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1
Research Proposal: Fintech Digitals Transformation in
Saudi Arabia
Hisham Hamid Alsharif
ID: 2302707
Date: 14-2-2024
2
Research Proposal: Fintech Digitals Transformation in Saudi Arabia
Introduction
Globally, the traditional financial sector is changing due to the quick evolution of
financial technology, or Fintech. Saudi Arabia, a major actor in the Middle East, is undergoing a
notable Fintech innovation boom that is drastically changing the country’s financial landscape
(Agarwal & Zhang, 2020). Peer-to-peer lending platforms, blockchain technology, digital
banking solutions, and cutting-edge payment technologies are all hallmarks of this shift, driven
by the Saudi Arabian Monetary Authority (SAMA) and encouraging legislative and regulatory
changes. By emphasizing accessibility, efficiency, and inclusivity through technology-driven
solutions like mobile payments, digital wallets, and blockchain applications, the Kingdom’s shift
toward digital finance is altering the traditional financial services paradigm.
This environment encourages innovation, entrepreneurship, and financial technology.
Financial sector transformation is increasingly driven by technology. Digitalization drives
Fintech in Saudi Arabia, improving financial services efficiency, accessibility, and inclusivity.
Blockchain-driven applications, digital wallets, and mobile payment platforms are quickly
becoming the standard, indicating a fundamental shift in how financial transactions are carried
out and handled.
Study Importance and Significance
Comprehending the Fintech digital transformation scenario in Saudi Arabia is crucial
because of its numerous ramifications. First, Saudi Arabia’s growing importance in the global
Fintech sector demands a thorough examination of its Fintech ecosystem. A deeper
comprehension of the regional Fintech dynamics can be gained by comparing the Kingdom to
other international Fintech hubs to identify specific trends and difficulties.
Furthermore, Fintech can catalyze economic growth (Jarvis & Han, 2021). Consequently,
a thorough examination of Saudi Arabia’s Fintech scene is essential to understanding how it
could influence the country’s economic expansion, employment opportunities, and support of
entrepreneurial endeavours. Policymakers and stakeholders must comprehend how these
technological developments affect the Kingdom’s economic environment.
Additionally, looking into how Fintech might support financial inclusiveness is critical.
The study can clarify how Fintech projects help underprivileged groups by providing access to
basic economic and banking services (Jarvis & Han, 2021). The degree to which Fintech
promotes financial inclusion and creates a more inclusive financial environment in Saudi Arabia
can be shown by evaluating the effectiveness of various activities.
Last but not least, Fintech innovation is greatly influenced by regulatory frameworks.
Examining the Fintech policies and activities of the Saudi Arabian Monetary Authority (SAMA)
can yield valuable insights toward promoting innovation while upholding the integrity of
financial systems and protecting the interests of consumers (Ashfaq et al., 2023).
Comprehending the dynamic regulatory environment is crucial for Fintech startups and wellestablished financial institutions, as it influences their approaches and functions within the
rapidly expanding Fintech industry in the Kingdom.
Research Questions
•
What impact does Saudi Arabia’s regulatory environment have on the development and
uptake of Fintech?
•
What are the main obstacles that Kingdom-based Fintech firms must overcome?
3
•
How is the Saudi Arabian fintech industry’s relationship with traditional financial
institutions changing?
Hypothesis and Methodology
Hypotheses
1.
The Saudi Arabian Monetary Authority’s (SAMA) legal framework significantly affects
the country’s growth and creativity of fintech businesses.
The regulatory framework implemented by the Saudi Arabian Monetary Authority
(SAMA) substantially impacts the expansion and inventive potential of fintech
enterprises in the nation. This hypothesis suggests that SAMA’s regulatory policies,
which include licensing procedures, compliance requirements, and regulatory
adaptability, have a crucial impact on the environment for Fintech companies operating
in Saudi Arabia. The study examines the effects of these restrictions on the efficiency of
corporate operations, the extent of innovation in the financial industry, and the rate of
introducing new financial goods or services. In addition, it aims to perform comparative
analyses between the regulatory frameworks of SAMA and those of other countries to
determine their impact on the growth trajectory and competitiveness of the fintech
industry.
2.
The quality and range of financial services provided are improved through partnerships
between Fintech companies and traditional banks, which raises client satisfaction.
The collaboration between fintech businesses and traditional banks in Saudi Arabia
enhances the calibre and variety of financial services provided, hence increasing client
satisfaction. This theory highlights the improvement of financial services that result
from collaborations between fintech companies and traditional banking institutions. The
research aims to evaluate case studies or empirical data that demonstrate the positive
effects of these collaborations on service accessibility, user experience, product range,
and reliability. Moreover, the study aims to assess the levels of client satisfaction after
adopting these partnerships, with a specific focus on the efficacy of answering customer
needs, resolving issues, and enhancing customer satisfaction metrics. Furthermore, it
seeks to investigate these collaborations’ enduring viability and influence on client
allegiance, market dominance, and financial success for both fintech firms and
conventional banks.
Techniques
Data Collection: The data collection methodology for this study employs a
comprehensive approach, incorporating both primary and secondary data collection techniques to
offer a holistic perspective of the fintech landscape in Saudi Arabia. Preliminary data will be
acquired through structured interviews with key stakeholders directly involved in the fintech
business, including representatives from Fintech startups, traditional banks, regulatory agencies
such as the Saudi Arabian Monetary Authority (SAMA), and customers. These interviews will
try to extract personal insights, thoughts, and experiences about regulatory frameworks,
collaborative activities, service offerings, obstacles faced, and overall perceptions of the fintech
ecosystem in the region. In addition to the primary data, secondary data will be gathered from
diverse sources such as government statistics, academic publications, industry reports, and
existing research studies. These secondary sources will provide additional context, historical
data, and broader industry trends to enhance the initial findings from the primary data collection
phase.
4
Analysis: The analytic procedure will utilize a mixed-methods approach, incorporating
quantitative and qualitative analysis methodologies. Quantitative analysis, employing statistical
techniques, entails scrutinizing survey findings and numerical data to detect patterns,
correlations, and trends within the gathered data. Statistical tools and software can assist in
analyzing quantitative data, facilitating the investigation of correlations between variables and
numerical patterns.
Conversely, qualitative analytic methods will be used to interpret the qualitative data
from interview transcripts. Qualitative techniques such as thematic coding and content analysis
can detect recurring themes, categorize replies, and extract significant insights from the
qualitative data. This qualitative study aims to provide a more profound comprehension of
stakeholder viewpoints, emotions, and intricate details that may not be adequately conveyed by
numerical data alone. This technique seeks to gain a thorough and detailed understanding of the
regulatory, collaboration, and consumer satisfaction factors in the fintech business in Saudi
Arabia by using both quantitative and qualitative analysis methods.
Sampling: The research will employ purposive sampling, a planned selection technique
designed to collect various viewpoints and experiences from multiple individuals inside the
Fintech business in Saudi Arabia. This strategy will guarantee the incorporation of participants
from diverse backgrounds with different responsibilities and varying degrees of experience. As a
result, it will provide a wide range of perspectives from various stakeholders involved in the
sector, thereby delivering a comprehensive set of insights. The process of choosing participants
will give priority to diversity, allowing for a thorough grasp of the fintech industry from many
perspectives.
When establishing the sample size, we shall find a compromise between the thoroughness
and comprehensiveness of the insights. The objective is to ensure that the sample is adequately
resilient to yield extensive information while also being manageable for detailed analysis. This
method will enable a thorough comprehension of the industry dynamics, regulatory hurdles,
collaborative endeavours, and client experiences within the fintech sector in Saudi Arabia.
Ethical Considerations: Ensuring ethical concerns will be of utmost importance
throughout the entire study procedure. Maintaining secrecy and honouring privacy will be the
fundamental basis of this investigation. Participants in surveys or interviews will be asked to
express informed consent, highlighting the voluntary nature of their involvement and
guaranteeing the safeguarding of sensitive data. The research will strictly conform to ethical
norms and standards, ensuring the utmost consideration for confidentiality and anonymity needs,
particularly concerning financial data. The purpose of these ethical standards is to uphold the
research’s integrity while prioritizing the privacy and rights of the study participants.
Limitations: The research proposal about the digitization of Fintech in Saudi Arabia
acknowledges various potential constraints that may impact the extent and results of the study.
These limitations involve multiple facets, beginning with possible restrictions related to the
sample size. The accessibility of a broad spectrum of stakeholders may impede the availability
and variety of participants. Purposive sampling will guarantee a varied representation within the
Fintech industry, notwithstanding any potential constraints in sample size to tackle this issue.
Moreover, obstacles to reaching out to crucial decision-makers, such as top-level
authorities at regulatory agencies or particular Fintech businesses, could impede thorough data
gathering. Networking and alternative sources will be employed as strategies to overcome these
limits. Furthermore, the ever-changing and fast-paced nature of the Fintech sector, marked by
swift technology progress and developing regulatory structures, may present difficulties in
5
ensuring the promptness and significance of data. The research will be carried out efficiently and
promptly, aiming to capture the most up-to-date trends while recognizing the possibility of swift
changes in the sector to address this issue.
One possible drawback of qualitative data interpretation is its inherent subjectivity. The
focus will be on achieving objectivity in analysis by utilizing rigorous qualitative data analysis
methods and cross-validation by multiple researchers. Finally, the study may be limited in
scope and detail due to limited resources and time. It will be essential to allocate resources
effectively and engage in careful planning to address these restrictions. It will help optimize the
effectiveness of the study and concentrate on crucial parts of Fintech digitalization within the
given timeframe. The research endeavours to provide a thorough and dependable analysis of the
Fintech industry in Saudi Arabia by acknowledging and resolving these constraints.
Research Design
The study will utilize a mixed-methods research methodology, incorporating quantitative
and qualitative techniques to investigate the intricacies of Fintech advancement in Saudi Arabia
thoroughly. Quantitative analysis will be crucial in determining the connections between
regulatory interventions and the expansion of the Fintech industry. Additionally, it will aid in
assessing the degree of acceptance and implementation of Fintech developments, utilizing
statistical techniques to detect patterns within the business.
In addition to the quantitative study, qualitative methodologies will be employed to
acquire comprehensive contextual insights. The qualitative investigation will examine the
difficulties encountered by Fintech startups, investigate the changing dynamics between
traditional banks and Fintech companies, and collect viewpoints on regulatory frameworks from
different stakeholders. A comprehensive comprehension of Saudi Arabia’s complex Fintech
landscape will be attained by employing qualitative methodologies such as interviews, thematic
analysis, and content evaluation.
Integrating quantitative and qualitative methodologies constitutes a hybrid approach that
offers a thorough and intricate analysis of the multidimensional Fintech ecosystem in Saudi
Arabia. This comprehensive research design allows for a comprehensive examination of the
legislative framework, industry obstacles, and players’ viewpoints in the fast-developing Fintech
industry in Saudi Arabia.
A Comparative Analysis or Case Study
Both comparative analysis and case studies will be crucial in examining the Saudi
Arabian Fintech ecosystem within the research design. The case studies will examine particular
entities, such as individual Fintech businesses, regulatory efforts implemented by the Saudi
Arabian Monetary Authority (SAMA), and partnerships between traditional banks and Fintech
companies in Saudi Arabia. These case studies offer a comprehensive analysis of the tactics,
difficulties, achievements, and effects of these particular elements on the broader Fintech
ecosystem in the country.
Furthermore, comparison research will be undertaken to juxtapose and evaluate Saudi
Arabia’s Fintech ecosystem with other prominent Fintech centres worldwide. This comparative
methodology aims to discern unique patterns, processes, regulatory structures, and competitive
strengths that differentiate Saudi Arabia or align it with international benchmarks. The study
seeks to analyze and compare these ecosystems to derive significant insights and possibly
optimal strategies that could contribute to the progress and improvement of Saudi Arabia’s
Fintech industry.
6
Incorporating case studies and comparative analysis in the research approach guarantees
a thorough examination of the specific dynamics and the broader global context of Fintech
development in Saudi Arabia. This technique enables a comprehensive comprehension of the
country’s Fintech landscape while identifying similarities and insights from successful
approaches in various international Fintech ecosystems.
Time frame
The following is an estimated timetable for the research activities:
•
One month for preliminary planning and research
•
Two to three months for data collection (interviews, surveys, and secondary data
collection).
•
Two months for both quantitative and qualitative data analyses
•
Case studies and comparative analysis: one month
•
One month for report writing and documentation
•
One month for review and finalization
7
References
Agarwal, S., & Zhang, J. (2020). FinTech, lending and payment innovation: A review. Asia‐
Pacific Journal of Financial Studies, 49(3), 353-367. https://doi.org/10.1111/ajfs.12294
Ashfaq, M., Hasan, R., & Merčon, J. (2023). Central Bank Digital Currencies and the Global
Financial System: Theory and Practice. Walter de Gruyter GmbH & Co KG.
Jarvis, R., & Han, H. (2021). Fintech Innovation: Review and Future Research
Directions. International Journal of Banking, Finance and Insurance Technologies, 1(1),
79-102. https://researchlakejournals.com/index.php/IJBFIT/article/view/126
Empowering SMEs: Unlocking growth with Fintech and PO
financing
Whitepaper Series
2024
Under Vision 2030, the KSA government
recognizes the importance of supporting and
promoting SMEs. The initiative aims to
diversify the economy and reduce reliance on
oil. To achieve this, the government has set
ambitious targets, aiming for SMEs to
contribute 35% of the country’s GDP by 2030,
while also addressing unemployment and
empowering women in the workforce.2
Despite their significance, SMEs in KSA face
challenges, particularly in accessing formal
credit. Financial institutions often view SMEs
as riskier borrowers, resulting in higher interest
rates and stricter collateral requirements.
However, the government has taken proactive
measures to support these businesses.
To address working capital needs, fintech
companies have emerged as key players in
supporting SMEs. They offer innovative
solutions like PO financing, providing faster
approvals and simplified processes. Fintech
solutions also automate administrative tasks,
streamlining the loan application process.
Executive Summary
SMEs play a vital role in KSA’s economic
growth and job creation due to their agility and
adaptability. As an essential part of the Vision
2030 initiative, they are recognized for their
significant contributions to the country’s
development and sustainability.
As the market size of SMEs in KSA continues
to grow, particularly in key regions like Riyadh
and Makkah, the role of fintech in supporting
their survival and growth becomes more
critical. With a dynamic landscape of nearly
1.27 million SMEs operating in the country, the
government’s commitment to empowering
these businesses ensures a more inclusive
and prosperous society, paving the way for a
diversified and sustainable economy.1
www.ta3meed.com
In the KSA market, a standout fintech company
is Tameed, which specializes in financing
government-backed purchase orders (POs).
With its innovative approach, Tameed is poised
to revolutionize SME lending, not just in KSA
but also globally. By harnessing fintech
capabilities, the company simplifies lending
procedures, granting SMEs easier access to
working capital, and enabling their growth and
prosperity.
Tameed, the prominent Purchase Orders (PO)
financing platform in KSA, is revolutionizing
business funding through crowd investing.
Tameed offers a distinctive financing solution,
connecting SMEs with swift and efficient
funding through peer-to-peer lending from
investors seeking attractive returns. With
Tameed’s innovative approach, SMEs gain
vital financial support, propelling their growth
and success in the dynamic market landscape.
Tameed’s transformative model has the
potential to reshape the SME financing
landscape, providing a much-needed boost to
businesses and contributing to the economic
development of the KSA.
Overview of SMEs
In every country, SMEs are defined based on
specific thresholds regarding their revenue and
number of employees. In the Kingdom of Saudi
Arabia (KSA), SMEs are classified as
businesses that employ fewer than 250
individuals and have an annual revenue below
SAR 200 million.5 These SMEs form an
essential foundation for any economy,
constituting a staggering 99.5% of all
companies in KSA, with the majority falling
under the micro-sized category.9
The significance of SMEs lies in their ability to
create
employment
opportunities
and
contribute to overall economic growth.
Compared to larger enterprises, SMEs
possess inherent characteristics of flexibility
and adaptability, enabling them to respond
promptly to market fluctuations and actively
contribute to the development of local
communities.
Definition of SMEs in KSA4
MICRO: 1-5 STAFF
Revenue from
SAR 0 to 3 MILLION
SMALL: 6-49 STAFF
Revenue from
SAR 3 to 40 MILLION
MEDIUM: 50-249 STAFF
Revenue from
SAR 40 to 200 MILLION
www.ta3meed.com
Recognising the vital role of SMEs, the KSA
government has taken proactive measures to
promote and support their growth as part of the
Vision 2030 initiative. This comprehensive plan
aims to decrease the nation’s dependence on
oil while fostering a diversified and sustainable
economy. Within the framework of Vision 2030,
the SME sector has set ambitious targets,
aiming to contribute 35% of the country’s GDP
by the year 2030.2
Furthermore, SMEs are poised to play a
significant role in achieving key objectives of
the KSA, including reducing the unemployment
rate from 11.6% to 7% and increasing women’s
participation in the workforce from 22% to
30%.3 By fostering the growth of SMEs, the
government aims to create a more inclusive
and prosperous society, offering enhanced
employment opportunities and empowering
women in the workforce.
Market Size of SMEs
In line with the significance of SMEs in
contributing to the KSA economy and
employment opportunities, the market size of
SMEs in the KSA reflects their significant
presence and potential impact.
3.5%
jump in the number of SMEs in
KSA between Q2 2023 and Q3
20231
In the third quarter of 2023 alone, over 40,000
new SMEs were launched, resulting in a 3.5%
increase compared to the previous quarter. The
total number of SMEs in the country now
stands at nearly 1.27 million, showcasing the
KSA population’s unwavering spirit of
innovation and entrepreneurship. These
businesses are persistently growing in terms of
quantity, scale, and range of operations.1
1.27
Mn
SMEs registered in KSA as of
Q1 20231
6.5
Mn
people employed by SMEs in
KSA in Q1 20239
SMEs by Size as of Q3 20231
Micro-sized
companies
The dynamic landscape of KSA’s SME
ecosystem spans across the entire country,
with a significant concentration in key regions
such as Riyadh, Makkah, and the Eastern
Province. Together, these regions serve as the
home to a remarkable 72.4% of the total SMEs
operating in the nation.1
The market size of SMEs is substantial,
spanning diverse industries and sectors.
However, SMEs encounter a range of
obstacles on their path to success.
86.7%
11.9%
SMEs Regional Distribution1
1.4%
Small-sized
companies
Medium-sized
companies
43.3%
Riyadh province
18.3%
Makkah province
1100 K
151 K
18 K
10.8%
Eastern province
27.7%
Other regions
www.ta3meed.com
Challenges and Opportunities for SMEs
While SMEs are recognized as the backbone
of many advanced economies, contributing
around 70% to their Gross Domestic Product,
the situation in KSA differs, with SMEs
accounting for approximately 30% of the GDP.5
The
primary
obstacle
hindering
the
development and growth of SMEs in the
country is the lack of access to formal credit
methods.
SMEs rely on external financing for
number of reasons including:
Fulfilling working capital needs
This perception of risk leads to higher interest
rates for SMEs, increasing the cost of
borrowing and making it more difficult for them
to invest in their businesses, expand
operations, or innovate. Additionally, financial
institutions
impose
stricter
collateral
requirements,
further
compounding
the
difficulties faced by SMEs in accessing credit.
The KSA government has recognized the
importance of SMEs and taken proactive
measures to support and promote their growth
as part of the Vision 2030 initiative. A key
player in this endeavor is the General Authority
for SMEs, also known as Monsha’at.
Expanding business
Investing in equipment and technology
SMEs are the core catalysts of KSA’s
growth and key drivers of its ambition
to transition away from an oil-reliant
economy
Investing in research and development
In KSA, credit and access to capital are
predominantly concentrated on larger firms,
leaving SMEs with limited options. Financial
institutions often perceive SMEs as riskier
borrowers due to their smaller size, limited
operating history, occasionally volatile cash
flows etc. As a result, SMEs face several
obstacles when seeking credit.
Monsha’at has made considerable strides in
addressing the challenges faced by SMEs in
KSA by implementing a diverse range of
initiatives. Notably, the ‘Kafalah Program’
stands out as a crucial platform that connects
SMEs seeking funding with both government
and private financiers. Through this initiative,
SMEs are provided with vital financial
support, fostering their growth and success.
SMEs funding challenges
Furthermore, to ensure greater liquidity and
improved access to funding for SMEs, the
government has introduced the SME Bank.
This institution has been entrusted with the
task of supporting Vision 2030’s objective of
increasing the contribution of SMEs to the
country’s GDP and elevating the volume of
SME financing to 20% of the total loan
portfolio.6
Limited collateral
Lack of creditworthiness
Cash flow fluctuations
High risk perception
Lack of credit history
www.ta3meed.com
While these government initiatives aim to
tackle the existing challenges and enhance
financing opportunities for SMEs, it is evident
that further steps need to be taken to bridge
the current gap and foster the growth of
SMEs in KSA.
Importance of Working Capital to SMEs
Working capital plays an essential role in the
success and sustainability of SMEs. It refers to
the funds that are readily available to meet the
day-to-day operational expenses and shortterm financial obligations of a business.
SMEs often face uncertainties and fluctuations
in their cash flows, especially during the initial
stages or during seasonal variations. Having
adequate working capital enables them to pay
for immediate expenses such as rent, utilities,
wages, and suppliers, ensuring uninterrupted
operations and avoiding disruptions in
production or service delivery.
Benefits of Efficient Working Capital
Management
Financial health and stability
Maintaining positive working capital ensures
smooth daily operations, timely payments to
suppliers, and avoidance of cash flow
constraints for SMEs.
Creditworthiness
A positive working capital position improves
creditworthiness, increases access to
financing, and facilitates favorable loan terms
for SMEs.
Meeting operational needs
Effective working capital management allows
SMEs to meet immediate operational needs,
such as inventory purchases, utility bills, and
rent.
Facilitating growth & expansion
Sufficient working capital empowers SMEs to
pursue growth opportunities, expand
operations, and undertake product
development.
www.ta3meed.com
To avoid such disruptions and meet short-term
operational expenses, SMEs obtain working
capital financing. Often, they have to go
through a tedious process to secure such
financing. However, Fintech has revolutionized
working capital financing, providing innovative
solutions like PO financing that address and
fulfills SMEs’ requirements . SMEs can benefit
from
faster
approvals,
simplified
documentation, and reduced paperwork,
enabling them to access the working capital
they need more quickly.
Role of Fintech in Survival of SMEs
The rise of fintech companies has played a
crucial role in the survival and growth of SMEs
in KSA. One of the key advantages of fintech
SME lenders is their ability to offer streamlined
and efficient loan application processes. Unlike
traditional banks that often have lengthy and
complex loan approval procedures, fintech
lenders leverage technology to simplify the
application processes.
The role of fintech in the survival of SMEs goes
beyond just providing funding. Fintech
solutions
can
automate
and
simplify
administrative tasks. SMEs can submit their
loan applications online, provide relevant
financial and business information, and receive
a decision within a relatively short period. This
speed and efficiency are important for SMEs,
allowing them to access the necessary funds
promptly to seize business opportunities or
overcome financial challenges.
Through August 2022, the number of
operating fintech firms in KSA
experienced a 79% year-on-year
increase, reaching 147 active fintech
companies compared to just 10 in
2018.7
Fintech SME lenders can generally be
categorized as either balance sheet lenders or
peer-to-peer marketplace lenders. P2P lending
platforms have gained significant traction in the
KSA as they establish a direct economic
relationship between borrowers and individual
or institutional investors. These platforms
utilize fintech technologies to facilitate
transactions, allowing investors to fund specific
projects or loans while monitoring their
investments through interactive dashboards.
One such innovative financing option is
purchase order financing, which caters to
business owners’ short-term capital needs.
147
14.7x
82
60
10
2018
20
2019
2020
2021
Active Fintech’s in KSA
www.ta3meed.com
2022
By 2030, fintech sector in KSA is
expected to generate around 18,000
direct jobs and account for 525 active
fintech companies.7
PO Financing
Purchase order financing refers to a type of
short-term commercial funding option that
provides capital to business owners to pay
their suppliers upfront for confirmed purchase
orders and meet working capital requirements.
This financing solution addresses cash flow
challenges by allowing SMEs to avoid
depleting their cash reserves or declining
orders due to financial constraints.
This form of financing provides the necessary
working capital, ensuring efficient cash flow
management and smooth operations. To
support SMEs, crowd investing in PO has
emerged as an innovative method.
Limited collateral requirement
Quick approval and funding
Enhanced creditworthiness
Improved cash flow
Traditional financing vs PO financing: Making the right choice for business
Application
process
Use of funds
Collateral and
credit history
Cash flow
management
www.ta3meed.com
Traditional Financing
PO Financing
SMEs need to go through a detailed
application process, which involves
submitting
financial
statements,
business plans, and other relevant
documents
The application process for PO financing is
typically quicker and simpler. The focus is
primarily on the creditworthiness of the
customer and the value of the purchase
orders
Traditional
financing
may
have
restrictions on the use of funds, limiting
SMEs’ flexibility in allocating the funds
according to specific business need
Funds obtained through PO financing are
designated for fulfilling purchase orders.
SMEs can use the funds to cover expenses
directly related to the purchase orders
Traditional financing often requires
collateral or a strong credit history,
making it challenging for SMEs with
limited assets or credit history to secure
funding
PO financing prioritizes the creditworthiness
of the customer initiating the order, rather
than solely relying on the collateral or credit
history of the SME. This approach empowers
SMEs with limited collateral or a lessestablished credit history to secure funding.
Traditional financing may not provide
the same level of cash flow support, as
it may involve delayed disbursements
and may require SMEs to rely on
customer payments to cover expenses
PO financing significantly improves cash flow
management for SMEs. By receiving funds
upfront, SMEs can pay suppliers, cover
production costs, and manage day-to-day
expenses, ensuring smooth operations and
timely delivery of goods or services
Crowd Investing in PO
Crowd investing in PO refers to a form of
crowdfunding where multiple individuals or
investors collectively finance a business’s
purchase orders. In this model, the business
seeking funding presents its verified and
government-backed purchase orders to
potential investors through an online platform.
Investors can then choose to invest in specific
purchase orders, providing the necessary
capital to fulfill the orders.
Transaction value of Crowd Investing
In Saudi Arabia* (In Million SAR)8
220.1
2023
246.3
2024
268.1
2025
289.7
2026
309.9
2027
The transaction value in the Crowd
investing market is anticipated to
exhibit a steady annual growth rate of
8.93% during the period from 2023 to
20278
With such a growth rate projection,
the total transaction value is
expected to reach a substantial
amount of SAR 309.9 million by the
year 20278
The projected annual growth rate
indicate a promising outlook for the
Crowd investing market, offering
businesses
and
investors
a
compelling alternative funding option
Crowd investing in PO offers benefits to both
SMEs and investors. For SMEs, it provides an
alternative and accessible source of financing
without the need for traditional loans or credit
facilities. It allows them to capitalize on
business opportunities and fulfill large orders
that may otherwise be beyond their financial
capacity.
For investors, crowd investing in PO p
