Two Saudi firms have become the first companies in the kingdom to receive a digital banking license. The Saudi cabinet gave approval to the country’s finance minister to issue the licenses, the local news reported today.

STC Pay, launched by the kingdom’s biggest mobile operator Saudi Telecom in 2018, will be converted into a digital bank with a capital of $667 million, according to a central bank statement. It will be called STC Bank. To meet the capital requirements, STC will invest about $214 million and maintain its 85% ownership in the firm, and Western Union will inject another $200 million to retain its 15%.

A second firm, led by Abdul Rahman bin Saad Al-Rashed & Sons Co., will form a digital bank with a capital of around $400 million. It will be called Saudi Digital Bank.

Saudi Telecom said Wednesday it will inject additional 802 million riyals to retain its 85% in STC Pay and Western Union will invest 750 million riyals to own 15% of the firm. Western Union acquired the stake in STC Pay last year for $200 million.

The central bank also stated they have recently licensed 16 Saudi FinTech companies to provide payment services, consumer micro-finance and digital insurance brokerage.

There are 32 FinTech companies operating under the Regulatory Sandbox environment, which was designed for testing innovative services and products. The only way for these startups to become digital banks would be to grow as mobile wallets and hopefully raise funding from investors to help them meet the capital requirements for obtaining a digital banking license.