Small businesses benefit when fintech firms can innovate fast. Source: Shutterstock

Small businesses benefit when fintech firms can innovate fast. Source: Shutterstock

MAS helps fintech firms accelerate innovation with Sandbox Express

THE BEST fintech firms are those that managed to create an innovative product or service.

These are often things that wouldn’t be technically possible if traditional banking norms, rules, and legislative stipulations were followed, but offer tremendous value to customers and society in general.

It’s these products and services that progressive central banks, such as the Monetary Authority of Singapore (MAS), provide support to — by offering an environment and ecosystem where the innovation can flourish. It’s why Singapore is such an attraction for new and innovative fintech startups.

Way back in 2016, the country became one of the first in the region to offer fintech startups with a regulatory sandbox (framework and ecosystem) to test innovative products.

Now, given the pressure to innovate faster and bring new features and capabilities to market sooner, the MAS has announced the launch of a new, faster, and more agile framework and ecosystem that it calls the Sandbox Express.

“For innovation to take root, it is important for ideas to be tested quickly and in a safe environment. Sandbox Express aims to achieve this through appropriate disclosures and pre-defined rules,” said MAS Chief Fintech Officer Sopnendu Mohanty.

Eligible applicants can begin market testing in the pre-defined environment of Sandbox Express within 21 days of applying to MAS instead of taking longer to customize their sandboxes under the 2016 program.

According to guidance from the MAS, Sandbox Express shortens the approval process for entry into the sandbox by relying on standard disclosures and pre-determined rules.

Hence, Sandbox Express is only suitable for activities where the risks are low and well-understood by the market, and can be reasonably managed within pre-defined parameters.

Of course, FinTech Regulatory Sandbox that was operational since 2016 remains open for applicants with more complex business models or where MAS requires more time to understand the risks of the activities.

MAS revealed that the Sandbox Express will initially cater to insurance brokers, recognized market operators, and remittance businesses and have pre-defined boundaries, regulatory reliefs, and expectations.

Firms will be expected to comply with all conditions of approval including providing clear and proper disclosure to the customer as well as submitting regular progress reports to MAS.

According to the rules, fintech cxperiments can remain in Sandbox Express for up to nine months, providing them with more time to overcome business and technical challenges during experimentation, and for MAS to address potential regulatory challenges.

Fintech companies could also the longer duration to better prepare their exit from the sandbox and to deploy their innovation on a larger scale.

“This introduction of Sandbox Express builds on the experience we have gained from running the [2016] FinTech Regulatory Sandbox and reflects our commitment to encouraging more experimentation and greater adoption of innovative technologies in the financial sector,” concluded Mohanty.