Artificial Intelligence
Why AI Readiness Determines FinTech Productivity Gains
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As deploying AI at the corporate and national level becomes a top priority, knowing what to expect in terms of increased productivity and results is important.
But adopting software and AI technology is only the first step of the process. How it is received, actually used, and then integrated into existing and future workflows determine how much value is actually created
A new study by two researchers at King Fahd University of Petroleum & Minerals in Dhahran, Saudi Arabia, illustrates the importance of AI preparedness.
They studied 255 firms across Saudi Arabia’s regions and assessed how productivity gains of FinTech adoption require AI preparedness.
They published their findings in the International Review of Economics & Finance, under the title “FinTech and productivity gains in Saudi Arabia: A multilevel analysis highlighting the state of AI preparedness”.
Moving Toward Intelligence-Driven Economies
The case of Saudi Arabia is especially pertinent to analyze the turn to FinTech and AI, as the country is looking to reduce its dependence on hydrocarbons. So the country is refocusing its attention on how it can harness technological innovation to spur productivity across key sectors.
In many emerging and middle-income economies, FinTech (financial technology) is increasingly seen as an inducement for financial innovation, access, and efficiency.
“By leveraging data analytics and digital credit scoring, FinTech platforms can achieve greater information transparency, facilitating lending to firms that may have been excluded from the traditional financial system.”
It can be broadly defined as the integration of advanced digital technologies, including but not limited to cloud computing, the Internet of Things, artificial intelligence, machine learning, and big data analytics.
This is especially important to unlock productivity growth in sectors like trade, transport & logistics, and services that could have been constrained by heavy reliance on timely payments and high working capital.
“In trade, the use of digital payment platforms can shorten cash conversion cycles and support the participation of small-scale financially-constrained firms in the wider markets. In transport, logistics, and services, FinTech deployment in payments and credit can strengthen coordination across fragmented networks, facilitate the launch of new business models, and improve the overall service delivery.”
AI Adoption Alone Is Not Enough
AI Preparedness Index (AIPI)
FinTech adoption connects with a broader digital transformation drive within firms, nurturing complementary innovation in client management, logistics, and management practices. So counting on FinTech adoption to improve productivity at the firm level is not an unreasonable expectation.
Still, the broader tech capability should be taken into account as well. In economies with strong AI preparedness, FinTech platforms can more effectively incorporate AI techniques such as machine learning, cloud computing, and big data analytics for credit risk modeling, automated compliance, and customer personalization.
Such multiplier effects can be estimated by the AI Preparedness Index (AIPI), constructed by the International Monetary Fund (IMF). The AIPI measures macro-structural readiness for AI adoption across 174 countries, and four key dimensions, which are:
- Digital infrastructure.
- Human capital.
- Technological innovation.
- Regulatory frameworks.
The study compares Saudi Arabia’s state of AI preparedness with advanced economies like the United States and the United Kingdom, fellow emerging economies, notably China and Turkey, and with neighboring economies of the United Arab Emirates (UAE) and Qatar.
Saudi Arabia’s AIPI Score
The level of AI preparedness in Saudi Arabia is still relatively low: the level of integration of AI capability in human resources is the highest at 0.18; this is followed by digital infrastructure with a score slightly above 0.14, and closely followed by regulatory and ethical frameworks in the third position, with the state of AI innovative technology the lowest.
When compared to other countries, Saudi Arabia ranks relatively low in AI preparedness. This is especially true when compared to advanced economies, but also emerging economies like China. However, the country is relatively on par with its regional neighbors, behind the UAE, but above Qatar and Turkey.
The researchers also analyzed individual AI preparedness at the firm level (255 companies) and at the region level within Saudi Arabia.
FinTech & Productivity
The study reveals that adoption of FinTech is tightly correlated to higher productivity. The researchers considered this to be due to FinTech helping to ease financing constraints and reducing information asymmetry.
The correlation held at both firm and region levels, with 20% to 29% of total variation in firm outcomes attributable to regional FinTech factors.
“Across the regression variants, a 100% increase in the regional FinTech measure is associated with about 59%–70% increase in the firms’ productivity.”
FinTech Does Not Work In Isolation
The finding of FinTech improving productivity is not surprising; after all, we should expect that result from improving algorithmic credit scoring, risk pricing, automating compliance & fraud detection, as well as improving automation, innovation, and decision-making in real-sector firms.
But the cases where it does not are more informative. Only when AI readiness is taken into account can the statistical link between FinTech adoption and productivity hold.
“FinTech alone cannot deliver productivity gains, if the level of the Kingdom’s AI preparedness is held constant. Digital finance tools alone are insufficient to drive measurable performance gains but require complementary enablers such as digital infrastructure and robust innovation capacity for productivity effects to materialize.”
So the researchers identify a few salient points that need to be addressed and improved by Saudi Arabia as well as any other country in the same position if they want to efficiently deploy new IT technology to improve productivity:
- Digital technology infrastructure.
- Digital transformation policies.
- Integrating robust AI training into labor policies.
- Solving inadequate existing regulation & ethics of the AI ecosystem.
Of these topics, digital infrastructure and innovation capacity produced the most consistent results, while human-capital policies and regulatory preparedness produced weaker or less robust results.
Investors Takeaway
Policymakers and investors can always be tempted to see digital transformation and FinTech as a magic bullet to improve productivity.
However, this study demonstrates through an analysis of hundreds of real firms that putting this idea into practice is not so simple: technology adoption and technology readiness are separate investment themes.
“Without coordinated investment in AI capabilities, workforce development, and innovation systems, the Kingdom may struggle to fully realize the transformative economic benefits expected from FinTech and digital transformation initiatives.”
Buying software is relatively straightforward; restructuring an economy or enterprise so that the software materially improves output is the more difficult, and potentially more valuable, opportunity.
For investors, this means the beneficiaries of FinTech expansion are not consumer-facing financial applications, but may include the companies building the underlying cloud, connectivity, data-centre, cybersecurity, and digital-banking infrastructure.
Further studies could also compare not just firms and regions within the same country, but between countries, to see whether other parameters also affect FinTech’s ability to raise productivity.
Investing In Digital Infrastructure
Microsoft
MSFT Price Chart
When it comes to cloud and AI adoption at corporate or state level, a common choice is Microsoft’s (MSFT ) Azure cloud infrastructure and Copilot, which integrate into the preexisting corporate toolkit of Windows, Office365, GitHub, LinkedIn, Outlook, etc.
Microsoft is preparing to open its Saudi Arabia East Azure region in Q4 2026, with three availability zones providing local cloud and AI processing, lower latency, data residency, security, and infrastructure for regulated and mission-critical workloads. Of course, this might be reconsidered depending on the escalation of the war with Iran and Iranian retaliation against data centers in the region, like the recent hit on Amazon’s data centers in Bahrain.
In any case, Microsoft is currently a leader in AI, including through partnerships to access even more compute and the restarting of nuclear power plants, as well as quantum computing hardware development.
This makes the company’s stock a good way to get exposure to a solid business model centered around corporate IT services, as well as accessing world-class AI infrastructure.
(You can read about the big picture of Microsoft’s many businesses in our investment report dedicated to the company)
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Study Referenced
1. Idris A. Adediran and Zainab O. Abdulkareem. FinTech and productivity gains in Saudi Arabia: A multilevel analysis highlighting the state of AI preparedness. International Review of Economics & Finance. September 2026. Article: 105598. Volume 110. 10.1016/j.iref.2026.105598
