Digital Sandbox

The Digital Sandbox provides innovators with access to a suite of tools to collaborate and develop financial services Proofs of Concept.

The Financial Conduct Authority (FCA) has a range of tools and services to create a regulatory environment that fosters responsible innovation. In response to the increasing numbers of data-centric products and services, the FCA identified an opportunity for the world's first regulatory digital testing environment. Run in partnership the City of London Corporation (CoLC), The FCA Digital Sandbox helps innovators in financial services to develop and test the feasibility of new ideas using 'Proof of Concepts' (PoCs).

The core features of the Sandbox are:

• Access to synthetic and publicly available data assets

• An application programming interface (API) market-place where digital service providers list and provide access to services via APIs

• An integrated development environment

• A collaboration platform to support networking and ecosystem development

• An observation deck, to enable regulators and other interested parties to observe in-flight testing at a technical level, to inform policy making

Initial evaluation suggests that the benefits of the Sandbox for participants include accelerated product development, validated and improved AI and machine learning models, refined business plans, and networking. The synthetic data provided as part of the Sandbox was one of the most valuable features for participants. The Kalifa Review of UK FinTech has recommended the creation of a permanent digital sandbox to encourage further collaboration.

Through the FCA Digital Sandbox, FinTechs are able to test out product ideas and gain access to synthetics data, API tools and expert advice in order to provide better services to the market.

Key info

Description: A regulatory digital testing environment to support market innovators in the development of financial services ‘Proofs of Concept’ (PoCs). The first cohort focused on scams and fraud, consumer vulnerability, and SME financing. The second focuses on products and services in the area of environmental, social, and governance (ESG) data and disclosure.

Owner: Financial Conduct Authority

Sector: Finance

Duration: November 2020 -

Cost: N/A

Participants

1st cohort: retail investments and retail lending sectors

2nd cohort: ESG finance

Data

• Synthetic data:

  • synthetic entities

  • synthetic individuals

  • transactions

  • device data

  • loan history

  • credit card history

  • current account history

  • SME directors

  • covid SME lending

  • factoring

  • profit and loss

  • accounts receivable

  • lending providers

• Publicly available data

Impact description

• Accelerated product development

• Validating and improving AI and machine learning models

• Refining business plans

• Networking within the pilot ecosystem

Case study