The Business Year

Ziad Al Yousef


Enabler Between Banks and Fintechs

Managing Director, Saudi Payments


Ziad Al Yousef took over as the Managing Director of Saudi Payments in 2018, assuming the responsibility of establishing the organization. He previously served in various roles in SAMA for 13 years, where he also was responsible for payment systems, most recently as General Manager of that department. Al Yousef graduated with a bachelor in information systems from King Saud University and an MBA from Alfaisal University. In addition, he followed post-graduate course work and leadership programs at INSEAD and Harvard Business School.

“There are advantages for the government as well, as it increases transparency regarding VAT and other taxation.“

Saudi Payments was established via the merger of SADAD and the Saudi Arabian Monetary Agency’s (SAMA) General Department of Payment Systems. Could you tell us more about the organization’s inception?

Saudi Payments might be a new organization in its name and branding, though its legacy is about 30 years old, when SAMA started in 1985 with the establishment of the banking technology department. This department focused on developing shared payments infrastructure. SAMA’s forward-looking vision for the need of a shared infrastructure was the impetus behind the center. The journey started in 1990 with the introduction of the national payment system mada formerly known as SPAN. In 1997, Saudi Arabia was among the first countries to introduce electronic real-time gross settlement system (RTGS). In 2003, the introduction of our electronic payment platform SADAD followed, in addition to other smaller-sized projects in between. In 2018, we executed a program SAMA had planned for a while: carving out all operational payment activities into a wholly owned subsidiary of SAMA. Saudi Payments was established with the mandate to continue that legacy by developing a national payment infrastructure, serving banks and fintechs equally, and providing the required interoperability to ensure all players have a level playing field. In short, we work on standardization, interoperability, and security, linking everyone and providing infrastructure. Other countries have similar setups, and global institutions such as the World Bank, the IMF, and the G20 Committee have recognized that interoperability and shared infrastructure are the key enablers of fintech. Without these, the barriers for entry are simply too high; it would potentially lead to mega players coming in and eating up the entire market. We prefer a level playing field, and that is still our mandate. Our main KPI is not revenue-based; rather it is based on increasing the number of cashless payments.

What strategies do you have in place to achieve the vision of having a 70% cashless society by 2030, as formulated by the Vision 2030’s Financial Sector Development Program (FSDP)?

To grow from 20% to 70% in one decade is an ambitious objective. From our global benchmarking, even the UK is only about 50%, and it is fairly advanced in digital payments. The most advanced societies are Sweden and Norway. That said, our financial infrastructure in place here, in addition to the high rates of technology by our customers, is promising. The pick-up of near field communication (NFC) payments in 2018 was phenomenal, reaching 40% of all contactless transactions. Within one year, we are reaching western European levels. Saudis use new methods of payment when these are convenient. In addition, mobile payment adoption is high compared to other countries, and it was only introduced in late 2018. There are still some missing pieces, like a faster payments platform. These RTGS transactions are still done from bank to bank via SAMA, which only operates during business hours, and currently, the only method of money transfer. Other countries are more advanced in this respect, allowing for bank-to-bank transfers, almost for free. An updated system will significantly reduce cash transaction, as many of these are P2P and usually low in value. This faster payments platform is our next megaproject and should be up and running in 2020. The nature of this program will require large changes to banking systems; we will adopt a new standard ISO20022. People are moving away from the old SWIFT messaging standard to that new ISO standard. The new systems have proven to reduce cash transfers and unleash a wave of innovation for fintechs thus far in the UK, Singapore, and the US.

What is your approach toward mobile payment operators and solutions?

Mobile payment is a large category with various different categories and methods. The market needs multiple solutions for multiple challenges. The first differentiator is between payment instruments and wallets. The proposition of the e-wallets is basically a light bank account on people’s mobile phone or other that has fewer requirements than a bank would ask. The main purpose for these is doing payments, and there is no lending or difference between a checking and saving account. Mobile payment operators in this domain will continue to focus on the unbanked or underserved segments of society, and we support them with the interoperability, security, and infrastructure. Apple Pay, for example, falls in a different category and is just a method of payment. The account is still linked to one’s bankcard, and they are debiting from their account directly. In the past one and a half years, we have worked to enable Apple Pay in Saudi Arabia as part of the existing infrastructure. We have also built mada Pay, which is a similar concept, though for Android users; customers can load their cards and use NFC to securely execute the transaction. There are areas to play for both those who would like to use their current account or card to make payments and e-wallets, which are more convenient.

How do you consider your role working with both banks and fintechs, which are both competitors and collaborators?

This is challenging because banks have long regarded us as their main deliverer, which we essentially still are. From a regulatory perspective, our objective is to serve everyone. Banks realize that the ecosystem is changing, and they are taking different approaches. Some have already established technology departments. The aim of those units is to find suitable partnerships for banks to partner with fintechs, either directly through capital investment or through partnership or extending bank services to those fintechs. We have yet to see successful examples, though partnerships are being forged and developed. Our proposition is providing a highway where, if a bank wants to expose a service to a fintech, our aim is to be an enabler for that layer. It is better to build one highway to fintechs rather than having every bank develop their own, which will lead to a scattered infrastructure; it also places fintechs at a disadvantage to be tied to only one bank. Luckily, the pie is large, and there is room for all banks and fintechs when they take a customer-centered approach.

What are your strategic priorities for the coming year?

We are focusing on achieve the Financial Sector Development Program (FSDP) targets set by SAMA and the Ministry of Finance. Aside from financial inclusion—which currently stands at 74% according to the World Bank—and the cashless transactions objectives, we are also working on an e-invoicing platform, which has already been launched as a pilot at the end of Q1 of 2018. Such a platform will significantly reduce costs for corporates and SMEs because of all spending on B2B paper-based invoicing. There are advantages for the government as well, as it increases transparency regarding VAT and other taxation. Operationally, we aim to finalize the internal carve out from SAMA and be an independent organization. The ultimate goal is when we do not need to talk about payments because they are seamless.



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