The UK Financial Conduct Authority (FCA) asked Innovate Finance to chair a consultation on an ‘industry-led sandbox’. Innovate Finance is an independent not-for-profit membership association representing the UK’s global FinTech community. A report on their consultation on this industry sandbox has been published.
For the purposes of the consultation, an ‘industry sandbox’ was defined as ‘a shared off-market development environment where developers of FinTech solutions can access data, technologies, and services from different providers in order to validate innovative ideas or address common industry challenges‘. This sandbox would be set up and run by the industry to enable technology business to test their solutions (either virtually or live with limited participants) before they reach the market. It would also allow businesses and regulators to collaborate on developing the UK FinTech industry.
The consultation was intended to identify whether there was demand for an industry sandbox and how such a sandbox might look. The report concludes that an industry sandbox would benefit the development of FinTech products by providing a ‘Fintech ecosystem’ with access to resources (including APIs or data) as well as by promoting collaboration within the industry to address shared technological or regulatory challenges. An industry sandbox would also help regulators increase their understanding of the industry by observing participants in the sandbox and designing their regulations accordingly.