Fintech is booming across the Gulf. In Saudi Arabia, the number of licensed fintech companies more than doubled between 2021 and 2023. In the UAE, fintech investment grew by 92% in 2023, even as global funding pulled back.
The momentum is real. But the success rate isn’t.
Many startups still stall early, not because of a lack of ambition or capital, but because they misread what it takes to operate in a tightly regulated, rapidly evolving financial system.
In this article, we’re unpacking the biggest reasons why fintech startups struggle to move beyond the idea stage in Saudi Arabia and the UAE, and what founders can do differently to build staying power.
Even with a growing fintech scene, startups face real obstacles before they can launch. Many of these challenges stem from how the sector is regulated, funded, and built. Here are three major hurdles that fintech founders need to navigate early:
Getting licensed in Saudi Arabia and the UAE requires careful preparation.
In Saudi Arabia, startups must work with multiple regulatory bodies such as the Saudi Central Bank (SAMA) and the Capital Market Authority (CMA). Many also undergo evaluation through regulatory sandboxes before receiving final approval.
In the UAE, startups secure licenses through the Central Bank or the financial regulator of their chosen free zone, often alongside sandbox participation.
Across both markets, fintech founders should plan for 6 to 12 months of regulatory preparation, including legal consultations, operational policy development, and alignment with local compliance requirements.
Startups also need to meet strict standards for anti-money laundering and counter-terrorism financing before launching services.
Fintech is a capital-intensive sector, and the investors in the region expect strong foundations from the start. Typical requirements include:
- A validated proof of concept and early traction
- Clear regulatory compliance strategies and advisory support
- A roadmap for scaling, supported by pilot customers or prototypes
- A founding team with experience in finance, technology, or compliance
Startups that enter fundraising without addressing these elements often find it difficult to secure early-stage investment.
In the Gulf markets, fintechs must address local legal and cultural requirements from the outset.
Sharia compliance is a prerequisite for many financial licenses, and products that align with Islamic finance principles tend to have stronger market demand.
In Saudi Arabia, strict data localization laws mean that customer data must be stored within national borders. Fintechs need to design their technology and partnerships accordingly, or risk costly delays during the licensing phase.
Despite strong government investment in digital infrastructure, specialized fintech talent is still in short supply across the Gulf, particularly in areas like cybersecurity, cloud infrastructure, and API development. While the number of tech jobs is growing, demand continues to outpace supply, making talent a real constraint for early-stage teams.
According to regional reports, only around 6% of the GCC workforce is currently employed in technology-related fields. As a result, many fintech startups rely on international recruitment, often paying premium rates to secure the expertise needed for product development and regulatory compliance.
Factoring talent acquisition costs into early-stage planning is essential for realistic budgeting and timelines.
While fintech adoption is growing across MENA, many consumers still have limited exposure to sophisticated financial products beyond basic mobile banking or digital wallets.
Products built around Open Banking, wealth management or embedded finance often require additional user education before they gain traction.
Startups launching in these markets should plan for extensive consumer onboarding, from simplifying user journeys to investing in educational marketing. Building trust and awareness early can be a key differentiator for fintechs offering more advanced or unfamiliar services.
For fintech startups in the UAE and Saudi Arabia, preparing for regulatory compliance from day one can save months in launch delays and increase credibility with investors.
One study found that startups that build for compliance at the pre-seed stage improve their long-term survival odds by over by 60%.
Here are four ways to do it:
Building a fintech company in Saudi Arabia and the UAE isn’t just about getting licensed. It’s about navigating regulations strategically from day one.
Yes, the landscape is complex: multiple regulators, investor expectations, and operational hurdles. But it’s also full of opportunity. Governments are investing in fintech ecosystems, and startups that take the time to understand the rules are better positioned to scale faster and win trust early.
If you’re planning your launch or expanding across borders, our team can help you build the regulatory frameworks and market entry strategies to do it right.
