An industry-wide consultation on the use case and key design principles of a virtual FinTech sandbox
An Industry Sandbox provides a testing environment that isolates experimentation and piloting from companies’ production environments. Like any sandbox, it protects “live” systems, data and consumers and replicates at least the minimal functionality needed to accurately test, pilot and/or simulate software in development.
The Industry Sandbox Consultation opened in July 2016, seeking industry-wide feedback on the demand for such a solution, the incentives of different stakeholders to support it, and its key technical, operational and legal features. The full spectrum of the FinTech industry, including start-ups, financial institutions, technology providers, telecoms and data vendors are within the scope of the sandbox.
The FCA tasked Innovate Finance with chairing the consultation and Innovate Finance has assembled a working group of advisors and observers from across financial services and industry bodies to participate in the consultation. Innovate Finance is conducting surveys, interviews, roundtables and design workshops to gather evidence.
Industry Sandbox Call for Input
Following industry engagement between July 2016 and January 2017, this Call for Input puts forward proposals on the need to create an Industry Sandbox and the potential design, funding and governance options. Interested parties are invited to respond by 10th March for their contribution to be considered in the final recommendations.
A blueprint for an Industry-led virtual sandbox for financial innovation: A Consultation Guide
This Guide provides an overview of the Industry Sandbox Consultation as lead by Innovate Finance, and an early view of possible use cases and design components.
On Tuesday, 22 November, Innovate Finance hosted a design session on the key features, value proposition and governance model of an Industry Sandbox. This session provided key input into the industry-wide consultation, as it fast-tracked consensus on the key use cases, design principles and governance requirements of an Industry Sandbox.
In distinction to the Industry Sandbox, the already operational FCA Regulatory Sandbox seeks to enable the testing of innovative products in an on-market environment. To understand the differences between both sandbox initiatives, view the comparative summary table below.
|The Industry Sandbox aims to create a space for FinTechs and industry players to collaborate on new products and proof of concepts in an “off-market” environment without consumers. There are no regulatory implications from testing off-market, so creating a bespoke regulatory framework is not necessary. The sandbox environment can be used to simulate consumer behaviour to test and trial applications to a functional acceptance level desired by the organisation using the sandbox.||The Regulatory Sandbox creates a safe space where a FinTech and a limited number of real consumers can engage in an “on-market” trial. Some of the regulatory requirements can be amended to create a bespoke framework for the duration of the trial where the normal regulatory consequences do not apply.|
|Access to the Industry Sandbox will be tiered and the eligibility criteria is currently under consultation. It is envisioned that there will be wider access to the Industry Sandbox than the Regulatory Sandbox.||Firms wishing to test in the Regulatory Sandbox must meet the FCA’s eligibility criteria. In addition, unauthorised firms wishing to test must gain authorisation or be registered with the FCA. Firms must also meet the FCA’s Threshold Conditions in order to be authorised. Firms may also choose to partner with an existing authorised firm for the purpose of a test.|
|The Industry Sandbox aspires to be a fit-for-purpose environment for a diverse set of stakeholders. That is why The Industry Sandbox Consultation has been focused on collecting industry views before proposing new or existing models or solutions.|
|The FCA will not provide a “stamp of approval” or a similar type of endorsement for a particular application, product or business model tested in the Regulatory or Industry Sandboxes. The FCA’s engagement with the Industry Sandbox is under consultation.|
To enquire about other ways to get involved please contact us.