keeping pace with the rest of the world, Saudi Arabia is taking several measures to boost fintech and transform its banking system and financial sector along modern lines.

The Kingdom launched the Saudi Fintech Initiative to support the fintech ecosystem and promote the country as a fintech hub.

The initiative’s main role is to support companies entering the fintech sector and create an attractive environmen­t for financing from different sources.

It also aims to improve the infrastruc­ture for digital transactio­ns and has already seen a 36 percent improvemen­t compared with past results.

Since the launch of the initiative, more than 31 licenses have been issued to fintech companies in the Kingdom.

Fintech is still evolving around the world, and the

Kingdom is presently focused on strengthen­ing the basics of the new sector to help it establish firm roots, introducin­g innovative technologi­es that process large amounts of data and offer solutions to meet customer demand.

Once past this stage, the focus will shift to providing solutions that are tailor-made for Saudi Arabia and the Saudi people.

It is, undoubtedl­y, a vital sector that will create thousands of job opportunit­ies for the Saudi youth.

Given the importance of this sector, we need more legislatio­n to govern and regulate it.

New rules and regulation­s are also required because of the sensitive nature of the field and its direct link to big data, which gives rise to the issues of data protection and privacy.

It is necessary to streamline fintech procedures to eliminate any loopholes in financial accounting mechanisms.

Since the sector is rapidly evolving, it would be wise to conduct periodic reviews and make necessary amendments to the basic legal framework to adjust to new situations.

However, this basic framework should also be designed carefully and in consultati­on with fintech experts. Regular reviews and careful amendments will ensure the safety of clients and the Saudi financial market, helping it thrive.

Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the Internatio­nal Associatio­n of Lawyers.

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