In 2018, Spain launched the initiative to create a Regulatory Sandbox through the approval of a draft bill. It was outlined that the supervisory oversight of the Sandbox will be undertaken by three regulatory agencies: The Bank of Spain, the National Securities Market Commission (CNMV), and the General Director of Insurance and Pensions. The initiative was approved by the Congress of Deputies as a formal Bill last year and is awaiting the final passage by the Spanish Senate.

From the beginning, the initiative had very good support from the banking and Fintech sector and is seen by both as a great advantage for the industry. This regulation could play a major role in boosting Spain’s FinTech scene.

There are currently over 400 FinTech Startups based in Spain. The Spanish FinTech ecosystem has seen a massive boost in the past few years. Some of the main industries which these Spanish FinTechs have entered are crowdfunding, personal financial management, and enterprise financial management.

Sandbox Basics

The term Sandbox has become somewhat of a buzzword in the FinTech space, below we’ll explain more in depth about what it really is. The Regulatory Sandbox concept was first thought of by the UK’s former chief scientific adviser Sir Mark Walport. Sir Walport suggested that the financial services industry would benefit from having something equivalent to the clinical trials of the health and pharmaceutical sectors. This is essentially what a Regulatory Sandbox is – a ‘testing ground’ for innovative FinTech products. The primary aim of a Sandbox is to boost regulation to keep up with the accelerated pace of innovation.

Sandboxes are primarily for startups, who don’t have to be fully licensed, wanting to test out an innovative product. The testing stage normally runs for several months. This allows early-stage FinTech startups to launch and evaluate their products in a restricted market environment.

Spanish FinTechs

Spain is now the sixth major FinTech ecosystem worldwide, with a 15% of annual growth. Some examples of these innovative FinTech startups are:

With the launch of a Regulatory Sandbox in Spain, we can expect FinTech startups like the above to thrive. Furthermore, by utilizing the information uncovered by the supervising bodies, Spanish regulations in this sector should become more favorable. This in turn can increase the appeal of launching a FinTech startup in Spain, in addition to attracting more foreign investment.

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