LONDON (Reuters) - Regulators from across the world start work this week on a blueprint for a global “sandbox” or testing bed for new financial technology applications, Britain’s Financial Conduct Authority said on Monday.
Britain helped to spearhead sandboxes which allow fintech firms to test new apps on real customers, but under the close eye of regulators to avoid consumer harm.
Chris Woolard, the FCA’s executive director of strategy and competition, said the watchdog was now pushing ahead with trying to set up a global sandbox, given that many fintech firms and their business plans span borders.
“Later this week we start work with interested regulators, including colleagues across Europe, the U.S. and Far East, on a blueprint,” Woolard told the Innovate Finance conference in London.
“There’s real momentum behind this and we hope that before long the ambition of a global sandbox will be a reality.”
The FCA’s own sandbox, the first of its kind, has worked with 70 fintech firms, with 90 percent of firms in the first round of applications having gone to the market and finding it easier to raise money, Woolard said.
Britain wants to maintain its role as a major fintech center, but its planned departure from the European Union has spurred the EU with its vast single market to propose measures to attract fintech firms from London.
“Increasingly we’re hearing from firms a demand to operate globally, to grow at real scale and pace,” he said.
Although FCA has signed fintech cooperation agreements with regulators in eight jurisdictions, there is no joint sandbox program for firms to participate in.
“Such a project represents new territory. Breaking new ground requires an element of risk, not something, as I’ve said, that regulators are generally comfortable with,” Woolard said.
Regulators have to be realistic about what a global sandbox could look like, however.
“In some quarters, there could be an aspiration for global standards. The logic is clearly there, but my strong suspicion is that it would take 20 years to negotiate and in a fast-moving market would be 19 years and six months out of date when we got there,” Woolard said.
Reporting by Huw Jones; editing by Jason Neely