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Dr. Khaled Al-Dhaher

Vice Governor for Supervision and Technology, Saudi Central Bank


Dr. Khaled Al-Dhaher is the Vice Governor for Supervision and Technology at the Saudi Central Bank (SAMA). He has over 30 years of leadership experience in technology and financial services. Before joining SAMA, he was the chairman and country managing director of Accenture Saudi Arabia. He has also held leadership positions at various companies in Saudi Arabia, the Middle East, and Africa. He worked with Microsoft as the general manager for Saudi Arabia and the general director of business solutions for MEA. Moreover, he held the position of managing director for Hewlett Packard Enterprise in Saudi Arabia. He also worked with Oracle as the director of business applications as well as the manager of financial services industry solutions at MEA. He earned his PhD in computer science and engineering from the University of Illinois Urbana-Champaign in the United States. He holds master’s and bachelor’s degrees in computer science and engineering from King Fahd University of Petroleum and Minerals in Saudi Arabia.

"As part of the fintech strategy, SAMA is working closely with various government agencies to drive the growth of the fintech ecosystem in the country."

Dr. Khaled Al-Dhaher, Vice Governor for Supervision and Technology at the Saudi Central Bank, talks to TBY about the role the bank is playing in developing the fintech sector, strengthening cybersecurity measures, and assisting the digital transformation.

Saudi Arabia has set ambitious goals in its Vision 2030 agenda. How does SAMA contribute to the realization of these goals, particularly in terms of fostering a digital economy and supporting technological innovation?

SAMA supports the delivery of various objectives of Vision 2030 through a variety of initiatives and proactive measures that support and foster innovation in the financial sector and contribute to boosting the digital economy. These include various programs and initiatives. First, SAMA played a key role in developing the fintech strategy in collaboration with key stakeholders including Capital Market Authority, the Ministry of Communications and Information Technology, the Ministry of Finance, the Ministry of Investment, Monsha’at, and Fintech Saudi. The fintech strategy is one of the key pillars under Vision 2030’s Financial Sector Development Program. We also Introduced regulations that promote and facilitate innovation and competition while ensuring consumer protection, balancing innovation and risk management. We’ve also been busy launching the open banking initiative to support the development of the digital economy by enabling financial intermediaries to support private-sector growth through open banking services. This enables fintech companies to leverage data associated with financial transactions to offer innovative, targeted products and services. We’re keen to increase financial inclusion by adopting digital technologies to extend financial services and reduce deterrents for unbanked and underbanked clients. Finally, we’re supporting research efforts focusing on new emerging technologies to help drive innovation in the financial sector. SAMA hosts an innovation hub that fosters out-of-the-box thinking, identifies solutions to better serve the financial sector and consumers, and provides platforms for experimenting with proof of concepts. The vision of the hub is to become a leading global innovation center for the financial sector. These initiatives and others resulted in some key milestones: Over 10.7 million customers used digital channels to open bank accounts since 2019, supporting the financial inclusion agenda; Non-cash transactions increased from 36% in 2019 to 62% in 2022; The banked population in 2022 reached 94% as compared to 72.6% in 2019; The number of digital wallet users has exponentially increased to 13.8 million in 2022 compared to 202,000 in 2018; As of April 2023, there are 154 fintech companies operating in the Kingdom, licensed and permitted by SAMA and Capital Market Authority.

As technology continues to advance rapidly, how do you perceive its impact on the banking and financial sector in Saudi Arabia and what initiatives has SAMA undertaken to embrace and regulate these advancements?

SAMA takes a proactive approach to managing the transformation of the financial services sector. The central bank is continuously working on enhancing trust, mitigating risks, and ensuring regulations align with international standards while leveraging technological advancements. SAMA’s proactive approach in embracing and regulating advancements in technology within the banking and financial sector is evident through several initiatives. This includes the launch of SAMA’s regulatory sandbox, which enables local and international fintech companies to test their innovative solutions in a controlled environment. SAMA’s facilitation of the fintech ecosystem was further enhanced when the regulatory sandbox influenced changes in current regulations and the introduction of completely new regulations, including payments service provider regulations, micro-lending regulations, financial information aggregation regulations, debt-based crowdfunding regulations, and buy now pay later guidelines. It also includes the introduction of the open banking framework and technical standards to ensure a standardized and secure methodology being followed industry-wide, ensuring everyone works with prescribed standards. Finally, we’ve launched the Open Banking Lab, which allows fintech companies and banks to test their APIs to ensure compliance with the standards set out by SAMA, thereby reducing risks and better manage testing and integration time.

Cybersecurity is a critical concern in the financial industry. How does SAMA address the challenges associated with cybersecurity and ensure the resilience of the banking system against cyber threats?

SAMA manages the increasing cyber security threats through various measures. First, we publish regulatory frameworks coupled with advanced technical testing requirements to equip financial institutions with the necessary measures against cyber threats and ensure the resilience of the banking system. We also conduct independent, full-scope cybersecurity and business continuity assessment covering a wide range of cybersecurity domains to assess the security and resilience posture of financial institutions. We’re developing a sector-wide cybersecurity strategy that takes into consideration the outcomes of the assessment and repository of the testing scenarios collected in view of evolving cyber threat landscape. Finally, we’re performing various types of testing as part of supervisory activities with the aim of testing the detection and response capabilities of financial institutions against real and sophisticated cyber attacks. These tests include red-teaming activities, business continuity plan simulation, disaster recovery, and other prudent tactics.

What steps has SAMA taken to promote financial inclusion in Saudi Arabia, particularly through the use of technology, and what are the current initiatives in place to further enhance financial accessibility for the communities living in KSA?

SAMA continuously works on enhancing access to financial products and services through the development of laws, regulations, and guidelines. The launch of open banking enhances trust among customers and market participants, which is important on the journey toward innovation and financial inclusion. SAMA has an always-open regulatory sandbox for fintechs that continues to facilitate financial inclusion by promoting the development of new solutions offering access to affordable financial products and services to segments of the population currently underserved or unserved. Moreover, the growth of the payment sector over the past several years has greatly contributed to promoting financial inclusion in the Kingdom. For example, SARIE system was upgraded to “SARIE IPS,” an instant payment system facilitating cash transactions and offering additional money transfer options such as mobile number, National ID, or residency number without the need to add and activate a beneficiary, resulting in empowering the national infrastructure for digital payments. All common metrics related to financial inclusion have improved over the past few years. As of 2022, the financial services penetration has reached 94% compared to 72.6% in 2019 of the adult population aged 15+, with an active and unique bank account or e-wallet account.

With the rise of fintech and innovative payment solutions, how does SAMA approach the regulation and supervision of these emerging technologies while balancing innovation and risk management?

The regulation for innovative financial products and services at SAMA combines both risk-based and opportunity-based regulations. With the initial introduction of cohort based regulatory sandbox has now evolved into 24/7 regulatory sandbox. This approach to opportunity-based regulations ensures that SAMA actively supports cutting edge innovation for the benefit of consumers, the industry and the wider economy. For fintech, a risk based approach for both regulations and supervision is followed. The regulatory requirements and supervision frameworks follow the fintech’s business model, size and impact on the sector which is translated into different tiers of regulatory requirements and supervision methodologies for different types of business models. This ensures secure and added value financial services in an innovative manner.

What are the key strategies and initiatives undertaken by SAMA to promote collaboration between the banking sector, technology companies, and Fintech start-ups, fostering an ecosystem of innovation and development?

As part of the fintech strategy, SAMA is working closely with various government agencies to drive the growth of the fintech ecosystem in the country. A number of active initiatives are ongoing, with more planned as the sector grows. These initiatives include launching SAMA’s regulatory sandbox, which allows innovative business models and concepts to be introduced in the market when a full regulatory framework is not in place. This has given fintech players early access to the market and allowed SAMA to assess risks and develop regulatory frameworks in parallel. We’re also launching Fintech Saudi, which has grown into being the focal point of the fintech ecosystem in the country. Through Fintech Saudi, many initiatives were introduced to foster an ecosystem of innovation and development including: Collaboration with international stakeholders to support foreign fintech companies seeking entry into the Saudi market; The introduction of “The Fintech University Challenge,” which focuses on fostering innovation in the banking sector by solving business problems for the participating banks through university students; The launch, by Fintech Saudi, of a virtual seed accelerator, which has accepted 50 new ideas into the program, helping shape these ideas into concepts; and the Introduction of technology-related training and development courses in collaboration with the Financial Academy. These courses aim to increase awareness and provide foundational knowledge for those seeking entry to the financial sector. This aligns with the talent development agenda under Financial Sector Development Program. In all of Fintech Saudi’s initiatives, banks are key strategic partners. They interact and mentor fintech players, acting as their banking partners as well as investors. This fosters an ecosystem of innovation and collaboration between the incumbent banks, fintech companies, and entrepreneurs.

Looking ahead, what do you envision as the major technological advancements or trends that will shape the future of the financial sector in Saudi Arabia, and how is SAMA preparing for them?

Several technological advancements and trends are likely to shape the future of the financial sector in Saudi Arabia. This could include blockchain and distributed ledger technology (DLT), artificial intelligence and machine learning, regtech and suptech, digital twins, and so on. SAMA’s preparation for these emerging technologies and trends involves a proactive approach with extensive research, internal studies, and proof of concepts being implemented long before any releases are made. A key area where SAMA is working with partners and global stakeholders is the Central Bank Digital Currency (CBDC). While different central banks around the world may opt to have their own CBDC, interoperability is critically important for cross border usage. This requires extensive design considerations and SAMA is involved in multiple discussions and experimentation.

Can you share the main targets and priorities set in your 2023\24 agenda?

SAMA will continue to focus on a number of ongoing initiatives, with particular emphasis on supervision transformation, which means transitioning from legacy supervision to an artificial intelligence and machine learning-based approach where risks are identified proactively through big data analytics in real time, enhancing supervision effectiveness, financial stability, and regulated entities’ experience. We’re also enhancing consumer protection and awareness of new financial products and services, developing their understanding of new ways of engaging with financial services providers and safeguarding personal information. We’re encouraging the growth of digital banking services with the launch of three licensed digital banks. We want to ensure the growth of a healthy fintech ecosystem, diversifying financial products and services. And finally we’re involved in further experimentation with a central bank digital currency with global development activities for cross-border payments.



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