FinTech and productivity gains in Saudi Arabia: A multilevel analysis highlighting the state of AI preparedness

This study documents the first set of evidence on the productivity gains of FinTech adoption across key sectors, subject to the mediating role of regional AI preparedness in the Kingdom of Saudi Arabia. It employs a multilevel mixed-effects model that maps 255 firms across six regions, measures productivity with operating revenue by economic activity, and FinTech with regional digital economy statistics. The research constructs a fresh regional AI Preparedness Index (AIPI), benchmarked against the IMF-AIPI, to assess variations in AI-readiness. Insights from preliminary analyses reveal: strong activity in trade, industry, and services, regional concentration of FinTech solutions in Riyadh, Makkah, and Eastern provinces, and Saudi Arabia remains behind frontier economies in AI preparedness. Formal results indicate that FinTech exhibits a weak-positive relationship with productivity in the absence of AIPI controls. However, the relationship becomes strong when composite, digital infrastructure, and innovation indices are incorporated, highlighting AI-readiness as a critical enabler of FinTech-driven productivity gains.