LFP242 – Fintech in Saudi Arabia and Collective Savings w/Naif AbuSaida CEO Hakbah

Saudi Arabia is a country that increasingly confounds stereotypes and expectations – an example being a YouTuber who has visited every country in the world choosing it for his honeymoon. At the same time it has undergone a phenomenal journey literally in a lifetime from a very low economic standard of living to super-high. As […]

Saudi Arabia is a country that increasingly confounds stereotypes and expectations – an example being a YouTuber who has visited every country in the world choosing it for his honeymoon. At the same time it has undergone a phenomenal journey literally in a lifetime from a very low economic standard of living to super-high. As a result, like China, it shares the “relatively blank canvas from which to start Finteching” but equally has it’s own unique issues notably eg in a country with centuries of little wealth and suddenly (on average) excess savings culture and the likes of pension provision are very distinct – or perhaps lacking.

Naif has had a wide and varied career before starting Hakbah a collective savings platform Fintech. Interestingly talking about different social models worldwide P2P was focusing in this “modern” “Western” way on the individual as the “unit of social currency” [and in passing re zeitgeist then became institutionalised on one side (the lending side) and then most became banks). Collective savings were A Big Thing in say the UK for some time where regionally folks would pool savings for others to get mortgages in “Building” (sic) societies. They remain A Big Thing in a still at heart traditional Arabian/Islamic culture.

In this show we dive into some historical and geographical aspects of Saudi Arabia – the 5th largest by land mass in the world in passing. Thence the unique aspects of Fintech in Saudi – one of which is a very rapid pace of development and another a very government-sponsored approach – and finally collective savings in more depth.

Topics discussed include:

the geography of Saudi Arabia – unique features and aspects one might not expect
tourist aspects and anecdotal reports from visitors
19thC British women travellers to Arabia and the long lasting (and unexpected) consequences of their journeys
management of national oil wealth by the government as key to the economic consequences
Naif’s career journey
the influence of encountering 3rd stage cancer on Naif’s journey and motivation to start Hakbah
the genesis of deciding upon collective savings especially in a country without a savings culture
the background to the history of Saudi Arabia and particularly the formation of the country and the central bank
the long background in money changing due to centuries of pilgrims to Mecca
the Dutch starting the first bank branch
the first loan in Riyals
the central role of the central bank in all finance to this day
the national remittance system and immediate payments system outside of the “western” rails of visa/mastercard
the advanced nature of ease of using compared to other countries (UK for example)
2018 as the real start of Fintech in Saudi
the central banks sandbox and first cohorts
verticals that were established
moving beyond batches/cohorts in the sandbox to continuous application
the national strategy for Fintech and government departmental support
key Fintech verticals with the greatest penetration in 2023
around 130 Fintechs at present
target of 525 by 2030
the complex issue of a lack of savings culture
the saying ~”spend what is in your pocket and the assistance is from God”
“more than 70% of Saudis don’t have any emergency savings at all” (!)
the State provision of pensions meaning that saving in a pension scheme is not the main modus operendi – enjoy life and spend now year by year rather than saving up to enjoy in the future
short-term savings examples in the culture
long-term savings culture across the Arab world
collective savings being traditional and existing in more than 60 countries around the world
at the end of a cycle no one owes anyone anything (cf debt-based systems where due to the interest margin between save and lend there is always increased debt every cycle)
how does trust work in the variety of collective savings schemes around the world?
what is key to establishing trust?
Hakbah’s model, key design features and very low default rate over its history (less than 0.7% default)
repayment of debts being historically important in England if not now in the “modernised” culture
the outlook for Fintech in Saudi
Hakbah’s plans and future ideas

And much much more

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