AFI’s DFS Working Group explores how regulatory sandboxes are evolving

AFI members shared their experiences of implementing regulatory sandboxes during a webinar organized by AFI’s Digital Financial Services Working Group, attended by 106 participants, including high-level officials.  

The group discussed how sandbox operating models, management processes, and regulatory approaches are evolving in line with new technologies and business models, and with the needs of the digital financial services and FinTech ecosystem.   

“Our sandbox is intended to foster responsible innovation that benefits consumers,” said Momoh L. Sesay, Bank of Sierra Leone. “Innovators are always ahead of the regulators, so we need to learn more about developments in the marketplace and address regulatory barriers to innovation.” 

“Our sandbox was introduced in 2021, and offers a lot of flexibility,” said Batchimeg Batbold, Financial Regulatory Commission of Mongolia. “We have adapted our approach to respond to the evolving needs of the market, ensuring that innovation can flourish while still maintaining the necessary safeguards for stability.” 

“Since 2016, Bank Negara Malaysia’s sandbox has received 125 applications for various Fintech products, including payment services and insurance tech,” said BNM’s Sheng Ling Lim. “The eligibility criteria have been simplified under our revised sandbox framework, enabling financial institutions with strong risk management capabilities to test their innovations more quickly and flexibly.” 

“A good regulatory sandbox allows applicant companies and FinTechs to build investors’ trust,” said Ahmed Monir, Central Bank of Egypt. Investments for Fintech startups testing in the sandbox have multiplied three to five times compared to before.”

“Since 2019, our sandbox has facilitated the development of various financial solutions, and we’ve seen measurable results, such as 1,000 additional households financially included due to solutions tested within the sandbox,” said Eserani Munivai, Reserve Bank of Fiji.

“We have a vision of how financial technology and innovation can accelerate financial inclusion, and are working to support technology and Fintech companies,” said Abdulrahman M. Ababneh, Central Bank of Jordan. 

AFI’s Digital Financial Services Working Group serves to foster peer learning, knowledge exchange, and technical guidance among members, supporting them in navigating the delicate equilibrium between ensuring that innovation drives progress, while safeguarding the resilience and inclusiveness of the financial system.