Fintech: A Structural Transformation in the Financial Services Industry (Riyadh Valley Company)

Summary

• Global investment activity in venture capital and M&A reached $105.3 billion across 2,861 deals in 2020, down from $168.0 billion across 2,986 deals in 2019.p.3
• The expected value of fintech transactions in Saudi Arabia is projected to reach $33 billion in 2023, up from $20 billion in 2019.p.5
• In Saudi Arabia, non-cash transactions reached 36.2% in 2019, exceeding the 2020 target of 28%.p.5
• Digital payments surged by 75% in 2020 compared to 2019, while smartphone transaction volume grew 352% in April 2020 versus April 2019.p.5
• Western Union acquired a 15% stake in STC Pay for $200 million, valuing the company at $1.33 billion.p.7
• Saudi startups in the fintech sector raised $23 million over a 5-year period up to July 2020.p.9

Key insights

1. Global venture capital and M&A investment in fintech experienced a slowdown in transaction value during 2020 to $105.3 billion from $168.0 billion in 2019.p.3
2. Deposits, loans, and payments represent the largest historic drivers of investment funding across global fintech sub-sectors between 2010 and 2020.p.3
3. Key performance indicators across global fintechs showed high positive impacts during the pandemic, including a 29% increase in existing customer retention.p.4
4. Fintech deal activity in Saudi Arabia accounted for 30% of the total 88 venture capital deals in 2020 shared alongside e-commerce.p.5
5. Saudi Arabian fintech startups actively operating grew significantly between 2018 and 2020, reaching a CAGR of 147%.p.7
6. Idea-stage and testing-stage startups constitute 36% and 20% respectively of the breakdown of fintech startups in Saudi Arabia.p.7
7. Payments and currency startups dominate the Saudi fintech scene, representing 18% of the total startups by sector.p.8
8. Saudi Arabia represents the second-largest remittance market in the world, generating a SR 30 billion cross-border transfer market opportunity.p.9