digital sandbox
Europe Regtech Weekend Read

FCA Opens Up Digital Sandbox Access to Prevent Innovation ‘Cliff Edge’

The Financial Conduct Authority is making its Digital Sandbox permanently available from 1 August 2023 to open up the platform to a broader range of businesses, startups and data providers in order to foster innovation and growth.

The Digital Sandbox serves as a testing ground, enabling early-stage firms to conduct experiments and validate their product concepts during the development phase.

In addition to supporting innovators, the permanent sandbox also extends an invitation to data providers, encouraging them to submit their data for listing on the platform. By doing so, they can not only gain increased traffic but also access valuable insights regarding the usage of their data.

Until now, the platform has only been available temporarily to those participating in pilots and ‘techsprints’.

The FCA ran its first Digital Sandbox pilot between October 2020 and February 2021 in partnership with the City of London Corporation. It  accepted 28 organisations all focused on challenges impacted or exacerbated by the Covid-19 pandemic.

A second pilot ran between November 2021 and March 2022 in collaboration with the City of London Corporation with 12 firms.

Making it permanent, the FCA said the digital sandbox has shown that collaboration and access to data can stimulate beneficial innovation in the market. It now has 2,445 registered users, 17 public datasets, two billion synthetic data records, and 1000 onboarded APIs.

Insight into the sandbox

Matt Lowe, manager, digital and data at Financial Conduct Authority provided insight into the evolution of the Digital Sandbox at the Fintech North Newcastle Conference 2023 on Thursday.

“I am really excited to see this happen”, said Lowe. “We have been experimenting with this Digital Sandbox concept for quite a while now and it’s something I’ve been working on for such a long time.

“The Digital Sandbox is supposed to be dynamic – that’s one of its core principles. We want to make sure that it’s constantly evolving and that data that’s coming into the platform is evolving. We want to see new typologies, such as money laundering data, and better synthetic data. And, we also want to see the community actually bringing in some data as well, it shouldn’t just be up to the FCA to provide those datasets.

“What we want to do from 1 August is open up the Digital Sandbox and all of its assets to a wider community. We don’t want that cliff edge of development. We want it to continue and also we want to see that long tail of innovation.”

digital sandbox
Matt Lowe, FCA
Digital Sandbox features

Participants will enjoy ongoing access to a host of valuable resources within the Digital Sandbox:

  1. Extensive datasets and APIs: Access to a wide array of over 200 high-quality datasets, including synthetic, public, and anonymised data sets. Additionally, participants can utilise more than 1000 APIs, allowing them to test and validate their technology solutions. These datasets encompass various domains, such as payments and transactions data, social media data, investment data, Companies House information, and credit data.
  2. Robust data security: The platform boasts an integrated development environment that fosters experimentation while ensuring the utmost protection for all data assets available on the platform. Security measures are in place to safeguard sensitive information.
  3. Collaborative environment: The Digital Sandbox provides a collaborative platform that encourages diversity of thought and facilitates the exchange of learnings and ideas between participating teams, observers, and mentors. This ecosystem nurtures innovation and collective problem-solving.
  4. Observation deck: For interested parties, including regulators, incumbents, and others, there is an observation deck. This feature enables these stakeholders to observe ongoing testing activities at a technical level, fostering transparency and knowledge-sharing within the sandbox.
‘Positive step’
Dr Henry Balani, global head of industry and regulatory affairs, Encompass Corporation
Dr Henry Balani, global head of industry and regulatory affairs, Encompass Corporation

Dr Henry Balani, global head of industry and regulatory affairs at KYC solution provider Encompass Corporation, described the FCA’s move as a positive step for 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,” said Dr Balani.

“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.”

‘Promoting economic growth’
Sheeraz Saleem, chief technology officer at FX management consultancy DKK Partners
Sheeraz Saleem, CTO, DKK Partners

While, Sheeraz Saleem, chief technology officer at FX management consultancy DKK Partners, described the drive towards promoting innovation and business support in the UK as ‘fantastic’.

“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.”

‘Passion for innovation’

London-based NayaOne said it is thrilled to have been awarded the tender to deliver the Digital Sandbox.

“We are passionate about empowering and supporting the future of financial innovation and the incredible growth of the UK tech ecosystem,” it stated.

More information on how to apply and what the FCA is looking for will be made available here from 1 August 2023. It will welcome themes including banking, investment, lending, payments, insurance, pension, wholesale buy-side, wholesale sell-side and cross-sectors.

Author

  • Claire is an experienced editor and writer with 25 years of experience in the publishing industry. As a tech journalist, Claire has covered every subject possible over the years, from the launch of broadband and next generation mobile networks to the arrival of the metaverse and Web3.

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