Where Fintech and Insurance Combine in Saudi Arabia | Hakbah | FF Virtual Arena #336

Sport isn’t the only area undergoing a revolution in Saudi Arabia. In this insightful interview, Naif AbuSaida, CEO of Hakbah, discusses the evolving financial landscape in Saudi Arabia, highlighting the significant impact of Vision 2030 on the fintech sector, particularly the country’s push to boost savings rates through innovative solutions like group savings.

We find out about traditional methods of saving in Saudi culture and the complementary relationship between fintech and insurance in the region.

Naif also shares how Hakbah’s partnerships are driving innovation and financial inclusion, with an eye on global expansion.

Read on to find out more.

Saudi Fintech

In this conversation, Naif AbuSaida from Hakbah shares valuable insights into both the Saudi financial landscape and the innovative approach Hakbah is taking to improve savings and financial inclusivity in the region. The discussion touches on several important themes, including the Vision 2030 reforms, the unique challenges in the Saudi savings culture, and the broader opportunities for fintech in Saudi Arabia and globally.

Financial Landscape and Vision 2030

Saudi Arabia has seen major changes in recent years as they diversify their economy and Vision 2030, led by Crown Prince Mohammed bin Salman, has laid out plans for the future of the country. The financial sector too will see big changes. The plan set ambitious targets, particularly for increasing savings rates to 10%, creating a significant opportunity for financial services to address the gap. Naif explains that historically, Saudis relied on free healthcare and strong family networks as a safety net, which discouraged long-term savings. Furthermore, banks offered savings products, but they were Sharia-compliant, meaning they did not offer interest, which made them less attractive and ineffective in fostering a savings culture.

Hakbah are tackling this issue by focusing on a traditional savings mechanism known as ROSCA—a rotating savings and credit association popular in many regions under various names. This system allows individuals to pool their money in groups and take turns receiving the lump sum, creating a simple yet effective financial model based on trust. Naif emphasizes that after completing three cycles of this group savings process, users often develop a sustainable savings habit, which is crucial for behavior change in a region where saving has not been a common practice.

Innovation and Insurance

There’s a lot of praise for the Saudi government for its push toward innovation, particularly in digital infrastructure, which is more advanced than many Western countries. This has created an ecosystem where fintech companies like Hakbah can thrive. He shares an anecdote about a meeting with the Saudi Central Bank where his company received immediate approval for several innovative financial products after demonstrating their potential. This kind of government support for fintech innovation has allowed Saudi Arabia to make rapid progress, with nearly 400 fintech startups as of 2023, approaching the ambitious target of 520 by 2030.

The conversation also touches on Hakbah’s foray into insurance, particularly through a partnership with Tawuniya, one of Saudi Arabia’s largest insurance companies. Naif points out that life insurance has historically been underdeveloped in the region due to cultural and religious concerns, but Sharia-compliant options are now emerging. Hakbah has incorporated life insurance into their savings groups, providing free coverage for users during the savings period, ensuring that if something happens to the saver, their family will still benefit.

Financial Inclusion and expansion

Naif addresses the significant issue of financial exclusion in Saudi Arabia, where millions of housewives, students, and gig workers are underbanked because they lack traditional salaried incomes. Banks typically deny these individuals access to financial products like loans or credit cards, forcing them to turn to the grey market for loans with exorbitant interest rates ranging from 20% to 45%. Hakbah seeks to change this by accepting anyone with income, regardless of its source, and using open banking to assess their financial health and provide personalized savings plans that fit their ability to save without financial strain.

While the group savings model is rooted in local cultural practices, Naif reveals that it has a much broader global application. The largest markets for these kinds of savings groups are in India and Latin America, followed by regions like Southern China. With a market size of over 500 billion euros annually, *Hakbah* aims to expand globally, helping more people build savings habits through these community-based financial models.

There are many changes happening in this region that are often overlooked. Be sure to check out the full video above and more of our Virtual Arena conversations on our website.