New sandbox for fintechs to play in

A regulatory sandbox is a concept which allows firms to test innovative products, services or business models.  An initial pilot phase will run from January to July 2025, with a decision on the need for a permanent FMA regulatory sandbox to be made later in the year.

This pilot will be open to all parts of the financial sector that come under the FMA remit and can include both new entrants and those firms already with a market presence. 

Sandboxes can help spur innovation by allowing both startups and established licensed financial institutions to test new products and services in a controlled environment, the FMA says.

Firms can test their systems in a monitored space, allowing them to obtain a deeper understanding of supervisory expectations. The opportunity to adjust a product or service before full commercial launch may help reduce costs for firms.

In return, the FMA has the chance to gain greater insights into the benefits and risks of financial innovation and new technologies. By first testing a product or service in a regulatory sandbox, we should be able to better assess the viability of innovative products and services. 

Experiences gained through such a testing phase should allow the FMA to react faster and more effectively to regulatory and supervisory problems. It should also highlight gaps around investor and customer protection, allowing development of more appropriate and timely solutions.