Tuesday, 02 / 10 / 2018
In the name of Allah, the Most Gracious, the Most Merciful
Praise be to Allah, the God of all creation, and peace be upon our Prophet Muhammed, his kinsfolk and companions.
Your Royal Highness,
Peace, mercy and blessings of Allah be upon you,
It is my pleasure to attend with you tonight the inauguration of 'STC Pay' subsidiary, which has worked with SAMA over the past months to allow it the capacity to function as an e-wallet provider.
The payments sector in Saudi Arabia has been witnessing remarkable developments for 30 years. Saudi Arabia was the first country in the Middle East to adopt a national payment system that is fully independent from international companies in the year 1990, which marked the launch of the Saudi Payment Network (SPAN). Saudi Arabia was also the first Middle Eastern country to develop a real-time system for transfers and settlements (SARIE) in 1997, followed by the launch of the first national system for electronic bill presentment and payment (SADAD Payment System in 2004). Such services have helped propel the country into reaching the highest positions according to the ranking of a BIS report on national payment systems. In addition, those systems have played a salient role in expanding financial inclusion, reducing cash transactions, facilitating payment and collection procedures, and increasing electronic transactions in general between various relevant bodies.
However, some segments of society and some commercial sectors still rely greatly on cash. Thus, we have to establish FinTech companies, whether independent or bank-dependent, that would look into the needs of beneficiaries, harmonizing their systems as to serve such needs. Such companies include payment services and e-wallet providers, which are expected to play a major role in expanding financial inclusion, reducing cash transactions, and developing diversified innovative solutions.
To this end, the Financial Sector Development Program, one of the programs of Saudi Vision 2030, was launched last May. It includes a pivotal initiative aimed at allowing FinTech companies, alongside banks, to provide financial services. Moreover, SAMA has worked on developing a legislative, supervisory environment with a view to achieving the objectives of such an initiative through working on two courses of action approved in the executive plan of the Program. The first is to establish the Regulatory Sandbox, through which a number of companies will have the chance to provide their services within a relaxed legislative framework, enabling service providers and SAMA to test innovative services under specific guidelines that take into consideration promoting innovation while mitigating risks to customers. In the second course, SAMA works on updating policies and issuing licenses required by those companies to be able to continue providing their services following the end of the pilot phase.
Given that innovation in financial services currently witnesses a shift globally spearheaded by FinTech companies, and given SAMA's realization of the promising potential of this sector domestically, the FinTech Saudi initiative was launched under the leadership of SAMA and in partnership with over 40 entities from various sectors (relevant government agencies, banks, universities, investment companies, and technology companies). This stems from our full awareness of the importance of cooperation in choosing a track for FinTech innovation to be followed here in Saudi Arabia, considering that it enjoys youthful national talent who are willing and capable of creating innovative products that would meet the needs of customers and add value to the domestic economy. In addition to that, the field of FinTech is considered one of the enablers for the growth and prosperity of SMEs as it helps them achieve technological advancement and promotes the development of FinTech products and services for SMEs across the Kingdom.
As much as we would like to allow new companies to engage in payment systems, we would also like just as much to maintain the significant gains achieved by Saudi Arabia and learn from international experiences. Thus, it is important to maintain conformity in payment systems. This concept has garnered much traction among international organizations as of late, including the G20. The G20 subgroup on payment systems has outlined in its latest report the importance of having in place a common infrastructure that would allow all e-wallet service providers to work with each other, allowing customers access to all channels. This should, therefore, prevent creating an unorganized payment system that does not serve the overall objectives of promoting cashless transactions and expanding financial inclusion. It is worth noting that central banks of several countries, such as China, India, and Singapore, have recently engaged in payment systems in order to ensure streamlined technical specifications and enhanced infrastructure in alignment with the Conformity objective. The national payment system "mada" is currently working on enhancing technical specifications in Saudi Arabia for the infrastructure in a manner that would achieve this objective. Mada will play the role of an enabler to link all service providers, whether banking or FinTech-related, with each other to create a competitive environment between all parties, ultimately benefiting the end customer.
In conclusion, the ambitious objectives of the Financial Sector Development Program will only be achieved through the vigorous, concerted efforts of all concerned parties to raise the level of services, improve customer experience, and treat opportunities and risks in the best manner alike. SAMA always endeavors to promote fruitful cooperation between banks and private entities in general. It also seeks to promote advancements and innovations in financial services. The aim of such is to achieve the overarching goals of the financial sector and encourage fair competition.
Thank you for your attention, and peace be upon you.