2014-04-10 14:06:04 - Financial Cards and Payments in Saudi Arabia - a new market research report on companiesandmarkets.com
Saudi Arabia´s economy continue to thrive as a result of stable and high oil prices. High government income improved the living conditions of many Saudis, where the unemployment rate decreased slightly, and government spending across various levels increased. In accordance with these favourable circumstances, the growing number of expatriates as well as the youthful nature of Saudi people and their consumption behaviour increased demand for consumer finance products. Such commitments from the government increased consumer confidence and therefore boosted their spending. Consumers in the Kingdom are looking for new payment methods besides cash.
The credit card market in Saudi Arabia is prospering, with greater penetration of Sharia-compliant cards extended by traditional and Islamic banks to meet the increased customer demand. Islamic
banks, which strongly benefit from this market, have innovated different types of Sharia-compliant credit cards which made the market highly competitive, especially with the entrance of new players which adopted Islamic regulations.
The bank´s current strategy is attracting the unbanked population and targeting the personal segment through the launch of more Islamic products and services. To achieve this goal the bank is currently expanding its branch network, ATM machines, and POS terminals across the Kingdom. Al Rajhi has a strong presence in all categories of financial cards, except credit cards, which are launched new by the bank. Furthermore, Al Rajhi´s general position is high and it is expected to be sustained over the forecast period, as the bank has a competitive advantage regarding its reputation as an Islamic bank, its service to the community, and its experience in Saudi Arabia.
The consumption habits of Saudi consumers and the youthful nature of society guarantee high demand for consumer finance products. The Saudi people are high spenders on luxury as well as basic goods and services. This consumption pattern, which is in general supported by high per capita income, is difficult to change, especially in terms of luxury items, mainly new cars, entertainment and travel. The youthful population of Saudi Arabia strongly enhance demand for different types of financial cards. This age group is a main driver of strong demand for different types of financial cards because they are affected by the western style of living. Also, banks are now targeting Saudi women more, providing them with exclusively designed products and services.
The banked population is expected to show further improvement in coming years due to several factors. The government´s efforts to achieve this goal, such as its decision to pay unemployment subsidies, the reduction in fraud risks related to card use, and increased urbanisation. The growth prospects are expected to vary according to card function, with credit cards expected to see the highest growth, while debit cards are expected to register the slowest growth. Industry players are expected to diversify cards and payment services, with increased innovation of Sharia-compliant products to meet the anticipated high competition and stronger demand.
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