Banque Saudi Fransi plans to set up a venture capital fund to invest in financial technology (fintech) startups, said Grant Niven, head of the bank’s digital group.
Highlighting the growth of the fintech sector in Saudi Arabia, where more than SAR 1 billion ($266 million) has been invested in fintech startups so far this year, Niven said most banks of the country had now changed their approach to startups.
An additional SAR 2.5 billion is expected to be invested in Saudi fintech startups, which traditional banks see as an opportunity, he said during a panel discussion at Fintech Surge, part of GITEX Global. 2022 in Dubai.
“What I’ve seen in Saudi Arabia is a massive increase in terms of [the] innovation program, we have 80 active fintechs in the sandbox with aspirations to reach 250 by 2025,” he explained.
“The workforce associated with that is 6,000 people working in that community. As a bank, do you see this as competition or an opportunity to co-create? We had to change the way we think about partnerships.
The Central Bank of Saudi Arabia announced plans to launch an open banking regulatory framework in the kingdom last year. The regulations, which allow banks and other financial institutions to collaborate with fintech startups through open application programming interfaces (APIs), are expected to come into force this year.
“Open banking allows us, in a controlled way, to open up our data, which banks don’t traditionally do,” said Niven, who added that banks are now looking at open banking as a way “to going beyond compliance to deliver great products to customers”.
He added: “One of the initiatives we are working on is how we can collaborate. We need to be API ready to interact with third parties. One of our major initiatives is to launch banking as a service, which is no small feat. We enable many of our services to offer our API to fintechs.
“Our strategy, rather than competing, is to partner up and other banks will do the same.”
(Edited by Seban Scaria [email protected])