Saudi Arabia has no shortage of capital. But access to finance remains one of the biggest challenges facing smaller businesses here. Joining me is Saudi finance and fintech executive and Founder of Isar, Ali AlKhater.
Thank you very much.
What is the financing problem that Saudi SMEs still are not getting solved?
The main challenge is access to the right capital at the right time. That is what I find most challenging for SMEs when you compare traditional banking and fintech. Using fintech will ease decisions by lenders and make it easier for SMEs to get financing.
Saudi banks are lending strongly but public sector enterprise credit is growing faster than overall credit. Does that create a bigger opportunity for fintech lenders?
Absolutely. But we are not talking about fintech replacing banks. Banks are a major player in the financial ecosystem. The better framing is that fintechs will be working with banks, serving companies that banks are not yet reaching. Banks are the giant brothers. Fintechs are the newcomers to the financing sector. And fintech complements clients who have been financed by banks — helping them scale and grow.
From your experience providing working capital finance to SMEs, what does a small business value most — cheaper money, faster access, or flexibility?
The certainty. The certainty and the value of knowing quickly — am I getting finance or not? This is the main purpose of fintech: to make things easier and quicker. A business might have payroll due or an invoice coming. Time is very critical. So I would put timing — answering these companies quickly — above pricing. The price matters, but the timing is crucial.
You have written about using AI to look at cash flows, payment behaviour, and invoices when assessing an SME. What can that see that a traditional credit score might miss?
Traditional credit scoring is based on historical data — credit history. The missing part is studying the behaviour of the client. Introducing AI will give me not only the historical study of the client but also their behaviour — which makes it easier to take a decision. We are not talking about AI replacing the decision made by risk modelling or risk underwriting. It helps us take better decisions, depending on the quality of the information we feed it.
How do you make sure financial inclusion does not turn into over-borrowing?
Responsible lending. The golden equation here is not to give more people debt or make more people indebted. It is about making more people understand responsible financing. Using AI will make it easier for us to see if a business is under financial stress — because historical data will not give you their current situation. This means we can manage how much we give a business just to help them scale up. What I see in most financing companies is they focus on giving more loans while skipping the quality of those loans — which is more important. As you enlarge your portfolio, you want to make sure the ratio of good loans stays high.
When a fintech starts scaling quickly, what tends to break first — credit discipline, culture, or governance?
Governance — because governance is what accumulates credit discipline and culture. Usually in startups, things are clear at the beginning. But when you scale up, things get more sophisticated. I would invest more in governance early. Once you scale up and you have not put the right base for governance, you will face difficulties in the future. You should not rapidly grow your balance sheet without scaling up your control functions at the same pace.
Ali, thank you very much for coming.
Thank you. Pleasure having you.
