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Fintech Market Overview

This article does not constitute legal advice.

Banking in Saudi Arabia

Fintech Software

In addition to granting temporary licences to practice fintech activities and the licences aforementioned for PSP, finance support and debt-based crowdfunding activities, an Open Banking Policy was introduced by SAMA for the purpose of developing financial solutions for the benefit of financial institutions and end customers. The open banking policy is an innovation that enables customers to securely share their data with third parties so fintech companies can benefit from access to customers' data allowing new financial services to be offered.1

Payment services in Saudi Arabia will trigger the application of the Banking Control Law, which applies to banks generally. Thus, any payment services activities will require licensing by SAMA (i.e., PayPal, HyperPay and PayTab). Accordingly, where an entity desires to carry out payment services, it must obtain the necessary licences from SAMA, partner with an entity licensed by SAMA, or appoint a local agent licensed by SAMA and licence the local agent to carry out the payment services activities.1

With regard to making client data accessible to third parties, the introduction of the Open Banking Policy should enable customers to securely share their data with third parties so fintech companies can benefit from access to customers' data allowing new financial services to be offered. As mentioned above, this policy is still undergoing different phases until its full implementation by 2022. As such, we should expect developments in this sector by 2022.1

Other than the open banking policy, there are no laws regulating the protection of client's information. However, it is common practice to keep such information confidential, especially with the introduction of the E-Commerce Law in July 2019 and its implementing regulations earlier in 2021. The E-Commerce Law is the first law to put an obligation on entities to keep its clients' and users' information confidential when transacting electronically. Based on this provision, we believe Saudi Arabia is moving towards imposing a legal duty on entities to keep clients' information confidential and making this a legal obligation subject to sanctions in case of violation.1

Payment services in Saudi Arabia

Fintech in Saudi Arabia

Fintech in other countries

Notes
  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/saudi-arabia
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