Balancing Innovation and Protection: Is AI Regulation the Future of Saudi FinTech?

Abstract

This study investigates the implications of artificial intelligence in the Saudi FinTech sector, focusing on the evolving regulatory landscape. While AI holds substantial promise for driving innovation, it also poses ethical and practical challenges such as data privacy, algorithmic transparency, and fairness. This study examines the current regulatory framework in Saudi Arabia, highlighting efforts like the AI Ethics Principles and the Personal Data Protection Law. Despite these measures, significant gaps remain due to the voluntary nature of the AI Ethics Principles and Generative AI Guidelines, resulting in inconsistent implementation. The primary aim of this study is to guide policymakers on regulating AI in the Saudi FinTech sector while preserving innovation. Key recommendations urge policymakers to develop regulations based on international best practices, addressing issues such as data privacy, algorithmic biases, and systemic risks. Emphasising the need for continuous dialogue among regulators, FinTech companies, and international partners, the study also calls for enhancing human-machine collaboration, establishing regulatory sandboxes, creating an AI Oversight Committee, and supporting research to better understand AI's implications. By aligning with Saudi Vision 2030 goals, these recommendations aim to strengthen Saudi Arabia's AI regulatory framework, support sustainable growth in the FinTech sector, and build public trust in AI-driven financial services.