Saudi Arabia’s government approved on Tuesday the issuing of the country’s first digital banking licenses to STC Bank and Abdul Rahman bin Saad Al-Rashed & Sons Co. by the Kingdom’s Finance Ministry.
Abdul Rahman bin Saad Al-Rashed & Sons Co. will then form a digital bank with a capital of 1.5 billion riyals, called Saudi Digital Bank.
“The finance minister will issue the necessary licenses for STC Bank and Saudi first Digital Bank, both under establishment,” the Saudi Press Agency added.
Minister Mohammed al-Jadaan said the cabinet’s approval comes within the objectives of the Saudi Financial Development Program, which is part of a massive economic reform plan known as Saudi Vision 2030.
These objectives seek to develop a more efficient digital infrastructure, while encouraging entrepreneurship and creating job opportunities in the financial sector, he said.
Digital bank process
First, STC Pay will be converted into a local digital bank, STC Bank, with a capital of SR2.5 billion. Second, a number of companies and investors, led by Abdul Rahman bin Saad Al-Rashed and Sons Company, will establish a local digital bank, Saudi Digital Bank, to conduct banking business in the Kingdom, with a capital of SR1.5 billion.
Al-Jadaan said on Twitter that the cabinet’s approval is in line with the Saudi Financial Development Program, which is part of the Kingdom’s massive economic reform plan known as Saudi Vision 2030.
The Vision goals include developing the digital economy and enabling financial companies to support the growth of the private sector.
16 financial technology companies
The cabinet also ordered the establishment of an administrative unit as part of the Ministry of Human Resources and Social Development called Social Specialties Unit.
Last year, the Saudi Central Bank (SAMA) licensed 16 financial technology companies to provide payment services, consumer microfinance, and electronic insurance brokerage.
Similar digital banks had earlier been launched in the United Arab Emirates and Bahrain.
It is worth mentioning that the central banks of the UAE (CBUAE) and Saudi Arabia (SAMA) have officially launched a project for a common digital currency.
Those plans include developing the Aber project were first announced in early 2019 to transact financial settlements between Saudi Arabia and the UAE through Blockchain and distributed ledgers technologies.