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Micro-financing license finally granted in Saudi ArabiaMENA

Micro-financing license finally granted in Saudi Arabia

The FinTech industry can rejoice as the Saudi Central Bank (SAMA) granted a micro-financing license to Tamam, the FinTech subsidiary of Kuwait-based Zain Group, to operate in Saudi Arabia. Micro-financing is a financing service provided to individuals and small businesses who would otherwise lack access to conventional banking services, and therefore has been a driver of financial inclusion globally thus far (at least in countries where FinTechs have been licensed to offer it).

Tamam, a mobile telecom operating across MENA, became the first company to receive this kind of license in the region (and it was about time someone did!). They will now provide micro-loan services to their consumers via a digital customer experience through their mobile app. According to a Zain press release, the entire process – from downloading the app to receiving the loan amount, which is based on users’ credit profiles – takes less than five minutes (lightning speed compared to other credit facilities in the region!). The platform also gained an accreditation that assures data and digital infrastructure security.

However, the license is not yet fully-fledged, as it follows an eighteen-month testing period within the central bank’s regulatory sandbox. Fingers crossed they’ll graduate to be a fully-fledged financial services operator after testing the waters throughout this period.

why it matters
Micro-financing is a big FinTech trend all around the globe. While it has the potential to promote financial inclusion, it hasn't been licensed across the Gulf Cooperation Council (GCC) yet due to its consumer protection implication. The fact that SAMA granted this type of license makes way for the rest of the regulators in the region to follow suit to stay competitive.