Home / Financial Services/ EU guidelines on fintech to include ‘sandbox’ design recommendations

EU guidelines on fintech to include ‘sandbox’ design recommendations


Comments / {{hitsCtrl.values.hits}} Views / Monday, 10 September 2018 00:00


LONDON (Reuters): The European Union’s banking watchdog said guidelines being drawn up for nurturing cross-border fintech companies will include recommendations for the core design of a ‘sandbox’ and innovation hub.

The sandbox, or controlled environment some countries offer fintech firms for testing new applications on real customers, was first launched by Britain and is regarded by the sector as having helped London become a major fintech hub.

Just two other EU countries, Denmark and the Netherlands, have sandboxes and Britain’s departure from the EU next year has put pressure on Brussels to step up efforts to encourage fintech firms to set up shop in the European Union.

European Banking Authority (EBA) Policy Expert Elisabeth Noble said the watchdog will publish its guidelines in December.

“Our report in December will include an analysis comparing the existing sandboxes and innovation hubs, and recommendations for the core design of a sandbox and innovation hub,” Noble told Reuters in a briefing.

Innovation hubs provide a forum for regulators and fintech firms to discuss ideas, while sandboxes allow them to test new products, such as making payments using a smartphone, on real customers – all without having to go through a costly and lengthy full authorisation process first.

“We hope this report will lead to a common and more coordinated approach, to help with cross-border scaling up of fintech firms, which needs sandboxes and innovation hubs working together,” Noble said.

The introduction at the start of this year of new EU cross-border electronic payments rules which allow start-ups to access a customer’s banking data to offer new services, is driving demand for more sandboxes.

German regulator Bafin Head Felix Hufeld has said he does not want to give start-ups “little buckets and spades” to avoid the full panoply of financial rules, but Noble said that would not be the case.

“Sandboxes are not light touch. They can enable the use of appropriate tools for a more proportionate approach, but none entail brand new powers, just existing powers in a new context,” she said.

Spain has made proposals for opening sandboxes, which have been put out for public consultation, and Noble said two other EU countries have detailed preparations for opening sandboxes, but did not say which countries.

There are already 16 innovation hubs or forums across the EU, including in Britain, for fintech firms and regulators to discuss ideas.

The EBA recommendations will allow some space for adaptation to national markets, Noble said.

Its analysis so far has not uncovered any barriers in EU law to setting up sandboxes but some national regulators have not done so because of a lack of resources, Noble said.

About 90 businesses have used the sandbox set up by Britain’s Financial Conduct Authority in May 2016 to test new products like crypto assets, services and business models.


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

In the desert of Tamil films, actor Sivaji Ganesan was an oasis

Saturday, 22 September 2018

‘Indian Film,’ first published in 1963 and co-authored by former Columbia University Professor Erik Barnouw and his student Dr. Subrahmanyam Krishnaswamy, is considered a seminal study of the evolution and growth of Indian cinema. The book is cit


Imran may turn blind eye to blasphemy law and persecution of Ahmadiyyas

Saturday, 22 September 2018

There are clear signs that Pakistan’s freshly minted Prime Minister, Imran Khan, will make a sincere effort to reduce corruption and maladministration in the domestic sphere. In foreign affairs he is likely to make a brave attempt to mend fences wi


The rate of exchange, capital flight and the Central Bank

Friday, 21 September 2018

The Central Bank (CBSL) exists for the sole purpose of price stability. Its controls on the financial system and monetary policy exist to maintain price stability. As put forth many times by the Governor, the failing of the CBSL to control inflation


Red flag over the Sri Lankan Navy

Friday, 21 September 2018

Shocking story Rusiripala, a former banker in Sri Lanka, who has taken to writing in Daily FT, is perturbed by the red flag I have raised (Daily FT article 18 September) over the shocking charge that our Navy had operated a ransom gang that had abduc


Columnists More