Our experiences and engagement with the industry indicates that developing a permanent digital testing environment will provide significant value to financial services. The Digital Sandbox Pilot is aimed at trialling this environment, by providing support to products and services which are at an early stage of development.

We are piloting the following features as the foundations of a digital sandbox:

• Access to synthetic data assets to enable testing, training and validation of prototype technology solutions, for example transactional banking data sets, SME lending data and customer accounts.
• An Application programming interface (API) market place where digital service providers list and provide access to services via APIs
  
• Integrated development environment in which applicants can develop and test their solution
  
• A collaboration platform – to facilitate an ecosystem of key organisations that will provide support and input to digital sandbox participants, such as incumbents, academia, government bodies, venture capital, and charities.
  
• 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.
  

The pilot will be assessed against 5 success criteria:

1. Innovation – role played in encouraging innovation in financial services to the Covid-19-related challenges detailed in the use cases.
2. Speed – role played in enabling quicker testing and development of proof of concepts.
   
3. Collaboration – role played in fostering collaboration, facilitating diversity of thinking and creating an ecosystem of key organisations.
   
4. Pilot features – the effectiveness of the key features of the pilot (see below) in stimulating and accelerating innovation.
   
5. Sustainable future – role played in informing and assisting the design and future operating model of a permanent digital sandbox
   

Through the pilot, the FCA and City of London Corporation are trialling the effect that certain features of a digital testing environment can have on stimulating innovation within financial services. We want to work with the industry and wider market to understand what tools and features would truly deliver value in supporting innovation in order to inform future iterations of a digital testing environment.

Applications were jointly assessed by the FCA & City of London Corporation and an Advisory Panel consisting of the below organisations:

• National Economic Crime Centre
• UK Finance
  
• City of London Police
  
• Fair4
  
• All Finance
  
• StepChange
  
• Citizens Advice
  
• Innovate Finance
  
• Confederation of British Industry
  
• ScaleUp Institute
  

Applications were assessed against four primary criteria.

• Genuine innovation – is the solution significantly different from what already exists in the market?
• In scope – Will the solution benefit UK consumers of financial services firms by solving one of the use cases?
  
• Need for a Digital Sandbox – The solution required digital sandbox features to be developed or improved.
  
• Testing – You have clearly defined development objectives with a pathway to production.
  

No. Being a successful applicant means that your solution has been selected as meeting the criteria and having sufficient merit to be accepted into the digital sandbox pilot. This does not mean that the FCA, City of London Corporation or any Advisory Panel members are specifically endorsing your firm or solution.

The two services provide different tools and features, aimed at different stages in the product/solution lifecycle. The digital sandbox pilot aims to support early stage Proof of Concept development through providing access to a digital testing environment, where firms can develop, collaborate, and test new products and solutions. The digital sandbox pilot is not intended for firms who want to test a product on live consumers or are seeking authorisations/permissions.

The regulatory sandbox, on the other hand, is suitable for firms that have a need to test their product in a live environment or on real consumers before potentially progressing towards a full authorisation. If you think your firm/product may be better suited for the regulatory sandbox you can find more information on the FCA Regulatory Sandbox webpage.

Yes. You can apply separately for existing FCA support services as well as applying for the digital sandbox pilot. The Direct Support Team provides a dedicated contact for innovator businesses that are considering applying for authorisation or a variation of permission, need support when doing so, or do not need to be authorised but could benefit from our support. The Advice Unit provides regulatory feedback to firms developing automated models to deliver lower cost advice and guidance to consumers.

Yes. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. If you register an account, by clicking the link at the top of the page, you will be able to access the showcase space, community directory and additional resources. You can also create a profile of yourself on the community directory, contact other members of the community and participants and observe what participants have published in their showcase space.

If you are interested in working with one of pilot participants, subject to their agreement you can be on-boarded onto their project team and be given access to the tools such as data, development environment, and API marketplace.

Yes. Participating firms have access to a showcase platform where they can publish results of their test in their desired format, for example uploading a video demonstration, documentation of testing results, etc. If you register to be a part of the community you can view these showcase spaces as well as use the community directory to contact pilot participants.

The next steps for applicants following the conclusion of the pilot will largely depend on the success of the firm’s test. Potential outcomes could include partnering with a financial institution to further develop their solution or testing in the FCA Regulatory Sandbox or other existing services.

The FCA and City of London Corporation will make the synthetic data sets publicly available as soon as possible following the conclusion of the pilot.

Grant Thornton have been commissioned to conduct an evaluation of the digital sandbox pilot. As well as assessing the effectiveness and utility of the features provided to participants in helping them develop and test their solutions, Grant Thornton will also make recommendations on the potential governance and operating model of future iterations of the digital sandbox. Grant Thornton will produce an evaluation report on the pilot in Q1 2021.