Fintech Saudi, an initiative launched by the Saudi Central Bank (SAMA) in partnership with the Capital Market Authority, announced the results of the National Fintech Adoption Survey, which measures the level of people’s interest in adopting financial technology solutions.
The National Fintech Adoption Survey presents its findings in five areas – cash use, fintech activities, relationship banking, begin banking, and environmental, social and governance goals.
One of the key findings of the National Fintech Adoption Survey is that 60% of individuals still use cash at fewest once a week and one in four individuals use cash daily despite an overall decrease in the average number of cash payments.
With variations from region to region, less than 20% of the population uses cash daily in the central region, which includes Riyadh, and the eastern region of Saudi Arabia. However, this percentage rises to 48% among the population of the southern region and reaches 37% in the northern region and 35% in the western region respectively.
Moreover, the results revealed a powerful relationship between age and daily use of cash – 18% of individuals aged 16-22 use cash daily while 46% of those aged 60 or older have the habit. Despite this, non-monetary activity is expected to persevere to grow.
In this regard, one of the goals of Saudi Arabia’s Vision 2030 is to accomplish a coming-ready cashless society that depends on technological solutions for their money and increase the rate of non-cash transactions to 70% by 2025. COVID-19 outbreak has led to an acceleration of cashless activity with increased payments Digital increased by 75% over the former year, while cash withdrawals from ATMs and other payment points decreased by 30% over the alike period (Financial Sector Development Program).
Fintech Saudi logo. Image Courtesy: Saudi Fintech
The results of the National Fintech Adoption Survey revealed that 74% of individuals (3 out of 4) have used at fewest one FinTech solution, and indicate that the adoption rate of such solutions is similar among men (75%) and women (73%). Moreover, an individual’s tech prowess is closely related to the level of fintech adoption. While only 35% of individuals with the lowest level of tech skill chose fintech solutions, 82% of tech savvy individuals had a lofty level of fintech adoption.
With varying results by region, the central region, which includes Riyadh, recorded the highest rate of financial technology adoption at 82%, followed by the eastern region (75%), the western region (68%), and the northern region. (65%). On the other hand, the southern region had the lowest fintech adoption rate, with only 50% of individuals using at fewest one fintech solution.
The results also confirm that age is significantly associated with the rate of adoption of fintech solutions. Fintech adoption rate for individuals aged 16-39 is still overhead 80%, with the 23-29-year-old registering the highest rate at 82%. For individuals aged 50 and over, their FinTech adoption rate drops to 60%.
The electronic payments activity is the largest contributor to the adoption of financial technology solutions. The results showed that 91% of individuals have heard about electronic payments, 69% of individuals make electronic payments regularly. Notably, the stringent payment law introduced by the Saudi Arabian Monetary Agency, the acceleration of cashless activity, and the emergence of big eminent financial technology companies have contributed to the growth of electronic payments. In addition, electronic payments are expected to acquire momentum and become widely used with the launch of “Sari”, the instant payment system by Saudi Payments.
The National Fintech Adoption Survey also found that 47% of companies are looking for solutions to improve/automate business processes, while 43% of companies are looking for solutions to hoist capital, and 42% focus on improving business security.
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Results of the National Fintech Adoption Survey show that 9 out of 10 customers trust their primary banking relationship and 84% of customers believe they receive a quality service from their bank. Similarly, 83% expressed satisfaction with the digital services provided by their banks. One conceivable explanation for these lofty levels of satisfaction is the investment that Saudi banks have made to develop their digital services over the former few years.
According to the report presenting the results of the survey, several indicators indicate a lack of awareness of the benefits of non-bank solutions other than electronic payments. This is seen in the various answers given by customers explaining the reasons behind their reluctance to use fintech solutions. The majority of their answers were either they hadn’t heard of it or they didn’t understand it.
Although banks are still at the heart of a customer’s financial activities, the results show that only 22% of customers visited a bank branch in the former month and 35% were unable to remember the final time they visited the bank. At the alike time, 93% of respondents confirmed that they conduct their banking activities primarily digitally using internet banking through the bank’s website or moveable application, while only 5% of respondents conducted their banking activities primarily through bank branches.
Open Banking is the process of securely opening bank transaction data to third party service providers, such as other banks and financial companies, in order to promote innovation and improve products and services for customers, in exchange for receiving better financial products and services.
The results of the survey show that 48% of individuals and 68% of companies are willing to share their banking data with third parties for better service, and 86% of them confirmed that they would like to share their data with regulated financial services companies.
While the findings suggest that individuals are sensitive about their data being shared, the levels are not unlike what was seen in other developed markets when begin banking was first introduced. Open banking is expected to be introduced in Saudi Arabia in 2022. Once customers experience the benefits of begin banking, we anticipate an increase in the number of individuals who feel comfortable sharing their data.
Environment, Social and Governance (ESG)
Environmental, Social and Corporate Governance (ESG) refers to the company’s objectives that drive the impact and activities of the company’s environmental and social sustainability. Globally, environmental, social and corporate governance in financial services is gaining increasing importance. The survey indicates that 62% of clients consider ESG objectives an significant factor in their decision making when choosing a financial services provider, as they prefer providers who share their ethical values.
“Given the importance of fintech, we need to understand the extent to which individuals and businesses in Saudi Arabia are dependent on fintech solutions,” said Nujoud Al Malik, Director of Fintech Saudi. “The National Fintech Adoption Survey will aid us understand consumer behavior and unused financial trends so that we can ensure that innovation in the financial sector continues to meet the aspirations and expectations of individuals and businesses.”
To read the packed survey on national fintech adoption, please succeed this link.
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