FCA Announces Digital Sandbox and Global Greenwashing TechSprint

Britain’s Financial Conduct Authority (FCA) is stepping up its innovation game with the launch of a digital sandbox. The platform will support fintechs in developing new proofs of concept for products and services, said Jessica Rusuhead of data, information and intelligence at Innovate Finance Global Summit.

The Digital Sandbox is expected to provide synthetic transaction and market data and offer payment and transaction data, investment data, Company House data and Covid data, as well as other things. It will also feature an open ‘API marketplace’ providing access to other fintech datasets.

Rusu said the sandbox will be available even to applicants outside or after specific TechSprint activities. From the summer of 2023, innovators from a wider range will be able to access extended services. “We benefit from supporting this innovation by advancing solutions to complex regulatory challenges such as APP fraud, greenwashing and fraud detection,” she added.

One of the FCA’s main aims is to reduce the regulatory burden on the UK’s regulated entities. The digital front door will simplify the journey for businesses to engage with the regulator’s innovation services by providing a single entry point. The regulator has also introduced digital tools, including decision trees and an FAQ digital assistant.

FCA focus

“UX continues to be a key focus of our work,” Rusu said, adding that the regulator had streamlined the Sandbox and Innovation Pathways application forms to provide a more user-friendly journey.

The FCA has also introduced predictive analytics to reduce late firm filings, which helps firms submit data on time and reduces late fees for firms. The regulator has gone along with Bank of England for the Transforming Data Collections initiative, focused on reducing the firm’s regulatory burden.

FCA also cooperates with international counterparties. A group of 23 regulators launched Global Financial Innovation Network (GFIN) in 2019 to help innovative firms interact with regulators across borders in more efficient ways. Rusu said the regulator is hosting a world-first global TechSprint with its GFIN partners in support of tackling greenwashing.

TechSprint

TechSprint will bring together technology experts, companies and an international group of regulators to address issues related to greenwashing. The virtual TechSprint will run on the regulator’s Digital Sandbox and leverage its synthetic data testing platform.

The regulator will also host a TechSprint focused on Financial Services Register data in May. The FCA plans to explore new ways third-party entities, such as comparison websites, can use register data to give consumers more proactive access to information when making investment decisions.

“We are laser-focused on this topic, because as demand for ESG-related products and services continues to grow, so does the risk of firms potentially overstating their sustainability credentials to attract customers and investors,” Rusu said.

In addition to offering innovation company support, TechSprints, and supporting international regulatory cooperation, the regulator continues to develop its work in artificial intelligence.

“We have done extensive work to understand AI and assess its regulatory implications, as well as using AI methods to identify bad actors,” Rusu said.

She added that the regulator is cooperating with Digital regulatory cooperation forum and is also working through what the appropriate framework for AI in financial services might look like.

NayaOne

London based company NayaOne is celebrating after bagging the ‘highly sought after digital sandbox
tender’ by the FCA. It called it a reflection of the company’s “innovation, vision and commitment to advancing the fintech landscape”.

“We are delighted to have been selected for this prestigious opportunity to work with the FCA to drive innovation in financial services,” said Karan Jain, CEO of NayaOne. “We believe our digital transformation platform and synthetic computing technology will be a valuable asset in helping fintech companies develop and test their products more effectively and efficiently.

“We look forward to developing our relationship with FCA and being part of any future focus areas they have, for development in the industry.”