For many, sandboxes evoke images of safe playgrounds, where children discover, explore, socialize, and collaborate, fostering their psychological safety and life skills. This notion of safe exploration is just as vital in the financial sector. As new technologies emerge, regulators must provide an enabling environment that cultivates innovation while ensuring financial stability and consumer protection.

That’s why the Central Bank of Solomon Islands (CBSI), with technical support from AFI, has introduced a Regulatory Sandbox (RSB) where firms can test solutions which contribute to financial inclusion and the broader development of our financial system.

The RSB enables CBSI to assess genuineness and risks of new Fintech solutions before, during and after testing, ensuring a fine balance between promoting innovation and managing risks. We can then determine regulations that are proportionate to innovative firms, rather than subjecting them to the one-size fits all regulatory regime of the financial sector, which may be too burdensome to comply with.

CBSI’s regulatory sandbox approach and timeline

CBSI opted to adopt a ‘test and learn approach’. In 2019, youSave loMobile brought together two Major Network Operators (MNOs) to allow customers to deposit savings using mobile top-up. The Ministry of Finance & Treasury granted a 10% sale tax refund proportionate to the top-up value, remitted to youSave as savings deposit. The outcome was highly encouraging: by Q1 2025, airtime deposits tallied SBD44.9 million (approximately 91% of total value of youSave cumulative deposits), with transactions happening nationwide.

For informal sector members, youSave loMobile saved time and reduces travelling costs, while enabling them to save, anytime and anywhere. For CBSI, this experience emphasized the value of a proper regulatory sandbox framework.

In 2020, following the launch of the Pacific Regional Sandbox framework, CBSI sought the technical support of AFI to develop regulatory sandbox guidelines and standard operating procedures specific to the Solomon Islands context. In April 2022, we finally launched our regulatory sandbox, ushering in an era where we could better support innovative solutions to improve access to financial services.

In 2023, CBSI invited firms to apply to test prototyped solutions in the regulatory sandbox. Eight firms applied, and six were admitted for sandbox live testing with actual customers. The solutions tested addressed key financial inclusion challenges faced by individuals (women and youths), households and MSMEs, covering:

1. Digital remittances – mobile-based platforms that allow workers to send funds to family members using their smartphones, thereby expanding access, reducing costs, and improving convenience for foreign remittances.
2. Digital Nano loans – using a credit scoring model which leverages AI and behavioral data in order to extend formal credit to previously excluded segments.
3. Parametric Insurance –products which use predefined triggers, such as weather events, to enable faster and more transparent payouts, thereby making insurance more tailored, affordable and efficient for vulnerable groups.

So far, all four remittance-linked products have progressed to market roll out, while the parametric insurance and digital nano loan products remain in the testing phase.

Regarding bringing innovation to the market, sandbox-tested products have promoted QR code payments, remote KYC processes, biometric fingerprints, and AI-driven credit assessments. The sandbox has also encouraged partnerships between private sector entities, technology providers, and development partners, helping firms overcome technological, regulatory and market constraints.

Lessons learned

Ove the last four years, we’ve identified a number of constraints that potentially limit a sandbox’s uptake and overall impact on market development. Our key lessons so far are:

1. Encourage market research – researching a solution’s feasibility, and understanding customer needs and challenges, helps firms to devise differentiated products.
2. Encourage partnerships – firms with strong partnerships are more likely to become sustainable when they exit testing.
3. Prioritize solutions which harness technology to address financial services access and usage pain points.
4. Create an innovation hub where individuals and firms can access training, technical and funding support, and create meaningful partnerships, in order to translate innovative ideas into market solutions with meaningful impact.

Where do we go from here?

Moving forward, our regulatory sandbox will focus on enabling market solutions that advance financial inclusion and an inclusive digital economy, and which drive positive change and empowerment, with a focus on MSMEs, rural adults, women, and youth.

Priority areas will include digital payments (including offline solutions), e‑commerce and payment gateways, cross-border payments, MSME finance, climate and green finance, digital financial literacy, government payment solutions, open finance, open API, and AI-driven business models.

However, the ability of these solutions to scale, interoperate, and remain inclusive by design will depend on the availability of strong Digital Public Infrastructure (DPI), particularly systems that enable secure identification, payments, and data exchange.

These key pieces will assist in ensuring the interoperability and inclusivity of new financial innovations. As such, the CBSI will continue to collaborate with the government, private sector, donor and development partners, and all financial inclusion stakeholders, to ensure our digital drive also serves to create resilient DPI.

A longer version of this article appears on the Central Bank of Solomon Islands website.