Saudi Arabia is setting its sights on a future with significantly less cash. According to Philip Drury, Global Head of Technology and Communications Banking at Citigroup, the kingdom has a goal of transitioning 70% of domestic transactions to digital payments by the end of 2025. This ambitious target aligns with the country's Vision 2030 plan, a wide-ranging economic and social reform program aimed at diversifying the Saudi economy and reducing its dependence on oil.
Drury's comments came during the 3rd Saudi Capital Market Forum (SCMF). He highlighted the rapid growth of the fintech sector in Saudi Arabia as a key factor enabling the push towards a cashless society. The number of operational fintech firms in the kingdom has surged from just 10 in 2018 to a staggering 147 by 2022. This surge reflects a thriving ecosystem supported by Vision 2030 initiatives and a young, tech-savvy population.
The shift towards digital payments is expected to unlock a multitude of benefits for both consumers and businesses. From a consumer standpoint, increased adoption of cashless transactions is likely to translate into a more convenient and secure payment experience. Digital wallets and mobile payment solutions offer faster transaction speeds and improved record-keeping compared to cash. Additionally, cashless payments can potentially enhance financial inclusion by bringing more people into the formal financial system.
For businesses, the widespread use of digital payments can streamline operations, reduce administrative costs associated with cash handling, and provide valuable data on consumer behavior. This data can be leveraged to personalize offerings, target marketing campaigns more effectively, and ultimately drive business growth.
The Saudi government is actively implementing initiatives to encourage the use of digital payments. These initiatives include promoting financial literacy programs, investing in digital infrastructure, and simplifying regulations for fintech companies. Additionally, partnerships between banks, fintech startups, and telecommunication companies are playing a crucial role in developing innovative payment solutions tailored to the specific needs of the Saudi market.
While Saudi Arabia has made significant progress in its journey towards a cashless society, certain challenges remain. Efforts will need to be directed towards ensuring equitable access to digital technologies across all segments of the population, particularly in rural areas. Additionally, addressing cybersecurity concerns and promoting consumer trust in digital payment platforms will be critical for achieving the ambitious target set for 2025.