Fintech sandbox launched by Central Bank
A Fintech sandbox, which is a framework set up by the Central (CB) to allow small-scale, live testing of financial innovations by private firms in a controlled environment under the regulator’s supervision was launched last month by the CB.
In this environment innovators can imitate the characteristics exhibited by the production environment on a real- time basis to help simulate responses from all the systems an application interfaces with, Dharmasri Kumaratunge, Director Payments and Settlements, CB told the Business Times.
"Innovative Fintech products may require a secure space in which to be tested, where strict financial regulations do not hinder their development. Further, technology-based financial services may also need to operate in a live environment with real customers for a limited time before scaling to the mass market level.” He also said that technological innovations in the field of finance have been continuously on the rise globally, and have permeated the local payments sphere which led to establishing a regulatory framework detailing compliance requirements for Fintech products, in line with the existing regulatory framework of the CB.
He added this Sandbox will provide temporary relaxations of regulatory requirements for selected Fintech products enabling developers to conduct the necessary testing of their products in a live environment. For participants in the sandbox, CB shall consider the temporary relaxing of directions, regulations, circulars, guidelines and rules issued by the CB. Acts of Parliament, however, will not be relaxed in this Sandbox, the CB said in the application.
Still, no one has applied, Mr. Kumaratunge said noting that firms will need to partner with commercial banks and then apply.
He said that CB had a briefing session at the Hatch for Fintech firms on March 6. "At the beginning, it will take some time to build up the ecosystem with the banks. Once it’s established then Fintech companies will submit their proposals."
The initial testing period is nine months and CB will inform the applicants in two weeks.
The application for the regulatory sandbox could be downloaded in https:// www.cbsl.gov.lk/en/public-notices