Setting a precedent in the Kingdom and the region in its new report, Fintech Saudi has announced the results of the National Fintech Adoption Survey which is aimed to measure the level of the people’s interest in adopting fintech solutions and to develop a clear understanding of how the fintech industry supports individuals and companies and streamlines their daily financial operations and activities.
The National Fintech Adoption Survey, supported by Saudi Central Bank (SAMA) and the Capital Market Authority (CMA), presents its results in five areas: cash usage, fintech activities, banking relationship, open banking, environmental, social and governance goals.
“Given the importance of financial technology, we need to understand the extent to which individuals and companies in Saudi Arabia rely on fintech solutions. The National Fintech Adoption Survey will help us understand the consumer’s behavior and new financial trends so we can ensure that innovation in the financial sector continues to live up to the aspirations and expectations of individuals and companies,” said Nejoud Almulaik, Director of Fintech Saudi.
One of the key findings of the National Fintech Adoption Survey is that the majority of the population use cash once a week. However, overall cash usage is steadily declining. In this regard, one of the goals of Saudi Vision 2030 is to achieve a future-ready cashless society that relies on technological solutions for their finances and to increase the rate of non-cash transactions to 70% by the year 2025. The COVID-19 outbreak has led to an acceleration in cashless activity with digital payments increasing by 75% over the last year, whilst cash withdrawals from ATMs and other payment points have declined by 30% over the same period.
The survey results illustrate that 60% of individuals still use cash at least once a week and that one out of four individuals use cash daily despite the overall decline in the average number of cash payments. With variations from one region to the other, just under 20% of the population use cash every day in the Central Region (which includes Riyadh) and the Eastern Region. That said, this percentage rises to 48% among the residents of the Southern Region and reaches 37% and 35% in the Northern Region and the Western Region respectively.
Furthermore, the results reveal a strong correlation between age and the daily use of cash: 18% of individuals between ages 16 and 22 use cash every day while 46% of those aged 60 and above have this habit. In spite of that, cashless activity is expected to continue to grow.
Revealing that 74% of individuals (3 out of 4) have used at least one fintech solution, the results indicate that the adoption rate of such solutions is similar among both men (75%) and women (73%). Moreover, the individual’s tech-savviness is strongly associated with their level of fintech adoption. While only 35% of individuals with the lowest level of tech-savviness opted for fintech solutions, 82% of tech-savvy individuals had a high level of fintech adoption.
With results varying according to each region, the Central Region (which includes Riyadh) scored the highest rate of fintech adoption with 82%, followed by the Eastern Region (75%), the Western Region (68%), and the Northern Region (65%). On the other hand, the Southern Region recorded the lowest fintech adoption rate, with only 50% of individuals having used at least one fintech solution.
The results also underscore that age is significantly associated with the rate of adopting fintech solutions. The fintech adoption rate of individuals between ages 16 and 39 remains above 80%, with the age group between 23 and 29 among them having the highest adoption rate at 82%. As for individuals aged 50 and above, their fintech adoption percentage drops to 60%.
The activity of e-payments is considered the greatest contributor to adopting fintech solutions. With results showing that 91% of individuals have heard of e-payments, 69% of individuals regularly make e-payments. Notably, a robust payment law introduced by SAMA, acceleration in cashless activity, and the rise of large prominent fintechs have contributed to the growth of e-payments. Additionally, e-payments are predicted to gain traction and become more widely used with the launch of “SARIE”, the Instant Payment System by Saudi Payments.
The National Fintech Adoption Survey has also found that 47% of companies search for solutions to improve/automate business operations, whereas 43% of companies search for solutions to raise capital, and 42% of them focus on improving business security.
The results of the National Fintech Adoption Survey shows that 9 out of 10 customers trust their primary bank relationship and that 84% of customers believe that they receive high-quality service from their bank. Similarly, 83% express their satisfaction with the digital services that their banks offer. One possible explanation of such high satisfaction levels is the investment made by Saudi banks to advance its digital services over the past few years.
According to the report displaying the results of the survey, several indicators hint at a lack of awareness regarding the benefits of non-banking solutions other than e-payments. This is shown in the various answers provided by customers explaining the reasons behind their reluctance to use fintech solutions. The majority of their answers were either that they had not heard about them or that they did not understand them.
Although banks remain at the center of the customer’s financial activities, results indicate that only 22% of customers had visited their bank’s branch in the last month and 35% were not able to recall the last time they had visited the bank. At the same time, 93% of respondents confirmed that they primarily conduct their banking activities digitally using online banking via the bank’s website or mobile app, while only 5% of respondents primarily conducted their banking activities through bank branches.
Open Banking Services
Open Banking is the process of securely opening up bank’s transaction data to third parties from service providers, such as other banks and fintechs, in order to boost innovation and improve products and services for customers, in return for receiving better financial products and services.
The survey results show that 48% of individuals and 68% of companies are willing to share their bank data with external parties for a better service, 86% out of them confirmed that they would want to share their data with regulated financial services companies.
Whilst the results suggest that individuals are sensitive about sharing their data, the levels are not dissimilar to what has been witnessed in other developed markets when Open Banking was first introduced. Open Banking is expected to be introduced in Saudi Arabia in 2022. Once customers experience the benefits of Open Banking, we expect an increase in the number of individuals that are comfortable with sharing their data.
Environmental, Social and Governance (ESG)
Environmental, Social and Corporate Governance (ESG) refers to the goals of a company that drive the company’s environmental and social sustainability impact and activities. Globally, ESG in financial services is gaining increasing importance. The survey reports that 62% of customers consider ESG goals to be an important factor in their decision making when choosing a financial services provider, as they favor providers that share their ethical values.
Fintech Saudi is an initiative that was launched by the Saudi Central Bank (SAMA) in partnership with the Capital Market Authority in April 2018 to transform Saudi Arabia into an innovative fintech hub and to create a thriving and responsible ecosystem by supporting the development of the infrastructure necessary for the growth of the fintech industry, building capabilities and talent required by fintechs and supporting fintech entrepreneurs at every stage of their development.