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Tech can boost financial inclusion in Saudi Arabia

27 November 2022

As Saudi Arabia moves closer to achieving its Vision 2030, technology and innovation play a key role. According to Saudi Arabia’s General Authority of Statistics, 36.7 per cent of the kingdom's population is aged 15-34 and has different needs from those of previous generations.

One of the most critical is the need for financial inclusion, so that as these young people grow up to become adults, they have the necessary background in learning to save and spend responsibly. This is also paramount if the region is to achieve a cashless society as part of its agenda.

While technology is disrupting many industries in the kingdom, it is creating an opportunity in the financial services sector – one that can benefit young people specifically.

With its high youth population, Saudi Arabia is also home to a large population of digital adopters who see mobile devices as the gateway to the rest of the world. Kids are becoming more tech-savvy from a younger age as they are increasingly exposed to aspects of everyday life through a digital lens, now that everything can be done at a touch of a button.

For example, we are seeing a growing number of kids selecting and ordering food for the family, shopping, booking cars – and with an added element of gamification. This is all because apps and mobile services are increasingly helping to make the day-to-day more seamless and trusted in the household.

Banking on technology

Technology is rapidly disrupting Saudi Arabia’s banking landscape. In the first three quarters of 2022, the kingdom has made progress towards achieving its digital transformation goals. Alongside the expansion of the Internet of Things, this is also evident in the rise of financial technology (fintech) players that have emerged in the region, paired with correlating consumer uptake.

A few years ago, the financial sector in the Middle East had seen little transformation, yet with the advent of platform-based banking, alternative payment methods and various digital financial products, there has been a rise in the number of banked Saudis.

The growing fintech sector has not only played a key role in solving predisposed consumer pain points, but also in helping to close the financial inclusion gap. This is because technology companies are agile – we can adapt our products and services quickly in response to the demands of the market, and scale for the future using a data-driven approach.

However, we believe that fintech companies and bricks-and-mortar financial institutions need to work collaboratively rather than in silos. Both these entities bring complementary skills that not only keep the sector at pace, but also enhance the opportunity for a wider cohort of underbanked groups to try a new approach to financial services.

Fintech companies and bricks-and-mortar financial institutions need to work collaboratively rather than in silos

Fintech companies’ nimbleness enables us to learn from our consumers’ patterns and identify products and services to help them. Banks keep regulatory processes synchronised and are trusted establishments for many. Some consumer groups have yet to move past cash on delivery or physically visiting the bank to pay in a cheque because they trust what they are used to. This is where banks and fintech firms can work hand in hand.

Simplifying financial processes

Saudi Arabia has adopted a digital mindset enabling fintech companies with the tools that simplify the Know Your Customer (KYC) process, a due diligence process that financial firms use to verify the identity of their customers and assess and monitor customer risk. This means it is easier to onboard those that live in remote areas or that have not used a bank before. But it is where regulation must keep up with our sector as the industry proliferates more products.

As the region becomes a powerhouse for the global economy, it is imperative that every household member feels empowered to manage their finances in much the same way that they might choose what meal to get on a food delivery app.

As the first independent financial super app for the Middle East, South Asia and Africa, YAP is creating an ecosystem for users to manage their finances all in one place, and from a mobile device. There is no cost to sign up and no minimum salary or minimum balance requirement, meaning it is accessible to all. We have created a digital financial toolkit that anyone can use.

By everyone, we mean young people as well. We have created a special product for them called YAP Young, which provides parents with the ability to bring financial literacy into their children’s lives by allowing them to create a sub-bank account for their children. They receive a prepaid card and access to the app. Parents can also set up spending limits and card controls and children can earn money by completing missions – a more engaging way to say 'household chores'. This encourages children to save for things that really matter to them with savings goals.

By teaching people from a young age how to save and spend wisely, we are investing in our children’s futures.

Anas Zaidan is the co-founder and managing director of YAP, the first financial super app for consumers and businesses in the Middle East, Africa and South Asian markets

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