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Product coverage
Consumer lending; Financial cards and payments
Executive summary
Boost in the economy increases consumer spending
Saudi Arabia comprises the largest economy in the whole of the Middle East,
with multi-billion dollar economic development projects under way and many
more in the planning stage in both the public and private sectors. The
Kingdom' s real estate construction sector continues to be fuelled by the
increasing population, which has grown eight-fold over the last two decades,
and is expected to continue to rise over the forecast period. These large
multi-billion dollar public and private projects are under way in order to
provide the necessary infrastructure, housing facilities, education and other
essential services needed to support this massive growth. As a result of the
new opportunities created by the boom, consumer expenditure increased
significantly over the review period, and is expected to maintain the positive
trend over the forecast period.
Saudi consumers now better informed about consumer finance
In order to penetrate the financial cards and payments market, Saudi Banks are
competing for market share as well as aiming to increase the penetration level
of debit, credit and charge cards. They are educating their customers on the
use and advantages of debit and credit cards. Saudi banks are also trying to
penetrate different and some formerly untapped segments, such as women, with
the aim of extending the market from the masses and students to the elite of
affluent customers. It is likely that during the forecast period a significant
percentage of bankable Saudi consumers will be issued with a credit card.
Currently, the penetration rate of credit cards in Saudi Arabia is relatively
low. Therefore, there is significant room for growth and expansion among
existing bank and other credit institutions, as well as potential newcomers.
Kingdom' s massive population growth behind increase in debit cards
Population growth and surging oil revenues are the key dynamics stimulating
both the economy and consumer spending. The Saudi government is encouraging
banks to issue debit cards to all government employees and transfer their
salaries directly to the banks. As a result of this policy, a significant
increase in the bankable population was seen over the review period. This
trend is likely to continue over the forecast period, as more people enter the
job market. Debit transactions are increasing significantly and they will
continue to increase over the forecast period, as the booming economy of Saudi
Arabia is allowing consumers to purchase new cars or homes that they wish to
equip with domestic electrical appliances, consumer electronics, home
furniture and other home items.
Huge shopping malls offer excitement in shopping
With the massive growth in the economy, shopping malls in Saudi Arabia are
mushrooming in all cities. The Kingdom' s shopping malls serve two purposes:
shopping and entertainment. Shopping centres, which are fully air-conditioned,
are increasingly part of the lifestyle. Therefore, shopping is not just an
activity everyone does, it is an activity that everyone enjoys and has a
stimulating effect on card payment transactions.
Positive trend in the use of credit cards and charge cards
Saudi Arabia is relatively cash-based society, but is expected to change
rapidly to a card society over the forecast period. As little as 20 years ago,
almost no one had credit cards and almost no merchant accepted them.
Previously, people would purchase a car with a shopping bag or two full of
currency, but today more consumers are taking advantage of developing
financial services. Credit cards are becoming more popular in Saudi Arabia,
and are expected to reach a high level of penetration over the forecast
period. It is expected that over the next few years, a significant percentage
of newly banked consumers will carry and use credit or charge cards in the
Kingdom.
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