- 8 views
Saudi Arabia Securities Regulator grants first two fintech licences
Saudi Arabia's Capital Market Authority (CMA) on Tuesday handed out its first two fintech permits to Riyadh-based startups Scopeer and Manafa Capital.
Both early-stage companies which are fully Saudi-owned operate equity crowdfunding platforms and the licences from the CMA will allow them to run their platforms on a trial basis.
Individual investors will use these platforms to fund small and medium-sized enterprises in exchange for shares in those firms, Reuters reported.
The CMA will receive applications for more fintech licenses later this year it said. The move from Saudi’s securities regulator which is expected to broaden Saudi’s capital markets, boost start up funding and create more jobs is part of a drive to develop a fintech sector in the Arab world’s biggest economy as the kingdom is implementing economic reforms designed to reduce reliance on oil exports.
The licenses dubbed the Financial Technology Laboratory Licenses (FTLL) are part of the CMA’s Financial Technology Laboratory initiative.
“The FTLL for crowd funding services aims to provide opportunities to invest in small-to-medium-size companies and finance their activities; by bringing them together with interested investors through electronic platforms. The crowd funding platforms will provide capital needs of young entrepreneurs with new business ideas, which will assist in closing the gap between new entrepreneurs and traditional funding methods.” Cryptovest quoted Dr. Bander Assad Alsajjan, CMA’s Deputy for Strategy and International Affairs, as saying.
Along with the CMA, the Saudi Arabian Monetary Authority has expressed great interest in the burgeoning fintech industry. In February 2018 the Saudi central bank signed a deal with the U.S.-based company Ripple to help participating banks in the kingdom settle payments using blockchain software.
In May 2018, Abu Dhabi-based private equity firm Gulf Capital acquired a stake in Geidea, a leading Saudi-based electronic payment solutions provider. The value of the deal exceeded 1 billion riyals or $267 million.
Competition is fierce in the region as other MENA countries are vying to become leaders of fintech innovation. Abu Dhabi, Dubai and Bahrain have all taken steps establishing regulatory frameworks, enabling startups to begin operating and have created fintech accelerators programmes.
“With everyone from regulators, customers and businesses embracing fintech, and even established financial institutions ramping up investment in non-traditional technologies, the opportunity for fintech is enormous, in Saudi Arabia and in the region as a whole.” Ambareen Musa, founder and CEO of souqalmal.com, a successful fintech startup based in the UAE told Albawaba Business.
The oil-rich kingdom is also discussing a coordinated approach to the regulation and nurturing of fintech startups with the UAE and Bahrain.
“We’re working on establishing some collaborations where we would give different assignments between different central banks and fintech hubs to develop a (common) GCC output when it comes to fintech”Mishari Al-Assailan, the acting head of Fintech Saudi, the division of the Saudi central bank charged with growing the sector in the Kingdom told Arab News.
Experts believe there is huge potential in Saudi Arabia as the country attempts to boost its nascent fintech ecosystem and has serious intent to become a major player in this field.