Digital sandbox – coronavirus pilot

Building on our approach to innovation, we are collaborating with The City of London Corporation to pilot a ‘digital sandbox’. This new service will provide enhanced support to innovative firms tackling challenges caused by the coronavirus (Covid-19) pandemic. Applications to the digital sandbox will open later in the summer.

We are currently seeking expressions of interest to participate in a DataSprint event in July 2020. The aim of the DataSprint is to develop test datasets which will be made available in the digital sandbox environment.

 

We believe innovation has an important role to play in meeting the challenges following coronavirus, particularly in the areas of preventing fraud, supporting vulnerable consumers and improving access to finance for small and medium sized enterprises.

Our regulatory approach supports innovators and innovative firms through our innovation services such as the Regulatory Sandbox, Direct Support and TechSprint programme. But we too must constantly evolve and refine our services.

Prior to the pandemic, we had been exploring the concept of a digital sandbox. This would enhance some existing features of our innovation services, and allow us to pilot new ones, such as providing innovative firms access to high quality synthetic data sets to be able to test and develop proofs of concept in a digital testing environment. We also see the FCA as having an important convening role, helping to establish a platform for public/private collaboration to solve complex challenges in financial services.

We are therefore accelerating our plans and will pilot a digital sandbox to provide support to innovative firms during the crisis.

We want to have open dialogue with the industry as we run this pilot. We will frequently update this page with further details and we are very keen to collaborate with stakeholders throughout the pilot.

Digital sandbox explained

Our experiences and engagement indicates that developing a permanent digital testing environment would provide significant value to financial services.

Data has become increasingly pivotal to the way firms operate and engage with each other and the consumers they serve. This means that longstanding challenges like data access and standardisation are increasingly a barrier for market participants and innovators. We also receive requests for support from firms which don’t match the eligibility criteria of the regulatory sandbox.

We recognise the following features as the foundations of a digital sandbox:

  • Access to high-quality data assets including synthetic or anonymised data sets to enable testing and validation of technology solutions.
  • Regulatory call-to-action – as with our latest sandbox cohort, we will identify areas of regulatory interest where we would like to see innovation play a greater role, or issue specific challenges.
  • A collaboration platform – to facilitate diversity of thinking, share learnings and foster an ecosystem around solving complex industry wide challenges.
  • An observation deck – to enable regulators and other interested parties to observe in-flight testing at a technical level, to inform policy thinking in a safeguarded environment.
  • Application programming interface (API) or vendor market place – where FinTech, RegTech and other vendors can list their solutions and APIs, to encourage greater interoperability and foster a thriving ecosystem.
  • Access to regulatory support – such as development of testing plans, signposting to relevant regulations, informal steers or support to understand the wider regulatory environment or the authorisation process.

We will pilot these features and tools to support innovative firms and will evaluate the effectiveness of each feature or tool as the pilot progresses.

Use cases

We will provide support to innovative firms and organisations looking to tackle challenges relating to, or exacerbated by, coronavirus. For the pilot, we have taken the decision to focus on 3 pressing areas so that we can provide the necessary support for each, in terms of supplying relevant data sets and expertise.

The pilot will support firms and organisations looking to:

  1. detect and prevent fraud and scams
  2. support the financial resilience of vulnerable consumers
  3. improve access to finance for small and medium sized enterprises

We will publish detailed use cases on these 3 focus areas before opening the application process.

DataSprint event

From 20 July to 10 August, we will host a virtual DataSprint. The purpose of this event is to bring together Data Scientists and Subject Matter Experts to collaborate on developing privacy-compliant, high-quality financial data sets related to the use cases.

These data sets will be made available within the digital sandbox pilot, and any future iteration, for participants to access. The data will be synthetic or anonymised, therefore compliant with data protection laws, and participants will have ready access to use the data to develop working proofs of concept, and test, train, and validate new technology solutions or product concepts.

We’re keen to hear from anyone with expertise in any of these focus areas, or expertise in data science who would like to participate in the DataSprint. It will be an opportunity to work with leading experts on cutting-edge data development techniques. Please get in touch via [email protected] and we can share further participation material.

Pilot next steps

We will publish further information including how to apply to the digital sandbox and the specific use cases later in the summer.

Further information

On 21 April 2020, our Interim Chief Executive Christopher Woolard discussed the digital sandbox as part of Innovate Finance’s Global Summit. We have also spoken about the gaps we believe a digital sandbox could address, as well as our innovation experience which informed our thinking.

In the meantime, we welcome expressions of interest from regulated and unregulated firms, organisations, associations and individuals who would like to learn more, or discuss how they might contribute to developing the digital sandbox.

Email [email protected] to express your interest.