Regulatory and Innovation Sandbox launched
The Bank of Ghana has today, Friday, 19th August 2022, launched its Regulatory and Innovation Sandbox developed in collaboration with EMTECH Solutions Inc.
This is in line with the Bank’s commitment to continuously evolve a conducive regulatory environment that fosters innovation, financial inclusion and financial stability.
Over the past two years and during the pilot, the Bank said the use of digital financial services among Ghanaians have recorded remarkable increase on account of a raft of enabling policies introduced by the Bank and the Government of Ghana under the national digitalisation agenda. At the same time, the restrictions imposed on movement of persons as part of the COVID-19 containment measures, according to the central bank have spurred the adoption of digital financial services among individuals, businesses, government ministries, departments and agencies.
"Similarly, the adoption of emerging technologies such as artificial intelligence, machine learning, and data analytic tools are accelerating among Ghanaian financial service providers with enormous opportunities for innovative products and services including chatbot, Know Your Customer (KYC) and Customer Due Diligence (CDD) solutions, anti-money laundering and fraud monitoring platforms, credit scoring for digital credit products and customer-centric product designs," the bank said in a statement.
Within the domain of Bank of Ghana, it said the digital version of the Ghanaian currency, the eCedi, has the potential of boosting innovation in digital financial service and further enhancing digitalisation of the financial service industry when mainstreamed.
On the other end of the digitisation spectrum, it noted that blockchain appears to hold significant
promise for use in mainstreaming financial service delivery though the technology is yet to mature. Nevertheless, the Bank of Ghana said it took a bold decision and admitted a blockchain solution into its Regulatory and Innovation Sandbox during the pilot stage; a further evidence of its commitment to innovation.
Against the backdrop of these developments, the bank explained that the Regulatory Sandbox is an opportune tool for harnessing the potential of technology to develop an efficient and inclusive financial service industry without risking financial stability. More importantly, it noted that it will serve as an enabling framework for small scale, live testing of innovations by innovators (operating under a special exemption, allowance, or other limited, time-bound exception) in a controlled environment under the regulator’s supervision.
"It aims at, among others, fostering a deeper understanding of innovative products, services and business models by the regulator, allowing for potential improvements to legal and regulatory requirements to encapsulate emerging technologies, and ensuring careful monitoring and containment of any risks that may emerge," the statement explained.
The Regulatory Sandbox is open to all licensed financial institutions (Banks, Specialized Deposit-taking Institutions, Payment Service Providers, Dedicated Electronic Money Issuers, Financial Holding companies and other NonBank Financial Institutions) and unlicensed FinTech start-ups that have innovative products, services or business models that meet the Regulatory Sandbox requirements.
Innovations eligible for the sandbox environment will have to satisfy any of the following broad categories:
1. New digital business models not covered explicitly or implicitly under any current regulation;
2. New and immature digital financial service technology; and
3. Innovative and disruptive digital financial service products that have the potential of addressing a persistent financial inclusion challenge.
The Regulatory Sandbox Framework, user guide and access link to the platform can be found on the Bank of Ghana website to provide guidance and accessibility to interested licensed and unlicensed financial or non-financial institutions.
The Bank of Ghana through this initiative said it affirms its commitment to provide the enabling environment for innovation to promote financial inclusion, and facilitate Ghana’s digitization and cash-lite agenda.