"This approach positively supports the development and testing of financial products in a safe, robust and non-market disruptive manner, where lessons can be learned."
Following two pilots, the FCA's Digital Sandbox will be made available permanently from next month, opening up the platform to a broader range of innovative businesses, start-ups and data providers.
The Digital Sandbox is a testing environment that enables the regulator to support firms at the early stage of product development by enabling experimentation through proof of concepts.
Until now, the platform has only been available temporarily to those participating in pilots and TechSprints.
More than half of the previous SME participants in the pilots and TechSprints made positive developments including launching new products, securing funding and partnerships, or receiving industry awards or recognitions.
From 1st August 2023, firms will be able to apply for the permanent Digital Sandbox under the following themes: banking, investment, lending, payments, insurance, pension, wholesale buy-side, wholesale sell-side, and cross-sectors.
Firms will be assessed against scope, genuine innovation, consumer benefit, readiness, and need for support. The approval process is expected to take a maximum of 4 weeks.
Dr Henry Balani, global head of industry and regulatory affairs at Encompass Corporation, commented: “The Digital Sandbox from the FCA represents a positive step when it comes to supporting innovation, and particularly for RegTech providers striving to deliver technology solutions that can bring significant business benefits.
"Crucially, this approach positively supports the development and testing of financial products in a safe, robust and non-market disruptive manner, where lessons can be learned. RegTech has an increasingly important role to play, with financial institutions looking to balance responding to an evolving and stringent regulatory landscape with maximising operations, which means facilitating the development of solutions that can support these institutions is vital. "
Sheeraz Saleem, chief technology officer at DKK Partners, added: “It is fantastic to see such a drive towards promoting innovation and business support in the UK as we aim to achieve global tech superpower status. Technology is evolving at an incredible pace and this is not something we should be fearful of, but instead, look to capitalising upon its benefits. SMEs are innovation drivers but many lack the support needed to grow and it is now time for their needs to be met.
“With the support from public bodies such as the FCA, businesses across multiple sectors can look to further developing their technological offerings in areas such as foreign exchange, catapulting the UK forward in the global innovation race. Not only will this support businesses but it will make the UK an attractive destination for countries around the world who wish to enjoy the benefits technology can offer, ultimately promoting economic growth."
