Fintech Sandboxes: Achieving a Balance between Regulation and Innovation

Abstract

The growth of Fintech, which refers to the use of technology in providing financial services, is continuing to disrupt global financial services markets. The rapidly evolving technological landscape provides challenges for financial regulators, which are already facing the need to address a broader set of regulatory objectives and policy priorities following the Global Financial Crisis (GFC). Regulatory sandboxes, which are aimed at encouraging innovation by allowing businesses to test their Fintech offerings in a ‘safe’ environment, provide an example of a shift away from traditional regulatory approaches and represent an attempt to embrace principles of proactive, dynamic and responsive regulation. This article examines key differences between the sandbox regimes that have been implemented to date, and explores the implications of sandboxes for businesses, consumers and domestic regulators.

Keywords: Fintech, regulatory sandbox, financial regulation, innovation, financial services, technology