Saudi banks should embrace fintech strategies and collaborate

23 March 2020 6 min. read

The number of fintechs emerging in Saudi Arabia’s financial services landscape is changing the face of the banking industry. According to Rajesh Prasad, a partner at KPMG, banks now need to respond to the threat while at the same leverage the power of fintechs to turn the situation into an opportunity.

The financial services industry is undergoing a paradigm shift. Emerging technologies are providing new ways to enhance the customer experience, responding to regulatory change, underpinning new payments or digital delivery models, making service delivery faster and more cost effective, or improving the efficiency of back-office functions. A myriad of fintech solutions available, or in development, are helping to rapidly reinvent the entire value chain of financial services.

The evolving ecosystem

The swift evolution of fintech has forced traditional banks to face a new reality wherein products, services and business models that have worked in the past are no longer relevant or considered as a viable option in the digital world. Legacy IT infrastructure has to be replaced or augmented by newer, more efficient technologies. To survive and thrive in today’s digital generation, banks need to recognise the need to reinvent the way they manage their business.

Top three greatest sources of disruption

Their competitors are evolving too, and it is not just fintechs knocking on the customers’ door through various channels, but technology companies, telecoms, postal services, retailers, global and niche companies which are all looking for ways to provide what customers are demanding from their financial services providers which may no longer be a bank.

Remaining competitive in this constantly changing environment is an enormous ask for banks. This is driving banks to undertake major transformation journeys to transition from complex legacy technology environments to more agile operations and creating more efficient compliance processes that fully satisfy evolving global and local regulations, while ensuring a seamless customer centric client engagement. Financial institutions see fintech as a major part of the digital future.

Fintech – friends or foes?

While financial institutions recognise fintech is a substantial disruptor, banks are orienting themselves to define how they should approach and adopt fintechs in their businesses. Leading financial institutions globally are pursuing many ways of either partnering with fintechs to resolve specific issues or acquiring them with a view to prudent investment for the future. However, closer to home in Saudi Arabia, many banks are in the early to middle stages of evaluating how fintechs can help them with their issues related to front-end omnichannel-based customer servicing for increasing process efficiencies and regulatory compliance.

Where are financial institutions when it comes to having a fintech strategy?

One thing clearly emerging is that local Saudi banks are now open to the idea of evaluating how fintech solutions can help them rather than seeing them as a threat and investing in-house technologies as in the past. Banks are now rapidly looking at embedding the adoption of fintechs in their overall business and digital strategies.

SAMA launched ‘Fintech Saudi’ with the objective to make the Kingdom a pioneer in the fintech sector, in line with Vision 2030. Key regulations on digital signatures and customer versification will further facilitate in the buildup of the digital banking ecosystem.

There is no shortage of opportunities, but selecting the most appropriate one is imperative to success in implementing these new technologies for banks.

To be able to succeed in today’s fast evolving digital world, banks need to define a clear fintech strategy that aligns to organisational objectives, considers current assets and capabilities, and includes an execution plan for addressing gaps and managing a transformation that may never have a defined end point as fintech will continue to evolve. There is not one clear-cut strategy or roadmap which can be deployed off the shelf when it comes to defining the individual fintech plans for banks.

Ranking of fintech strategy objectives - by industry

Banks would need to ensure that fintech opportunities are well defined and fully aligned to their overarching business strategy. Leading banks have established specific fintech strategies that consider their business objectives, customer expectations, market position, organisational structure and culture, the geographies in which they operate, and the fintech opportunities and solutions available to them, together with buy in and support from the executive leadership.


For banks struggling to decide which solution is best suited to help them solve their business issues, help is close at hand with KPMG’s Matchi platform, a leading global fintech innovation and matchmaking platform that connects financial institutions with leading-edge financial services technology solutions and companies worldwide. Matchi’s database includes over 3,500 fintech solutions.

Using the Matchi platform, financial institutions are able to search for a specific company or solution, or they can use the platform’s proprietary ‘Innovation Challenge’ capability to present specific problem statements to the global fintech market and receive recommendations on solutions from fintech innovators.

Emerging fintech technologies of most interest, next 3 years

It is clear that banks can no longer be engulfed in their own silos, oblivious to the rapid changing developments happening around them in the fintech world. Banks would need to adopt and adapt fintech strategies developed specifically for them to enhance their overall customer experience, increase process efficiencies and comply with ever-changing regulations.

 Banks would be better off exploring ways and means to collaborate with fintechs rather than seeing them as a threat and trying to fight them off. The sooner the banks can see fintechs as their ally rather than competition, the sooner they will be able to confidently embark on the banking of the future journey together.

Rajesh Prasad is a partner in KPMG’s Financial Services Advisory practice. He is based in KPMG’s Riyadh office and is the lead for financial services advisory engagements in the Kingdom. This article was previously posted in KPMG’s ‘Kingdom of Saudi Arabia Banking Perspectives 2020’.