As the first Saudi telco to be licensed as a digital bank, STC Bank has the manoeuvrability to tap into SMB projects and the tech startup segment in ways that traditional banks in the country have not.
From its beta launch in April 2024, STC Bank is now set for commercial launch, having received approval from the Saudi Central Bank. Its forerunner e-wallet service, STC Pay (launched in 2018), will be retained, but customers and businesses alike are now being encouraged to upgrade themselves to full digital banking services.
STC posts impressive growth figures
STC Bank has more than 200,000 registered merchants, with more than a tenth of that figure using QR payments, and 8,000 facilitating online payments. For end-2024, STC Bank (and STC Pay) posted revenue growth of 20% (totalling 1.6% of STC Group revenues), whereas gross profit in the same period achieved the highest growth of any segment at 93%.
Both its revenue and profit shares are expected to grow substantially over the next few years now that is has its banking license.
STC is the first non-bank entity of any type to be licensed as a digital bank in Saudi Arabia. It is not the first regionally, and it most certainly will not be the last.
Positional advantage
STC Bank, however, is one of the few digital banks in the world that is majority-owned by the telco, which means the company will be more invested in its success.
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By GlobalDataSitting in the sweet spot between the trinity of telecoms, tech, and fintech, STC will be able to leverage its existing customer relationships, its wealth of telco user data, and analytics on how its business subscribers deploy its B2B solutions, to offer tailored banking services, potentially with quicker turnaround times on financing than conventional banks.
It also can be a one-stop shop for SMBs and tech startups requiring finance to deploy next-generation technologies at a small scale. The same can be said for young entrepreneurs – many of whom crave for convenience, service convergence, and saving time to focus on their projects rather than shopping around for the best banking service or attending a conventional bank branch in person.
All of these represent a demographic vacuum that STC can rapidly fill.
A digital banking bellwether
Others in the region and beyond – especially those telcos already offering digital wallet and similar fintech services but not licensed as digital banks, those with minority stakes in digital banks, and other companies sitting on large cash reserves in the Gulf – will be keenly tracking STC Bank’s fortunes.
Some of the aforementioned operators, like PLDT, have already expressed a desire to boost their shareholdings in their digital banking operations.
With its first mover advantage and ability to disrupt the old banking guard in Saudi Arabia, it is a bold move by STC. But with the solid base of customers and merchants it has already built up during beta, it is also hard to see how this venture by the Saudi telco incumbent does not favourably work out for it
