H.E. Deputy Minister of Finance, Mr. Abdulmohsen bin Saad Alkhalaf, revealed that the number of fintech companies in the Kingdom reached 224 by the end of Q2 of 2024, exceeding the quarter’s target of 168 businesses, thanks to efforts exerted by the concerned authorities. However, he noted that the number of fintech firms is targeted to hit 525 by 2030.

Alkhalaf made the statements as he took part in a panel discussion titled “Leadership in the Age of Technology and Innovation” within the Financial Academy Forum (FAF) 2024, held Wednesday, October 9, at Conference Center of King Abdullah Financial District (KAFD) in Riyadh.

Al-Khalaf pointed out that the technical shifts have extended to financial transactions through via the artificial intelligence (AI) gateway to support the economy, and therefore big data, blockchain, or business intelligence programs have emerged. “These shifts had great impact on areas of financial planning and monitoring financial performance, thus enhancing predictability of positive or negative developments due to the availability of a huge amount of data, information and statistics, which supports decision-making by taking advantage of opportunities proactively, or by hedging against potential risks.

The deputy minister of finance further spoke of the impacts of modern technologies in the financial sector, especially predictability, which is based on the availability of information and data that enable sound decision making. He pointed out that such technologies have activated many pathways in the financial sector, and improved accessibility to the required information, enhancing credibility, transparency and governance programs in the sector.

“The world is undergoing a major and accelerated technological transformation, as modern technology has brought about an unprecedented revolution in all areas, the impact of which has extended to the public sector. This revolution has radically changed the way the sector is managed, including the mechanism of internal dealings and the services it provides to beneficiaries, whether they are individuals, private institutions or government agencies. This has been enabled by the huge investments in digital infrastructure and the great empowerment of digital transformation in the Kingdom.”

Then, Al-Khalaf zoomed in on the role of technology in the Saudi governmental sector, particularly in the Ministry of Finance. He said that since Vision 2030 has been launched, the ministry has been working on various domains. It adopted technology in many sectors, focusing specifically on the financial sector with a view to developing it. Two years ago, he added, the executive plan of fintech strategy - a major component of the Financial Sector Development Program (FSDP) - was launched in order to facilitate doing business and attracting investments.

Highlighting the challenges encountered by the Ministry of Finance in this regard, Alkhalaf stated that the ministry found out that the technical initiatives are scattered and inconsistent, with one for revenues unit, a second for budget unit, and a third for accounts unit, and each of them has a separate system. Then, the ministry decided to address this challenge, which reduced the efficiency of financial planning processes. Hence, the ministry started handling this issue since 2017, when it opted to combine all initiatives into a single technical system, which has evolved over years. This system has now turned into the National Center for Government Resource Systems (NCGR).

“The ministry created numerous systems, including Etimad platform, Sarf and Mu’amalat systems, which facilitated transactions and improved decision making. However, we are still striving to further leverage these technologies, so we are building an interactive dashboard that includes all data related to financial and macroeconomic policies, which will provide accurate recommendations to improve the macro-financial policy-making process.”

Al-Khalaf underscored some key initiatives undertaken by the Ministry of Finance to achieve digital transformation, most notably building a partnership with the NCGR, adopting a digital technology-based business model for innovating products and services, and introducing new channels that increase the value of the ministry’s products and improve their impact on public finances.

“The closest example coming to my mind of a national digital success story is the Etimad platform, to which both the ministry and the NCGR contributed. Previously, contracts, tenders and procurement procedures with government entities were implemented manually, which over time led to mismanagement of data, delays in the disbursement of private sector’s dues, and the emergence of issues in government projects. Given all of this, the idea of creating Etimad platform came up in the second quarter of 2017 during a meeting of the ministry's leaders to consider automating payment orders. The ministry chose a simple, gradual and flexible methodology for developing the platform, i.e. introducing a small product and then developing it. Accordingly, the platform started with one service which later was followed by multiple ones.”

Today, he elaborated, the platform offers many public finance services to its beneficiaries from the government, public/private sectors and individuals, as the procurement to payment cycle has been governed and automated. Thus, we have become fully aware of the current situation regarding the budget, disbursement, and the existing obligations, which helps enhance governance, transparency, reliability, and spending efficiency. “Additionally, the platform has helped accelerate payments to the private sector, and provide financial data that enable us and government entities to compare, follow up and improve financial planning.”

The deputy minister recounted that previously payment order cycle duration used to exceed 100 days, while the ministry handled 2,000 to 3,000 payment orders per day. Thanks to Etimad platform, he said, the payment order cycle duration has decreased to only 14 days, and the ministry now handles 6000-7000 payment orders daily and commits to paying within 45 days of receiving the payment order, which contributed to improving the efficiency of the private sector and sustaining its growth. “Likewise, depositing in the accounts of beneficiaries after implementation took three business days; yet after launching the TRAX payment system and applying the electronic signature, deposits take place on the same day the transfers are implemented.”

Finally, Alkhalaf addressed the challenges facing the institutions in general and financial organizations in particular, namely the global competition to attract technical expertise and talent; issues related to the enablers such as infrastructure and legislations; cybersecurity challenges; and resistance to change. He pointed out that emerging technologies can have a positive social and economic impact in different ways. “They can improve financial inclusion for society members, and increase the level of transparency at governments, which would upgrade financial data and planning, support Anti-Money Laundering (AML) activities, and control the financing of illegal activities.”

He concluded that increasing the accuracy of estimating and measuring the impact of public policies is a key concern for decision makers, so emerging technologies can be used to simulate the expected results of policies by collecting, processing and analyzing big data, which would provide insightful feedback and recommendations to help take balanced economic decisions.