STC Pay and another domestic firm have become the first corporations in Saudi to get a digital banking license. The Saudi cabinet provided permission to the nation’s finance minister to grant the licenses, the local state news firm reported. The Saudi Central bank would now begin its banking activities in the Kingdom, stated the report.
Began in 2018 as a subsidiary of STC, STC Pay has developed from a mobile wallet into a financial app that also helps cross-border money transfer and distinct other services. The company had got a $200 million investment from Western Union at a valuation of $1.33 billion the late previous year. The cross-border money transfer service on STC Pay is powered by Western Union. STC Pay had also inaugurated visa-powered virtual and physical debit cards for its clients previous this year.
With this license, STC Pay would not be transformed into a digital bank, STC Bank, with an amount of $670 million. To complete the debt needs, STC would invest around $214 million and sustain its 85% ownership in the company, and Western Union would infiltrate another $200 million to sustain its 15% share, the Saudi corporation stated in a report.
The second company that got the digital banking license is spreadhead by Artar, a Saudi holding corporation with interests in investment maintenance, construction, real estate, and a few other industries. They would make a digital bank that would be known as Saudi Digital Bank with an amount of $400 million. There are fewer details about Saudi Digital Bank at present, but hopefully, more will be revealed in the future.
It is a welcome move and can transform the banking future in Saudi but this is also vital to make the difference between startups and the fintech played by corporations such as STC and Artar. Both STC and Artar have the financial strength to complete the fund needs. That would not be the case for most startups functioning in the fintech sector in Saudi. The only method for them to become a digital bank will be to expand as mobile wallets to a moment where they can get in investors who are keen to place in the cash to complete the fund needs for getting a digital banking license.
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