Keeping up with aspirations for developing the Saudi finance sector, the Saudi Cabinet gave the Kingdom's finance minister the green light to issue licenses for the country's first digital banks.
On Tuesday, in a virtual meeting chaired by King Salman, the Cabinet approved the finance minister issuing the necessary licenses for STC Bank and Saudi Digital Bank, both under establishment.
First, STC Pay will be converted into a local digital bank, STC Bank, with a capital of SAR2.5 billion ($666 million). Second, several companies and investors will establish a local digital bank, Saudi Digital Bank, to conduct banking business in the Kingdom, with a capital of SAR1.5 billion ($400 million).
The state economy and the public and private sectors benefit from digital banks' presence, specialists confirmed to Asharq Al-Awsat.
Today, Saudi Arabia is preparing for the future by evolving its financial sector through supporting drafting and passing required legislation and developing the desired digital and technical infrastructure.
Finance Minister Mohammed Al-Jadaan said that the Cabinet's approval is in line with the Saudi Financial Development Program (SFDP), which is part of the Kingdom's massive economic reform plan known as Saudi Vision 2030.
These objectives seek to develop a more efficient digital infrastructure while encouraging entrepreneurship and creating job opportunities in the financial sector, he said.
Moreover, the finance minister pointed out that the SFDP has worked on mapping a strategy for the whole financial sector from 2021 to 2025.
This strategy includes many initiatives related to financial technology that grow the national economy and diversify sources of income.
Saudi Arabia's Vision 2030 goals include developing the digital economy and enabling financial companies to support the growth of the private sector.
Last year, the Saudi Central Bank (SAMA) licensed 16 financial technology companies to provide payment services, consumer microfinance, and electronic insurance brokerage.
For his part, SAMA Governor Fahad bin Abdullah Al-Mubarak clarified that with the Cabinet's approval, SAMA would recommence its work to finalize technical and operational requirements for both STC Bank and the Saudi Digital Bank.
This will allow both establishments to kickstart their banking activities in the Kingdom.
The governor also drew attention to the fact that digital banks are subject to supervision and controls applied currently to commercial banks operating in the Kingdom, but with an increased focus on technology, cybersecurity, anti-money laundering measures, and tracking terrorist financing as operational risks.
Al-Mubarak pointed out that digital banks provide services and products exclusively through e-channels and adopt an innovative and sustainable banking business model that enhances financial inclusion and keeps pace with cutting-edge tech developments in the financial sector.
