Interview: Bader H AlSalloom, CEO, BSF
What has been the response of the banking sector to recent shifts in the global economic landscape?
BADER ALSALLOOM: The Saudi banking sector has responded to global economic shifts with a robust focus on supporting Vision 2030 and the associated giga- and megaprojects driving economic growth. Saudi Arabia has been somewhat insulated from global economic challenges, thanks largely to the substantial investment in these large-scale projects. Banks have aligned their strategies with Vision 2030 and are involved in financing these projects, which has fuelled credit growth.
To navigate the evolving landscape, banks are diversifying their funding sources, including local and international debt, foreign direct investment and public-private partnerships. This strategic alignment with national goals allows banks not only to weather global economic uncertainties, but also to capitalise on the ongoing economic boom driven by Vision 2030 initiatives.
In what ways is the banking sector adapting its services and operations to remain competitive in light of ongoing technological advancements?
ALSALLOOM: The banking sector is at the forefront of digital transformation, and continuously upgrading its systems and services to remain competitive in a rapidly evolving technological landscape. The sector has made strides in enhancing front-end digital services and backend IT infrastructure. Financial technology (fintech) innovations impacting the sector include open banking, banking as a service and partnerships with fintech companies. The sector is also investing in innovation labs to explore and develop digital tools and solutions, including the integration of artificial intelligence for business development and fraud prevention.
Do you see the relationship between banks and fintech players as more competitive or collaborative?
ALSALLOOM: In Saudi Arabia the relationship between banks and fintech firms is increasingly seen as collaborative rather than competitive. Banks recognise the value that fintech companies bring, in terms of agility and their ability to address niche market needs that larger institutions may not be able to target as effectively. The sector views these partnerships as mutually beneficial, with fintech companies complementing traditional banking services rather than disrupting them.
How effective have banks been in integrating sustainable considerations into their operations?
ALSALLOOM: Saudi banks have made substantial progress in integrating environmental, social and governance (ESG) considerations into their strategies and operations. The sector has taken a top-down approach, establishing governance frameworks and committees dedicated to ESG initiatives. Banks are working with the Saudi Central Bank to develop comprehensive related frameworks that align with national and international standards. Many banks have also begun to embed ESG criteria into their credit policies, ensuring that sustainability considerations are part of their lending decisions. The release of sustainability reports and the ongoing work to integrate ESG into long-term strategies highlight the sector’s commitment to these principles.
To what extent will digital currencies and blockchain technology innovations influence the traditional banking model in the coming years?
ALSALLOOM: While digital currencies and blockchain technology are areas of active exploration within the banking sector, their impact on the traditional banking model is expected to be more significant in the medium to long term rather than in the near future. Banks are currently working closely with the Saudi Central Bank on initiatives related to these technologies, but these efforts are in the exploratory phase. However, ongoing exploration and pilot projects indicate that when the time is right, the sector will be well-positioned to integrate these key innovations into its operations.
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