Interview: Nadir Al Koraya, CEO, Riyad Bank
To what extent are banks adapting strategies and services to support economic diversification?
NADIR AL KORAYA: The Financial Sector Development Programme (FSDP) is key to creating a diverse sector that supports the national economy. The FSDP has been instrumental in privatising industries, strengthening related entities and developing financial markets. It also supports private companies by expanding financial planning, and increasing funding for small and medium-sized enterprises (SMEs). Due to these efforts, the banking sector has helped promote economic growth.
By the end of 2023 total banking sector assets reached SR3.9trn ($1trn), with claims on the private sector accounting for 63% of these assets. Banks have also tailored products for SMEs in key sectors, with credit for such entities rising to 8.4% of the total banking loan portfolio in 2023, up from 5.8% in 2018. In addition, banks are enhancing digital solutions, boosting inclusion, and investing in sectors like e-commerce and ICT. They are also contributing to venture capital funds and financing infrastructure projects, all of which support Vision 2030 and diversification goals.
In what ways is the digital transformation shaping the future of banking in Saudi Arabia?
AL KORAYA: Most banking operations are now conducted digitally. Saudi banks have made significant strides in financial technology (fintech), in line with Vision 2030. Investment in digital technology has driven innovation, improved the customer experience, reduced the dependence on cash and enhanced service efficiency. The latest wave of the digital transformation has led to a rise in new business models, fuelled corporate growth and boosted the digital economy.
While brick-and-mortar branches are not disappearing, their role is changing. They are transforming into advisory and support centres, where personalised service is more important, reflecting the broader trend of digital banking becoming the dominant service channel.
What role is the banking sector playing in advancing financial inclusion in Saudi Arabia?
AL KORAYA: In recent years the Saudi Central Bank (SAMA) has approved a range of innovative products and services from payment service providers, which have contributed to financial inclusion. Banks have played a key role by developing digital solutions that cater to diverse social segments, and offering more accessible and tailored products and services. For example, banks have focused on the youth segment by utilising digital tools for onboarding, and strengthening financial literacy through apps and platforms. Collaboration with fintech companies is also crucial, as such entities have increasingly realised the value of working with banks, which themselves benefit from fintech innovation and market reach.
How much progress has there been towards integrating sustainability and environmental considerations into banking practices in the Kingdom?
AL KORAYA: The banking sector is making notable progress in sustainability, driven by Vision 2030 and the Saudi Green Initiative (SGI). Key steps include the formation of a ministerial committee focused on environmental, social and governance (ESG) issues, the development of corporate sustainability reporting standards by the Ministry of Economy and Planning, the launch of ESG disclosure guidance through the Saudi Exchange and the creation of the Green Financing Framework by the Ministry of Finance.
The Saudi Central Bank’s ESG banking advisory committee plays a key role in developing and promoting sustainability across the sector. Green financing is expanding, with over SR705bn ($188bn) invested in more than 80 initiatives under the SGI. Banks are contributing through a number of sustainable finance products and the funding of green projects. Boosting the integration of environmental risk into credit assessments and investment decisions is a core area of focus.
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