Saudi Banking Regulator Funds Local Banks Using Blockchain

Saudi Arabia is continuing with the mission to improve blockchain adoption and use across the United Arab Emirates. In the country’s latest adoption play, its financial regulator just conducted a banking fund transfer with the technology.

Blockchain and Private Sector Capital

Earlier today, the Saudi Arabian Monetary Authority (SAMA) issued an official statement confirming that it had used blockchain to transfer funds to local commercial banks. As explained in the announcement, the funds were a part of the SAMA’s initiative to optimize banks’ capabilities to continue providing credit to individuals and businesses.

While the bank didn’t specify the amount sent, it announced last week that it would inject 50 billion riyals (about $13.35 billion) to help banks to support the private sector. The bank also explained in its latest press release that it conducted the transfer to test emerging technologies and their potential to help provide financial inclusion and improve efficiency.

Saudi Arabia and the UAE Thrive on Their Blockchain Plans

The blockchain takeover of Saudi Arabia has extended far beyond the country. It appears that the entire Middle East is benefiting from it as well. Earlier this year, the Centre for the Fourth Industrial Revolution UAE — a science and tech-focused consortium— partnered with the Dubai Future Foundation and the World Economic Forum to release a research paper.

Titled “Inclusive Deployment of Blockchain: Case Studies and Learning from the United Arab Emirates,” the paper posited that the UAE could save as much as $3 billion annually by fully incorporating blockchain.

The paper also explained that the UAE government could reduce paperwork with blockchain. Essentially, it could take out its reliance on about 398 million printed documents and 77 million hours of work in a year.

Since then, the UAE’s government has been sold on blockchain and its potential to help improve just about every aspect of daily life. However, the government has been doing a lot of work with blockchain before the report came out.

In 2018, the UAE launched the Emirate Blockchain Strategy 2021, in which it outlined its plan to move at least half of all government-concerned transactions to blockchain platforms before the end of this year. In the same year, the UAE’s Central Bank and the SAMA announced a partnership that will see them issue a digital asset for cross-border transactions between the two countries.

This year, the Abu Dhabi Island Bank announced that it had become the first Islamic financial institution to use blockchain to complete a finance distribution transaction successfully.

The company used TardeAssets, a blockchain-powered trade finance marketplace, to execute several cross-border transactions with several of its banking partners over a year.

“ADIB is committed to expanding its digital footprint in trade financing and distribution, enhancing the efficiency and productivity of businesses across the region and globally,” said Haytham Elmaayergi, the global head of transaction banking at ADIB. 

There have been several other significant milestones on the way to the Emirate Blockchain Strategy 2021. While it’s still unclear whether the government can really pull off a partial blockchain overhaul, the progress made thus far has been undeniable.