Startups and other businesses developing financial technologies (FinTech) will soon be able to test their innovative products in a live environment under the guidance and supervision of the central bank of Lithuania. Submission of applications to enter the Bank of Lithuania regulatory sandbox opens on 15 October 2018.
“Having developed an innovation-friendly space, we seek to pave the way for faster and easier access to new financial solutions. Ideas generated in the sandbox could quickly move beyond its limits and increase competition in the financial market – without a doubt, this would bring identifiable benefits to consumers, such as more convenient, safer and cheaper financial services,” said Marius Jurgilas, Member of the Board of the Bank of Lithuania.
With the Bank of Lithuania ready to offer consultations on the go, entrants to the regulatory sandbox will be able to test their innovative financial products or business models in a live environment, with real consumers. Sandbox participants will also be entitled to certain reliefs pre-agreed with the regulator, including the temporary lifting of some supervisory requirements. Once testing of financial innovations has proved successful, companies could shift to the usual operating environment.
The regulatory sandbox is open to both existing authorised financial institutions and market newcomers. Selection of eligible participants will be based on certain criteria, the innovativeness of products or solutions and their benefits to society being the most important among them.
The regulatory sandbox of the Bank of Lithuania would be especially useful in cases when regulation of innovations is insufficient or unclear. Strong cooperation between innovators and the regulator could help understand the impact of financial innovation on consumers, identify emerging risks, determine potential regulatory shortcomings and eliminate or reduce any possible negative effects.
Development of a FinTech-conducive regulatory and supervisory ecosystem as well as fostering innovation in the financial sector is one of the Bank of Lithuania’s strategic directions for 2017–2020.