The Financial Conduct Authority (FCA) and the City of London have announced the pilot of a “digital sandbox” to support innovative firms tackling challenges caused by the pandemic.
Both organisations will work together to develop and launch a digital testing environment to provide innovative firms with access to high-quality data sets for technology solutions.
The digital sandbox will support both large financial institutions and start-ups looking to play a key role in the economy’s recovery from coronavirus. The sandbox will supply the relevant data sets, expertise in supporting vulnerable customers and detecting and preventing fraud and scams, and improved access to finance for SMEs affected by the pandemic.
The data barrier
The FCA stated that data has become pivotal to the way firms operate and the consumers they serve. This means longstanding challenges like data access and standardisation are increasingly a barrier for market participants and innovators. The FCA has therefore recognised that the following features should be the foundations of a digital sandbox:
FCA interim chief executive, Christopher Woolard, said: “Innovation is a powerful driver of effective competition and can help accelerate the development of new solutions to emerging challenges.”
“Building on our existing work supporting innovation in the market, we are now helping to establish a platform to tackle the challenges that will face the financial services sector in the recovery from Covid-19.”
Catherine McGuinness, City of London Corporation policy chair, said: “As we look towards recovery, it’s vital that we continue to support innovation, and this digital testing environment provides us with the opportunity to do just that.”