KSA Financial Services Market Outlook to 2030

KSA Financial Services Market Overview

• The KSA Financial Services Market has experienced notable growth, this is reflected by the Global Financial Services market reaching a valuation of USD 30.98 trillion in 2023. This growth is driven by factors such as increasing digital banking adoption, insurance reforms, and the rise in financial technology innovations
• Dominant institutions such as Al Rajhi Bank, Saudi National Bank (SNB), Riyad Bank, Samba Financial Group, and SABB lead the market. These institutions maintain their dominance through extensive branch networks, strong digital platforms, and comprehensive service offerings.
• In 2023, the Saudi Central Bank granted licenses to three digital-only banks, marking a significant development in the financial services sector. These banks are expected to leverage advanced technologies to provide innovative and accessible financial products, attracting a growing number of digitally savvy consumers.

KSA Financial Services Market Analysis

• The rapid development of digital financial services is a major growth driver for the KSA financial services market. In 2024, the digital banking sector saw a significant rise in users, with over 12 million people utilizing online banking services.
• The financial services market is significantly impacting Saudi Arabia's economy by providing necessary capital for businesses, creating jobs, and supporting the overall economic diversification strategy. The growth in this sector is also enhancing financial inclusion, particularly among the younger population.
• Riyadh, the capital city, is the dominant region in the KSA financial services market. With its status as the economic and financial hub of the country, Riyadh houses the headquarters of major banks and financial institutions. The city’s advanced infrastructure, coupled with a favourable business environment, makes it a central point for financial activities in the Kingdom.

KSA Financial Services Market Segmentation

By Bank Services:  In 2023, the KSA Financial Services market is segmented by bank services into retail, corporate and SME banking. Retail banking is dominant due to the high demand for personal financial services and the increasing adoption of digital banking solutions. The convenience and accessibility of retail banking services attract a large customer base, contributing to its substantial market share.

By Insurance Services: In 2023, the KSA Financial Services market is segmented by insurance services into health, motor and life insurance. Health insurance leads the market due to mandatory health insurance policies for all employees and dependents, driving up demand significantly. Government initiatives to promote health insurance also play a crucial role in its dominance.

By Investment Services: In 2023, KSA Financial Services market is segmented by investment services into asset management, wealth management and brokerage services. Asset management is the dominant sub-segment as it provides diverse investment options and professional management of funds, attracting both individual and institutional investors seeking to optimize their portfolios.

KSA Financial Services Competitive Landscape

• National Commercial Bank (NCB) and Samba Financial Group Merger: In 2022, NCB and Samba Financial Group merged to form Saudi National Bank (SNB), creating the largest banking entity in Saudi Arabia with assets exceeding USD 240 billion. This merger is expected to create significant synergies and enhance the overall competitiveness of the sector by streamlining operations and expanding service offerings.
• Al Rajhi Bank's Strong Presence and Technological Advancements: Al Rajhi Bank, known for its extensive retail banking network and strong presence in Islamic banking, introduced a new mobile banking app in 2023. The app leverages AI to provide personalized financial advice and services, significantly enhancing customer engagement and satisfaction.
• Saudi British Bank (SABB) and Comprehensive Financial Services: The services, following its merger with Alawwal Bank in 2019, Saudi British Bank (SABB) has emerged as a stronger entity with a comprehensive suite of financial services. This merger has allowed SABB to expand its market reach and enhance its service offerings, contributing to the growth and diversification of the financial services sector in Saudi Arabia.

KSA Financial Services Industry Analysis

KSA Financial Services Growth Drivers

• Economic Diversification Under Vision 2030: Saudi Arabia’s Vision 2030 initiative aims to reduce the country’s dependency on oil revenue and diversify its economy. This strategy has led to significant investments in non-oil sectors, including financial services. In 2024, the Public Investment Fund (PIF) has allocated over USD 0.45 trillion to various projects, including financial technology and banking infrastructure, fueling the growth of the financial sector.
• Expanding Financial Inclusion: The Saudi Central Bank (SAMA) has been actively promoting financial inclusion, leading to a substantial increase in the number of bank accounts and financial products available to the population. As of 2024, over 27 million individuals in Saudi Arabia have access to banking services, a significant rise from previous years.

KSA Financial Services Market Challenges

• Economic Volatility: Economic volatility, particularly fluctuations in global oil prices, continues to impact the financial services sector in Saudi Arabia. In 2024, the financial market experienced fluctuations due to varying oil prices, which affected the liquidity and investment decisions of financial institutions.
• Talent Shortage in Specialized Areas: The financial services sector in Saudi Arabia faces a shortage of skilled professionals in specialized areas such as risk management, compliance, and fintech. In 2024, the demand for skilled financial professionals exceeded supply by over 5,000 positions, leading to increased competition among financial institutions to attract and retain talent.

KSA Financial Services Market Government Initiatives

• Merger of National Commercial Bank and Samba Financial Group (2022)- In 2022, the merger of National Commercial Bank and Samba Financial Group created Saudi National Bank, the largest banking entity in Saudi Arabia. With assets exceeding USD 239.7 billion, this merger aims to create synergies and enhance the competitive landscape of the financial services sector.
• Introduction of Green Bonds (2024)- In 2024, Saudi Arabia issued its first green bonds, raising USD 2.7 billion for sustainable projects. This development reflects the growing trend towards sustainable finance and aligns with global efforts to promote environmentally responsible investments.

KSA Financial Services Market Future Outlook

The KSA financial services market is expected to grow substantially by 2028, driven by continued economic diversification, increased foreign investments, and advancements in financial technology. The market is expected to see an upswing in digital banking, insurance, and investment services, providing a broad spectrum of opportunities for both new and existing players.

Future Trends

• Growth of Fintech Solutions: The fintech sector in Saudi Arabia is expected to witness significant expansion, with a substantial number of fintech startups projected to emerge. These startups will introduce disruptive technologies such as blockchain, AI-driven financial advisory, and peer-to-peer lending platforms, revolutionizing the traditional financial services landscape.
• Adoption of Open Banking: The adoption of open banking is anticipated to transform the financial landscape in Saudi Arabia. The Saudi Central Bank is expected to implement regulations supporting open banking, which will allow third-party developers to build innovative applications and services around financial institutions, fostering a more competitive and dynamic market environment.
• Expansion of Sustainable Finance: Sustainable finance is set to emerge as a key trend in the KSA financial services market. Initiatives in sustainable finance, including green bonds and ESG (Environmental, Social, and Governance) investments, will attract significant attention and investment, promoting environmentally and socially responsible economic activities within the sector.