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Regulatory sandboxes ‘neither necessary nor sufficient’

Regulatory sandboxes may not be the answer for regulating cross-border fintechs, a new report has suggested.

A new report commissioned by Queen Máxima of the Netherlands, compiled by the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), argues that regulatory sandboxes are “neither necessary nor sufficient to promote financial inclusion.”

According to to the report, titled Early Lessons on Regulatory Innovations to Enable Inclusive Fintech: Innovation Offices, Regulatory Sandboxes and Regtech, regulators looking to adopt regtech tools “should start small” with one or two test cases and build from there, and that “capacity building inside regulatory authorities is also crucial”.

To succeed, regulators will need dedicated staff familiar with new technologies, the report suggests.

The report – which was created by the University of Cambridge’s Centre for Alternative Finance, the Monetary Authority of Singapore (MAS) and the FinTech Working Group of the UNSGSA – spotlights the potential for fintechs to accelerate financial inclusion for the “1.7 billion people worldwide” who are without bank accounts, but calls into question cross-border regulatory collaborations such as the Global Financial Innovations Network (GFIN).


The GFIN – composed of 28 cross-border organisations including the Australian Securities and Investments Commission, the UK’s Financial Conduct Authority, the US Consumer Financial Protection Bureau, and the Ontario Securities Commission – was created to act as a global fintech “sandbox” committed to financial innovation for consumer best interests.

The GFIN was formally launched last month (January 2019) and has called on participating regulators to submit an application for membership before the 28 February 2019 deadline.

Reportedly, the aim of the GFIN is to act as a network of regulators to collaborate, communicate to firms, share experience and best practice to provide a forum for joint policy work while trialing cross-border financial solutions in both B2B and B2C sectors.

“While these innovative tools are exciting, countries need guidance on how to regulate them in a way that maximizes their potential and minimizes their risks,” Queen Máxima said. 

Ravi Menon, managing director at the MAS, acknowledged that the “fintech phenomenon offers great opportunity... to make financial services more accessible, more affordable and more focused on the customer’s needs”.


“Realising this potential requires close and continuous collaboration between the private and public sector,” he concluded.

“This report comes at a key moment when fintech has given us an unprecedented opportunity to bring more people into the formal financial system,” said Queen Máxima.

[Related: Fintechs sought for Global Financial Innovation Network]

Regulatory sandboxes ‘neither necessary nor sufficient’

Ezekiel MacNevin

Ezekiel is a journalist on the mortgages, property investment and wellness titles at Momentum Media. 

Before joining the team in 2019, he was a freelance journalist for Vice Australia, Pulse Radio and the Sydney-based travel publication Global Hobo, among others. 

Ezekiel studies a double Bachelor of Communications and International Studies at the University of Technology, Sydney.

You can email Ezekiel on: This email address is being protected from spambots. You need JavaScript enabled to view it.


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