THE USE OF FINTECH AND ITS IMPACT ON FINANCIAL INTERMEDIATION – A COMPARISON OF SAUDI ARABIA WITH OTHER GCC ECONOMIES

Abstract

This study analyses the use of Fintech/digital finance in Saudi Arabia, comparing
the use of various digital finance tools across other Gulf Cooperation Countries (GCC). The study
uses the Global Financial Development Indicators Data from 2011, 2014, and 2018 published by
the World bank. Graphical trend analysis, covariance, and correlation analysis are used to examine
the role of digital payments, the use of the credit card, and use of the debit card to find out their
impact on Fintech and the distribution of credit to the private sector. The results suggest that the use
of financial technology is increasing in the GCC region, and the use of digital payments, debit cards,
and credit cards have a linear dependence on each other and positively contribute to the distribution
of credit to the private sector – hence, to financial intermediation in certain aspects. The results also
show that Saudi Arabia is ranked four among six regional economies in terms of the use of digital
finance. It is also observed that the country has potential for Fintech growth both in terms of supply
and demand. To tap into this potential, regulators have introduced a regulatory sandbox to facilitate
Fintech startups. Based on the evaluation, cooperation among traditional financial institutions, Fintech startups, technology companies, regulators, and academia could reduce the potential challenges
and enhance Fintech in Saudi Arabia.