In this article, we are going to jump right into the sandbox, covering its creation, process, progress and problems.


The programme was started by the Financial Conduct Authority (FCA) in 2016 to provide a ‘testing ground’ for innovative FinTech products and services within the UK, and has to date, accepted 89 companies and finished receiving applications for its fifth cohort.

The testing stage normally runs for several months and allows early-stage FinTech startups to launch and evaluate their products in a limited market environment, whilst this is under supervision, the companies do not have to be fully licensed.

What does the process look like? 

Application and Authorisation

In order to be accepted into one of the FCA’s ‘prestigious’ cohorts firms have to submit an application form explaining how their proposal meets the sandbox’s eligibility criteria. These are:

  1. In Scope – Whether the proposal is looking to deliver innovation that is either regulated business or supports regulated business in the UK financial services market
  2. Genuine Innovation – Whether the innovation represents a new or a significantly different offering in the marketplace
  3. Consumer Benefit – The innovation should offer a good prospect of identifiable benefit to consumers (either directly or via heightened competition)
  4. Need for a Sandbox – Whether the innovation has a genuine need to test the innovation in our sandbox, although applicants aren’t required to need a sandbox tool to meet this criteria
  5. Ready for Testing – Finally; whether the innovation is ready to be tested in the real market with real consumers

Once accepted, (although this is not a sure thing; for the first cohort there were 69 applications, out of which 24 were accepted and 18 tested,), firms are required to complete all the necessary paperwork to obtain authorisation(s) – typically with restrictions such as the number of customers or the volume of transactions.


After the firm is authorised, the innovations move into the testing phase….

This transition may take several months, as mobilising capabilities for testing can be time consuming – specifically customer acquisition and opening a business bank account have proven to be common challenges for new entrants.

The testing process, despite having to be approved by the FCA, is mostly up to the firm. Another advantage comes in the form of the ability to choose the Key Performance Indicators (KPIs) used to assess the performance of the test(s) which are normally used to measure business objectives rather than regulatory compliance.

Provided the necessary consumer safeguards are in place, the FCA has normally been very flexible and willing to consider small amendments to both testing plans and KPIs if required.


As part of the testing period, firms are required to have customer safeguards and exit strategies that can be implemented when the test finishes. This means that the final step is to submit an outcome report to the FCA with test results and findings. Firms looking to continue the tested business model have to apply for a “variation of permission” to lift the restrictions imposed during the test.

Source – Deloitte & Innovate Finance – A journey through the FCA regulatory sandbox


“The Financial Conduct Authority (FCA) has, in collaboration with 11 financial regulators and related organisations, on 7 August 2018 announced the creation of the Global Financial Innovation Network (GFIN), building on the FCA’s proposal earlier this year to create a ‘global sandbox’”

The current GFIN membership is the following:

  1. Abu Dhabi Global Market (ADGM),
  2. Autorité des marchés financiers (AMF, Quebec)
  3. Australian Securities & Investments Commission (ASIC)
  4. Central Bank of Bahrain (CBB)
  5. Bureau of Consumer Financial Protection (BCFP, USA)
  6. Dubai Financial Services Authority (DFSA)
  7. Financial Conduct Authority (FCA, UK)
  8. Guernsey Financial Services Commission (GFSC)
  9. Hong Kong Monetary Authority (HKMA)
  10. Monetary Authority of Singapore (MAS)
  11. Ontario Securities Commission (OSC, Canada)
  12. Consultative Group to Assist the Poor (CGAP)

Possible Issues

Concerns have been raised over the motives a startup may have for entering the sandbox programme; many believe it to serve as free PR and a stamp of approval, which attracts the wrong kind of business. There is also a tendency for regulators to want to attract sandbox applicants through lax regulation; an advertisement for the Arizona sandbox ironically states “Arizona State Offering Regulation-free Access for UK Companies” – Regulation-free???

There is an increasing concern over the regulation of global sandbox programmes, as not all regulators possess the same level of competency and compliance standards; the priority is, and always should be customer safeguarding, not increased sector investment


In conclusion, the sandbox projects represent a positive move forwards in terms of FinTech adoption, but in order for its true potential to be realised it needs to be developed and regulated to the highest standard