In a recent speech delivered at the British Bankers’ Association FinTech Banking Conference, Christopher Woolard, the Director of Strategy and Competition at the UK Financial Conduct Authority spoke about the high level of interest in the FCA’s Regulatory Sandbox for FinTech ventures. The Sandbox aims to create a ‘safe space’ in which FinTech businesses can test innovative products, services, business models and delivery mechanisms in a live environment without immediately incurring all the normal regulatory consequences of engaging in the activity.
Of 69 applications to join the Sandbox, the FCA has accepted 24 to develop towards testing. The FCA’s team has been expanded to meet demand. 40 of the unsuccessful first time applicants will be offered assistance via Project Innovate or other FCA staff, in some cases to prepare for the next cohort of the Sandbox.
It is interesting that the applicants came from a diverse range of countries, including Singapore, Denmark, USA and Canada. It shows that the UK is still an attractive environment for those in FinTech looking to work globally.
The range of sectors covered was also broad. From the applications accepted:
- seven came from payment firms – including blockchain firms
- four from retail banking
- four from insurance firms
- three covering advice and profiling
- three related to international public offerings
- one for each of digital identity, disclosure and the mortgage sector.
The high number of successful payment candidates is noteworthy. Christopher Woolard said “.. the FCA does not view blockchain as a panacea, but at the same time although still in its relative infancy, the development of Distributed Ledger Technology (DLT), and its application as blockchain, has the potential to offer genuinely innovative solutions to financial services.”
The applicants included incumbents as well as challengers. The FCA has also seen incumbents and start-ups create partnerships – the incumbent bringing established systems, distribution channels and customers and the start-up bringing new technology and fresh insights.