The financial sector in Saudi Arabia has experienced a rapid digital transformation over a short period. In less than a decade, the economy has shifted from a heavy reliance on cash to a stage where approximately 80% of retail transactions are electronic. However, this achievement does not mark the end of the journey but rather the beginning of a more complex phase.
Mohammed Owaidah, founder and CEO of 'Stitch', believes that the fintech sector in the Kingdom has entered a critical turning point. He explains in a special interview with 'Asharq Al-Awsat': 'If we compare Saudi Arabia to markets that were considered leaders in fintech five years ago, we find that parts of the Kingdom have caught up and even surpassed them in the payments sector. However, the next phase is no longer about adoption but about execution.'
Details of the Transformation
The transformation achieved so far has been evident to users through digital wallets, seamless payments, and more accessible financial services. However, behind this facade, the deep transformation process remains incomplete. Artificial intelligence stands out as a clear example of this. Despite the significant momentum surrounding it, its use in financial institutions is still concentrated in superficial applications.
Owaidah states that 'in most cases, artificial intelligence is still not integrated into core functions such as fraud management, credit decision-making, underwriting, or operational automation.' It is often used in chat interfaces or simple services. This is not due to a lack of ambition but rather the infrastructure.
Background & Context
Legacy systems, along with the multiplicity of vendor platforms, make it challenging to integrate artificial intelligence into core operations. Without unified data and modern infrastructure, advanced capabilities remain limited. This creates a clear paradox, where products can be launched quickly, but scaling them efficiently is difficult.
As the market matures, the nature of the challenge has changed. The regulatory framework is clear, demand is strong, and digital infrastructure is available, but the obstacle has become daily execution. Estimates indicate that over 84% of financial institutions in Saudi Arabia plan to update their infrastructure in the coming year, reflecting a widespread awareness of the nature of the challenge.
Impact & Consequences
This challenge is particularly evident in the financing sector, where more than 60% of institutions rely entirely on legacy systems, while the reliance on external vendors exceeds 87%. This not only affects operational speed but also extends to the outcomes themselves. Owaidah points out that there is a 'gap between the speed of product launches and the ease of developing or scaling them. In many cases, institutions are missing business opportunities because their core systems cannot keep up with growth.'
Retail represents one of the most significant challenges at this stage. More than 73% of institutions heavily depend on external partners to launch and update products. While this model has helped accelerate innovation, it has also led to increased complexity.
Regional Significance
Owaidah clarifies that 'relying on a large number of specialized vendors increases the coordination burden, slows down execution, and scatters responsibilities.' This issue extends beyond efficiency to governance, compliance, and security. When systems are fragmented, applying unified standards becomes more challenging, and responsibility is distributed across multiple parties, complicating risk management.
At the heart of these challenges lies data. In many institutions, data is distributed across multiple systems, duplicated, and processed manually or arrives late. This not only affects efficiency but also limits potential. According to Owaidah, this leads to 'everything being constrained.' This directly impacts the ability to implement real-time risk assessment, dynamic pricing, and tailored financial services.
Conversely, when systems are built on unified data models, the entire landscape changes. Owaidah explains: 'When institutions operate on unified data models and shared governance layers, innovation multiplies.' In this context, 'open banking' is no longer a futuristic concept but an emerging reality, albeit still constrained by fragmented infrastructure.
In conclusion, the story of fintech in Saudi Arabia is no longer about catching up. In many areas, it has already reached global levels. The next phase will be more critical... effective execution, sustainable expansion, and building systems that support continuous innovation.