The UK Financial Conduct Authority (FCA), which has long been a supporter of innovation and technology, has launched two ‘sandbox’ services to support firms that are innovating to tackle coronavirus.
The two sandboxes – Cohort 7 of the Regulatory Sandbox and a new Digital Sandbox initiative – have been launched with a particular focus on businesses that are building products and solutions that look to resolve challenges presented by coronavirus. The FCA has identified three key areas of particular importance:
- Supporting the resilience of vulnerable consumers
- Improving access to finance for medium and small sized enterprises
- Preventing fraud and scams
Cohort 7 of the Regulatory Sandbox will operate in much the same way as previous cohorts and will allow businesses to test new products in the market with real consumers. The Digital Sandbox is a pilot, launched in collaboration with the City of London Corporation, which will look to support early stage innovation, where products are still in the development rather than testing stage.
The application windows for both sandboxes opened yesterday, 5th October 2020. Commenting on the openings, the FCA’s Director of Innovation, Nick Cook noted that the FCA is a “strong believer in the positive power of innovation” adding that “together, these services will allow us to support a wider spectrum of innovative firms […] As a regulator we recognise the need to continually experiment and learn in order to stimulate innovation. We are excited to launch this new service and by the lessons it will provide for future iterations of the initiative.”
As a company rooted in regulatory technology (RegTech) and innovation, CUBE of course welcomes the launch of these new sandboxes. As global financial regulators look to encourage new technologies, the FCA stands out as a regulator that not only encourages innovation but supports and offers guidance to see that innovation through to fruition.
Covid-19 has presented a wealth of challenges across industries, including financial services. Many firms will undoubtedly be pleased to see that the FCA is looking to provide opportunity despite a landscape of reduced resource and budget. Technology and innovation have slowly made their way up the regulatory agenda, it appears that coronavirus will only make the move towards automated compliance more important than ever.