FinTech Invades Phones ... from Quick Payment to Investing Money

It’s hard to find a device owned by someone from Generation Z that doesn’t feature financial technology (FinTech) applications. These apps aim to speed up various transactions, such as buying products via “Buy Now, Pay Later” (BNPL) services, borrowing money, investing, transferring funds, paying bills, and even sending gifts or requesting money from friends. Over time, these apps have become an integral part of their daily lives.

Gen Z typically refers to individuals born between the mid-1990s and the early 2010s. As a generation that has grown up in the digital age, they have never known a world without the internet and modern technology. This makes them the most engaged demographic when it comes to using FinTech services, a sector that has seen rapid growth and innovation in recent years.

Trends in FinTech

An initiative launched by the Saudi Central Bank, in collaboration with the Capital Market Authority, aims to advance the FinTech sector. Known as “FinTech Saudi,” the initiative has identified nine key areas of focus for FinTech companies. These include banking infrastructure, fundraising, payments and currency exchange, business solutions and information services, insurance, personal finance and treasury management, capital market services, regulation, and risk management.

Digital loans

Borrowing is no longer limited to major purchases like homes or cars. FinTech companies now offer fast, simplified financing solutions. The younger generation can quickly access loans for a range of purchases, including luxury dinners, clothes, airline tickets, and consumer goods.

In 2023, the global peer-to-peer lending market was valued at $5.94 billion and is expected to grow to $30.54 billion by 2032, according to SNS Insider. However, while traditional banks’ interest rates are regulated by central policies, FinTech companies often charge much higher rates - up to 38% - as observed by Asharq Al-Awsat, in a review of several fast-financing companies.

Buy Now, Pay Later

One of the fastest-growing trends in FinTech is BNPL services, especially in the e-commerce sector. These services allow consumers to make immediate purchases and pay in installments, often without interest or with minimal interest, enhancing their shopping experience and increasing purchasing power.

Data from Fortune Business Insights indicates that the global BNPL market was valued at $30.38 billion in 2023 and is expected to reach $167.58 billion by 2032, with an impressive compound annual growth rate (CAGR) of 20.7%.

Digital banks

FinTech companies specializing in digital banking offer all traditional banking services but without physical branches, allowing for faster and more cost-effective services for customers, as noted in the Financial Technology Report by FinTech Saudi.

Fundraising

FinTech platforms provide opportunities for investors to invest smaller amounts in private companies in exchange for equity. These platforms also enable private companies to raise funds from a wide range of investors.

Insurance

FinTech companies are competing with the insurance industry by offering digital solutions that often come at lower costs compared to traditional providers. According to FinTech Saudi, these companies can improve service efficiency by automating payment processes and consolidating information from various insurance providers into one platform, enabling consumers to choose the best offers.

Easier investment

FinTech innovations in financial markets improve efficiency by enabling faster trade executions and streamlining listing processes. Additionally, FinTech solutions make it easier for individuals to purchase securities. For example, mobile apps now allow users to buy stocks, and virtual trading platforms simulate the stock market for beginners.

Risk management

FinTech companies help financial institutions manage various risks, such as fraud detection and credit risk management. By leveraging machine learning, they can identify potential fraud. Additionally, FinTech tools enhance regulatory oversight, allowing regulators to better monitor the companies they supervise.

Business solutions

FinTech companies also provide business solutions by optimizing operational processes, reducing costs, enhancing cyber-security, and improving data management. This makes it easier for businesses to operate more efficiently.

Payments

FinTech apps enable users to store their money in digital wallets on their mobile devices. These wallets can be used to save, manage expenses, pay bills, and exchange currencies without needing to visit a bank.

FinTech conference

The first edition of the 24 FinTech international conference, focusing on the FinTech sector, will take place in Riyadh on Sept. 3-5.

The event will feature participation from the Financial Sector Development Program as part of Saudi Vision 2030, the Saudi Central Bank (SAMA), the Capital Market Authority, and the Insurance Authority. It is co-organized by FinTech Saudi and Tahaluf.

Oil prices drifted lower on Thursday after a surprise jump in US gasoline inventories, with investors focusing on the OPEC+ meeting this weekend to discuss oil output policy.
Brent crude futures fell by 14 cents, or 0.2%, to $72.69 per barrel by 0401 GMT, while US West Texas Intermediate crude futures were also down 14 cents, or 0.2%, at $68.58 a barrel.
Trading is expected to be light due to US Thanksgiving holiday kicking off from Thursday.
Oil is likely to hold to its near-term bearish momentum as the risks of supply disruption fade in the Middle East and stemming from the higher-than-expected US gasoline inventories, said Yeap Jun Rong, a market strategist at IG.
US gasoline stocks rose 3.3 million barrels in the week ended on Nov. 22, the US Energy Information Administration (EIA) said on Wednesday, countering expectations for a small draw in fuel stocks ahead of record holiday travel.
Slowing fuel demand growth in top consumers the United States and China has weighed heavily on oil prices this year, although supply curtailments from OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, have limited the losses.
OPEC+ will meet on Sunday. Two sources from the producer group told Reuters on Tuesday that members have been discussing a further delay to a planned oil output hike that was due to start in January.
A further deferment, as expected by many in the market, has mostly been factored into oil prices already, said Suvro Sarkar, energy sector team lead at DBS Bank.
"The only question is whether it's a one-month pushback, or three-month, or even longer. That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don’t come," he said.
The group, which pumps about half the world's oil, had previously said it would gradually roll back oil production cuts with small increases over many months in 2024 and 2025.
Brent and WTI have lost more than 3% each so far this week, under pressure from Israel's agreement to a ceasefire deal with Lebanon's Hezbollah group. The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the top producing Middle East region.
Market participants are uncertain how long the break in the fighting will hold, with the broader geopolitical backdrop for oil remaining murky, analysts at ANZ Bank said.
Oil prices are undervalued due to a market deficit, heads of commodities research at Goldman Sachs and Morgan Stanley warned in recent days, also pointing to a potential risk to Iranian supply from sanctions that might be implemented under US President-elect Donald Trump.

FinTech Invades Phones ... from Quick Payment to Investing Money