More than a trend, the fact that so many regulators are lowering regulatory requirements for fintech firms while providing them with a flexible framework illustrates an increasing awareness of the potential that lies within the digitalization of financial services. When alternative financial services originally emerged thanks to the availability of innovative technology, few governments were willing to support disruptive firms. However, over the past few years it has became impossible for established institutions and governments to ignore the possibilities offered by fintech firms to lower costs while providing services to people that were previously out of reach for financial institutions.
While the use of the term ‘sandbox’ can seem intriguing when referring to innovative financial services, it can be understood as a secure environment in which innovative firms can demonstrate the viability of their solutions. Similar to a playground where children play under the supervision of responsible adults, sandboxes are environments where local authorities supervise the implementation of new solutions. In both cases, a sandbox is a means to an end: once an innovative firm has demonstrated its ability to behave in a responsible manner, it will be allowed to play in the real world. Supervision from local governments and regulators doesn’t aim at restricting innovation, but rather to make sure that applicants have the necessary infrastructure and resources to thrive on their own while protecting the end-users.
Pursuing this analogy, it is understandable that the maximum number of people authorized in a sandbox is tied to the number of supervisors. Indeed, with the point of a sandbox being to provide a safe environment, there is a limit to the number of people that can be effectively supervised by a single individual. A tangible demonstration of this is seen with the UK’s Financial Conduct Authority (FCA) having to increase its workforce in order to adequately review and support promising initiatives. And this while rejecting more than 65% of sandbox applicants. This underlines the seriousness of the selection process as well as the tremendous level of qualified applicants. Indeed, the 24 firms that became part of the first wave of participants within the sandbox, were approved due to the quality of the solutions offered, not because the government was desperately looking for firms to join its program. And the Malaysian Central Bank’s recent initiative seems to follow the same logic; its initial framework states that the participants should be “effectively supported at any one time to ensure that adequate guidance and oversight can be provided”.
Recently, Crowd Valley presented its own sandbox to give interested firms and institutions an opportunity to use our state of the art infrastructure to provide their target audience with a unique user-experience. All interested parties are encouraged to contact us in order to develop and test their own innovative solutions.
Born and raised in France, Enzo began working within Fintech in 2014, covering the regulatory changes than enabled the creation of French equity crowdfunding platforms for Lyon Place Financière, an association that regroups all actors of Auvergne-Rhône-Alpes’ financial place. There, he also worked on an exhaustive analysis of the regional stock market among other duties. Enzo has lived and studied in different countries, including the United States (Philadelphia & Monroe,MI) and France (Paris & Lyon).