The Financial Conduct Authority (FCA) has selected 24 fintech companies to start testing their new financial products in its “regulatory sandbox”.
The regulatory sandbox is part of FCA’s Project Innovate, an initiative to foster growth and competition among innovative financial firms with the aim of benefitting consumers.
It allows firms to test their products, services and business models in a “safe space”, without immediately triggering regulatory consequences, ensuring consumers are protected.
Christopher Woolard, FCA’s executive director of strategy and competition, said that the regulator was pleased to announce the first cohort of firms.
“It has been an intense process for both firms and ourselves and we are grateful for their cooperation and hard work in getting us all to this position. We look forward to these businesses bringing new products and services to market whilst we ensure that appropriate consumer protection safeguards are in place,” he added.
Sixty-nine firms applied for sandbox status, and the FCA selected 24, which included early stage startups, challengers and incumbent firms. More than a quarter of the successful firms – Billon, BitX, Epiphyte, Nivaura, SETL, Tradle, Tramonex – develop innovations that are underpinned by blockchain technology.
Other successful firms included Swave, a microsavings app; HSBC, which is developing an app with Pariti to help customers better manage their finances; and Issufy, a web-based software platform for investors, issuing companies and their investors that streamlines the IPO distribution process.
Applications for the second sandbox cohort open on 21 November.
The General Data Protection Regulation (GDPR) will be enacted on May 25 2018 and promises to revolutionise the way that firms collect, store, process and protect the personal information of customers, clients and employees.
The software’s security has been questioned after a BBC reporter and his non-identical twin brother successfully bypassed it.
A global survey by The Economist Intelligence Unit and Standard Chartered finds that nearly half the firms participating believe they will be more efficient within five years, while one in three sees them becoming longer and more complex.
A survey of chief information officers across the UK and Europe found that less than half saw security as an investment priority.