Artificial Intelligence in the Saudi Financial Market: Digital Transformation

Artificial intelligence is defined as a branch of computer science focused on developing systems capable of performing tasks that require human intelligence, such as machine learning, data analysis, and decision-making. In the Saudi financial markets, AI represents the cornerstone in developing advanced analytical tools, helping to improve market responsiveness to rapid changes and the massive data generated from daily trading. Brokerage firms and local banks have adopted AI technologies to analyze market trends, discover investment opportunities, and monitor risks. AI has also become an essential part of the digital transformation strategies implemented by regulatory bodies such as the Capital Market Authority, which oversees the development of a smart infrastructure to ensure integrity and transparency. One of its most notable applications is the use of intelligent financial robots (chatbots) to enhance investor experience, providing instant answers about trading and accounts. It is also used in developing continuously updated technical and fundamental analysis models, thereby increasing the efficiency of institutional investment decisions without direct human intervention. All of this comes within the framework of the government's direction to accelerate digitization and enhance the competitiveness of the Saudi financial market at the regional and international levels.

Vision 2030 has placed digital transformation and the development of the technology sector at the core of its national strategies. Artificial intelligence is considered a pivotal part of this vision, as the Kingdom aims to become a regional hub for future technologies. Several national programs have been launched to accelerate the adoption of AI, including the National Data and Artificial Intelligence Strategy overseen by the Saudi Data and Artificial Intelligence Authority (SDAIA). The government has invested billions of riyals in developing advanced digital infrastructure and launched initiatives to stimulate innovative startups in the sector. The Public Investment Fund has shown interest in establishing specialized entities such as the 'Humain' AI company, which aims to accelerate local innovation and localize technology. The vision has also encouraged collaboration with global companies in cloud computing, data analytics, and industrial robotics. These combined efforts have made AI a key factor in increasing the efficiency of financial markets, improving risk management, and enhancing the quality of services provided to both Saudi and foreign investors.

The applications of artificial intelligence in the Saudi financial market are diverse, covering several vital areas. Among the most prominent is the development of automated trading algorithms capable of analyzing massive data and making buy and sell decisions in fractions of a second. AI is also used to monitor unusual patterns to detect potential fraud or market manipulation. Some companies offer robo-advisors that assist investors in building their investment portfolios based on customized criteria and precise risk analysis. Additionally, banks and financial institutions rely on AI technologies to assess creditworthiness and analyze customer behavior, helping to provide smart digital banking services. The insurance sector has seen the use of machine learning models to improve pricing processes and detect fraudulent claims. In the trading sector, electronic trading platforms have enhanced their reliance on AI to provide updated recommendations and real-time analyses, contributing to increased speed and accuracy in institutional and individual financial decisions.

Recent statistics indicate rapid growth in the size of the AI market at both global and local levels. Globally, the value of the AI market is expected to exceed $200 billion by 2024, with annual growth rates exceeding 30%. In the Middle East, IDC reports predict that spending on AI technologies will reach $10 billion by 2025, with Saudi Arabia leading the list of countries investing in this sector. Locally, the number of AI startups increased by over 40% in 2024 compared to 2023, attracting funding exceeding 500 million Saudi riyals in one year. The share of the communications and information technology sector of the total market capitalization rose to over 15% by the end of 2024, driven by the establishment of new data centers and massive investments in research and development. This growth reflects the increasing confidence of investors and institutions in AI's ability to bring about a qualitative shift in the Saudi economy.

The communications and information technology sector is the largest driver of AI investments in the Saudi market. This sector includes major companies such as Saudi Telecom Company (STC), Etihad Etisalat (Mobily), and Zain Saudi Arabia, which are increasingly investing in developing digital infrastructure, data centers, and fifth-generation solutions and cloud computing. According to financial reports for 2024, STC's capital expenditure increased by 10-15%, with a significant portion of this expenditure allocated to AI technologies and expanding data centers. The telecommunications and media sector recorded revenues of 80 billion Saudi riyals in 2024, with an annual growth exceeding 5%. The sector's profit margin ranges between 25-30%, confirming the viability of investing in AI solutions. Despite high competition, telecommunications and technology companies remain at the forefront of innovation, supporting digital transformation through strategic partnerships with global technology service providers.

Saudi Telecom Company (STC) leads the list of companies adopting AI solutions, having launched an AI innovation center and expanded its smart cloud computing services. Mobily invests in developing AI solutions for businesses and expanding its partnerships with global technology companies. Zain Saudi Arabia focuses on big data services and AI applications directed at individual and corporate customers. Additionally, the Public Investment Fund has established 'Humain,' an AI company with an initial capital of 80 billion riyals, aimed at developing advanced data centers and partnerships with global companies like Nvidia and AMD. Alongside major companies, new startups listed in the parallel market (NOMU) focus on data solutions and smart analytics. This diversity in companies enhances the sector's dynamism and creates promising opportunities for growth and innovation in the Saudi financial market.

The AI market in Saudi Arabia features strong competition between government-backed local companies and major international players. Locally, companies like STC and Mobily, supported by the Public Investment Fund, are investing in developing advanced AI solutions. In contrast, global companies such as Microsoft, Google, and Amazon AWS have entered into strategic partnerships to provide cloud computing and AI services in the Kingdom. Semiconductor companies like Nvidia and AMD are also competing to supply AI chips for massive Saudi projects. Additionally, Gulf funds such as the Abu Dhabi Investment Authority are investing in AI projects in Saudi Arabia, creating a competitive environment that stimulates innovation. These partnerships and global competition accelerate knowledge transfer, support the development of digital infrastructure, and ensure the Kingdom remains at the forefront of countries adopting the latest AI technologies in the region.

The Saudi Capital Market Authority plays a pivotal role in regulating and stimulating a safe investment environment for AI. The authority has issued several regulations to facilitate foreign investors' entry, announcing in 2025 its intention to raise the foreign ownership limit in tech companies to over 49%. The Saudi Data and Artificial Intelligence Authority (SDAIA) is also working on developing regulatory frameworks for the use of big data and AI in financial services, focusing on data protection, privacy, and preventing illicit uses. Government initiatives also include stimulating startups through funding programs and tax incentives. These regulatory efforts ensure balanced growth in the AI sector and support the Kingdom's aspirations to enhance the competitiveness of the financial market and the attractiveness of the tech business environment.

AI requires a robust digital infrastructure, prompting major Saudi companies to build advanced data centers. Humain announced the construction of the first specialized data centers for processing AI applications in Riyadh and Dammam, with an operational capacity of up to 100 megawatts per center. STC and Mobily have also invested in developing data centers that support cloud computing and big data storage. These centers enable Saudi and foreign companies to train large AI models locally and provide a secure environment for processing financial and commercial data. These investments keep pace with the rapid growth in demand for digital services, especially with the spread of 5G technologies and the Internet of Things. A strong infrastructure is a critical factor in attracting global companies to invest in the Kingdom and localize AI technologies.

Opportunities for AI applications in Saudi Arabia are expanding to include various sectors. In healthcare, AI is used in medical diagnostics, radiological image analysis, and drug development. In the energy sector, Aramco relies on AI to improve refinery efficiency and detect faults early. In financial services, banks employ AI to analyze creditworthiness and provide smart banking services. Smart city projects, such as NEOM, have introduced AI applications for managing infrastructure, transportation, and renewable energy. These developments open wide horizons for local and international companies to participate in building an advanced knowledge economy and achieving qualitative leaps in productivity and quality of life. The Kingdom is a fertile environment for experimenting with and developing AI solutions, thanks to government support and the increasing demand for digital services.

Despite the significant opportunities, the AI sector in Saudi Arabia faces several challenges, including high valuations for startups and the potential for a bubble in some tech sectors. Risks also relate to cybersecurity, as big data may be exposed to cyberattacks or illicit exploitation. Companies face challenges in complying with local and international regulations related to data protection and privacy. Additionally, AI solutions require qualified human resources and face difficulties in localizing many advanced technologies. Saudi regulatory bodies are working on developing balanced legislation that ensures growth while protecting investors and consumers alike. Therefore, it is essential for investors and companies to carefully study these challenges before entering the sector or expanding their investments in it.

Education and scientific research are central to Saudi Arabia's AI strategy. Saudi universities have launched specialized academic programs in AI and data science and collaborated with global companies to provide practical training for students. The Kingdom has also established advanced research centers to support the development of AI algorithms and technologies locally. In 2024, several universities announced joint research programs with major tech companies, aiming to graduate national competencies capable of leading digital transformation. These initiatives aim to bridge the gap in qualified human resources and localize technology, providing an encouraging environment for innovation and entrepreneurship in AI.

Experts expect strong growth in the Saudi AI sector to continue until 2030, driven by massive government investments, international partnerships, and the increasing demand for smart digital solutions. With new players entering the market and an expanding base of startups, the range of AI-supported financial products and services is expected to diversify. Government policies to facilitate foreign investment and develop digital infrastructure will propel the Kingdom to a leading position in the global AI readiness index. In the coming years, the financial, technology, and energy sectors will remain the most beneficiaries of these transformations, with expectations of increased market capitalization for tech companies and a growing influx of international investments into the Saudi market.