Interview: Tony Cripps
What can be done to facilitate growth of local small and medium-sized enterprises (SMEs) and ensure the availability of financing?
TONY CRIPPS: There is a strong commitment from the government to increase the contribution of SMEs to GDP, which will help to accelerate the economic diversification of the Kingdom. There are strict key performance indicators in place to support these objectives, and local banks play an important role in providing the necessary financing mechanisms to help facilitate growth of SMEs.
In order for banks to be able to offer more tailored financing products and services to SMEs, the digitisation and automation of processes needs to be accelerated and expanded, which will cut costs and boost efficiency. Transaction automation has been happening for years, reducing the need for physical branches. We are now seeing the next step in this process, one that allows banks to offer to customers their financial products and services digitally. Within this process it is important to implement best practices and digital solutions for SMEs that have already been proven in other markets.
Where do you see opportunities for the greater use of digital tools to improve service provision and product delivery in the local banking sector?
CRIPPS: The domestic banking industry is turning to technology and digital tools to become more customer centric, thereby boosting customer retention. This is a process that involves continuous investment.
For example, SABB has committed SR1.5bn ($399.9m) in technology upgrades through to 2025-27. The majority of this allotment will be spent on customer solutions, and there will be notable investment in improving integration.
Moving forwards, there is considerable opportunity in product delivery. Even as the Saudi banking industry has been active on this front, there are areas that present further investment potential. As a result, the industry will see development in the implementation of digital tools to improve product delivery.
To what extent are global environment, social and governance (ESG) trends shaping growth opportunities in Saudi Arabia?
CRIPPS: The international investment community is focused on executing ESG frameworks and in many cases they lack the assets to do so. As a result, a number of global investment institutions are looking at green projects around the world that will allow them to be more effectively involved in and have a greater impact on their environmental and social outcomes.
Saudi Arabia is a key player in leading ESG trends. This is due to the scale of the transition taking place, as the country moves from being the world’s largest exporter of oil to the largest exporter of renewable energy. This provides ample opportunities for both local and international investors.
How would you evaluate the potential for expansion in both the sector and the wider economy?
CRIPPS: The fundamentals of Saudi Arabia’s economy are strong. The Kingdom is opening its economy and attracting foreign capital in infrastructure development that will help the country meet its net-zero carbon emission target by 2060.
The fast pace of change in Saudi Arabia has raised awareness of the opportunities available in the country, particularly in strategic sectors that have become of great interest to the international investment community such as renewable energy and tourism. This will ultimately affect many other areas of the economy, benefitting businesses and society.
Similarly, the local banking industry is well positioned for further development in the coming years. This is primarily a result of the positive prospects of the economy and high levels of liquidity in the market.
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