FCA opens access to digital sandbox to prevent ‘Cliff Edge’ innovation

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The Financial Conduct Authority is making its Digital Sandbox permanently available from 1 August 2023 to open the platform to a wider range of companies, startups and data providers to drive innovation and growth.

The Digital Sandbox serves as a testbed, allowing early-stage companies 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 inclusion on the platform. This way, they can not only get an increase in traffic, but also access valuable insights into their data usage.

Until now, the platform was only temporarily available to those participating in pilot projects and “techsprints”.

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

A second pilot took place between November 2021 and March 2022 in partnership with the City of London Corporation with 12 companies.

By making it permanent, the FCA said the digital sandbox demonstrated that collaboration and access to data can spur beneficial innovation in the marketplace. It now has 2,445 registered users, 17 public datasets, two billion synthetic datasets, and 1000 built-in APIs.

Insight into the sandbox

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

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

“The Digital Sandbox should be dynamic – this is one of its core principles. We want to make sure it’s always evolving and the data going 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 bring in some data as well, it shouldn’t just be up to the FCA to provide those datasets.

“What we want to do from August 1st is to open up the Digital Sandbox and all its resources to a wider community. We don’t want that precipice of development. We want that to continue, and we also want to see that long tail of innovation.

Matt Lowe, FCA Digital Sandbox features

Participants will enjoy ongoing access to a number of valuable resources within the digital sandbox:

Extensive datasets and APIs: Access a broad range of 200+ high-quality datasets, including synthetic, public, and anonymized datasets. Additionally, participants can use more than 1000 APIs, allowing them to test and validate their technology solutions. These datasets span various domains, such as payment and transaction data, social media data, investment data, Companies House information, and credit data. Robust data security: The platform boasts an integrated development environment that encourages experimentation while ensuring maximum protection for all data assets available on the platform. Security measures are in place to safeguard sensitive information. Collaborative Environment: 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 fuels innovation and collective problem solving. Observation Platform: An observation platform is available for interested parties, including regulators, incumbents and others. This feature allows these stakeholders to see ongoing testing activities at a technical level, aiding transparency and knowledge sharing within the sandbox.’Positive Passage’Dr Henry Balani, Global Head of Industry and Regulatory Affairs, Encompass Corporation

Dr. Henry Balani, global head of industry and regulatory affairs at KYC solutions provider Encompass Corporation, described the FCA’s move as a positive step to support innovation, and particularly for regtech vendors 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. Barnacles.

“Regtech has an increasingly important role to play, with financial institutions looking to balance responding to a changing and stringent regulatory landscape with maximizing operations, meaning it is vital to facilitate the development of solutions that can support these institutions.”

‘Promoting Economic Growth’Sheeraz Saleem, CTO, DKK Partners

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

“Technology is evolving at an incredible pace and this is not something we should be afraid of but rather try to capitalize on its advantages. SMEs are engines of innovation, but many of them lack the support they need to grow and the time has come to meet their needs.

With the support of public bodies such as the FCA, companies across multiple sectors can seek to further develop their technology offerings in areas such as foreign exchange, catapulting the UK into the global innovation race.

“This will not only support businesses but make the UK an attractive destination for countries around the world who want to enjoy the benefits that technology can offer, ultimately promoting economic growth.”

‘Passion for innovation’

London-based NayaOne said it was thrilled to have won 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’s tech ecosystem,” he said.

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 topics including banking, investment, lending, payments, insurance, pensions, wholesale buy-side, wholesale sell-side and cross-sector sectors.

Claire Wofenden

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

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