Riyadh - Sharikat Mubasher: The fintech industry in Saudi Arabia witnessed fast-paced growth with innovative business models that led to the development of new products and services.
A recent report released by Fintech Saudi stated that this ongoing growth was backed by sandboxes that emerged to help test, validate, and prepare for innovation in a structured and controlled environment.
The sandbox ecosystem creates a supporting environment for fintech activity as it makes it easier to start a fintech company. It allows fintech companies to test and validate various parts of their business quickly and at a low cost, enabling entrepreneurs to start a fintech company easily.
Sandboxes also provide a space for entrepreneurs to test emerging technology and business models which accordingly lead to developing more innovative solutions.
By using sandboxes, fintech entrepreneurs no longer need to invest in developing a final solution that they then test to ensure it meets all standards and requirements. This supports an iterative build process which leads to the development of more robust fintech solutions.
Furthermore, sandbox environments help regulators, government organizations, and incumbents to evaluate new innovations and business models, ultimately developing better regulations, standards, and processes that benefit the ecosystem.
The sandboxes further foster greater engagement and collaboration between fintech companies and key stakeholders.
In January 2024, 41 fintech companies obtained licenses from the Capital Market Authority (CMA) to operate under the Fintech Lab, while 17 fintech companies received their Regulatory Sandbox testing licenses from the Saudi Central Bank (SAMA).
Saudi regulators, government entities, and academic institutions such as SAMA, the Saudi Authority for Data and Artificial Intelligence (SDAIA), the Communications, Space, and Technology Commission (CST), and King Abdullah University for Science and Technology (KAUST) played a pivotal role in developing successful regulatory sandbox models that help startups test and validate different aspects of their business.
Moreover, private sector entities such as banks have been developing their own sandboxes and testing environments to engage with fintech companies and enable larger organizations to keep themselves informed and connected with the ecosystem.
