Scaling Financial Innovation: Saudi Market Entry Handbook for Global Fintechs
Saudi Arabia has increasingly been viewed as a go-to market for international fintech companies.
Fintech is a key driver of growth in Saudi Arabia's vision for financial integration and economic development, making substantial contributions to economic output. By 2029, the sector is projected to expand to $87 billion from $64 billion in 2024.
The sustained growth of fintech has drawn global companies to nest themselves in one of the world’s rapidly growing fintech centers. As a result, the number of fintech companies has grown from 89 in 2022 to 200 in 2023, with fintechs in Saudi generating over SR3.75 billion ($1 billion) in revenues and reaching millions of customers daily.
As a result, there’s a noticeable rise in global fintech activity witnessed by AstroLabs, the Gulf’s leading business expansion platform, with the company playing a pivotal role in accelerating the expansion of more fintech to the Kingdom and shaping the future of the financial services sector.
Fintech companies constitute a substantial share of AstroLab’s expansion network. Among these is Zenda, the UK-based company that specializes in creating cashless education systems.
This article serves as a playbook for global companies looking to establish a footprint in the Saudi fintech sector and captures opportunities spurred by a conducive business environment and permissive regulatory framework.
Navigating the Saudi Market Entry Process: A Guide for Global Companies
The Kingdom has long viewed fintech as a key factor in its pivot towards a knowledge-based, diverse economy and position as a hub for 525 fintech companies by 2030 to create 18,000 job opportunities.
For international fintech companies, navigating the regulatory landscape is crucial to ensuring a smooth company setup process and full compliance with local frameworks.
AstroLabs' on-ground operations team in Riyadh handles the entire 20-step business setup roadmap on behalf of its clients to make the soft landing process in Saudi Arabia more streamlined according to Mistry of Investment (MISA) regulations.
To successfully expand into Saudi Arabia, fintech companies need to ensure they meet the following requirements:
Document Checklist for a Startup
- Commercial Registration/Certificate of Incorporation, attested by MOFA and the Saudi Embassy
- Memorandum of Association (MoA) and Articles of Association, attested by MOFA and Saudi Embassy
- A letter of intent, a startup brief, and a pitch deck
- A support letter from a VC company and a licensed incubator
Documents Checklist or Established Business
- Commercial Registration/Certificate of Incorporation, attested by MOFA and Saudi Embassy
- Memorandum of Association (MoA) and Articles of Association, attested by MOFA and Saudi Embassy
- An Audited Financial Statement, attested by MOFA and the Saudi Embassy
Understanding the Market Entry Process
The company setup process is divided into three stages.
Phase One includes acquiring a MISA license, reserving a company name, drafting and attesting the local Articles of Association (AoA), and issuing the Commercial Registration (CR). Additionally, registration with the Chamber of Commerce (CoC) is required at this stage.
Phase Two includes acquiring a company seal, registering with the Ministry of Labor, and enrolling with the General Organization for Social Insurance (GOSI). Adding to this, companies must file for a national address, issue a General Manager (GM) visa, and complete registration with the General Authority of Zakat and Tax (ZATCA), along with VAT registration.
Phase Three includes activating the CoC account, obtaining health insurance, and completing a medical checkup. The GM's Iqama must be issued, followed by registrations with government portals, including Muqeem, Absher, Qiwa, and Mudad. For companies, having a bank account is mandatory to ensure all financial operations are set up effectively.
Understanding the Post-Setup of the Market Entry for Fintechs
The post-setup process entails that companies must go through the regulatory sandbox with the Saudi Central Bank (SAMA) or the Capital Market Authority (CMA), both of which are the only two governing bodies responsible for regulating fintech activities.
This step is crucial to acquiring third-party approval from either SAMA or CMA or both to be able to carry out regulated activities, depending on the business type and activity.
If the service falls under banking, payments, or finance, a license from SAMA is required. In case a fintech engages with securities or investments, CMA’s approval will be required.
To facilitate the development of a robust fintech sector in Saudi Arabia, AstroLabs, the Gulf’s leading expansion platform, has been laying a huge focus on sector-building initiatives. This has paved the way for numerous collaborations between the business setup company and its partners in Saudi Arabia. Initiatives like the Fintech Bootcamp offer a powerful example of the importance of these collaborative alliances.
