What’s all the fuss about regulatory sandboxes? Bob Ferguson Head of Project Innovate, from the FCA UK told us why....

Exactly one month ago, on November 1st, I was gifted the amazing opportunity to hold a round-table event with Bob Ferguson, Head of Project Innovate with the Federal Conduct Authority (FCA). Bob has been on the speaking circuit having just spoken at Money 2020 and several other prominent FinTech events.

Henry Long of the UK Department for International Trade – whom I am surprised I haven’t met before because of how involved he is in the FinTech community – somewhat of a celebrity – Gilda Carbone and I put the event together with about a week’s notice, with Gowlings WLG as our generous host in their Toronto offices. We had no trouble filling the room. Why? Well, our FinTech network in Canada is good and, because a regulatory sandbox is becoming a proven strategy for accelerating innovation and enabling competition in many regions around the world, and Canada is all-a-buzz about it.

I first heard about regulatory sandboxes in the spring of 2016 and have been studying it and the growth of the idea around the world since then. While the FCA’s sandbox is 2 years old, the popularity and almost celebrity around their first-to-market approach is recent. Regulators are launching similar efforts in other regions such as Singapore, Australia, Korea, Hong Kong, Thailand, Malaysia, Abu Dhabi, and many more countries have now announced they are doing the same. Canada 2020 and the US House are both making noise about creating sandboxes. And of course, the Ontario Securities Commission here in Ontario, Canada has just announced the LaunchPad for FinTech experimentation.

The need for a regulatory sandbox is in response to the dramatic increase in competition coming from FinTech startups, who are gaining momentum in the market with consumers and businesses. With this new competition, regulators are seeing the need to assist with navigating the regulations by providing advice and guidance through the process, and create controlled environments for startups to test their ideas with real customers with a looser set of rules and oversight.

Carrie Russell, Strategic Advisor to the FinTech Growth Syndicate, agreed to interview Bob Ferguson for the round-table, and what a masterful interviewer she is. Carrie is a veteran of the Fintech industry in Canada, having served in both Financial Services and technology organizations for the last 20 years.  Most recently as CMO and EVP of strategy and innovation at one North Americas largest Fintech organizations and prior as SVP of everyday banking, payments, and investment businesses at TD. Carrie has a way with words, and I know everyone who attended the event would agree her approach to interviewing Bob – or rather facilitating the discussion - was atypical and extremely engaging.

Carrie took Bob back to the beginning 2 years ago, and asked Bob what the market context was prior to the idea for Project Innovate, and what the original plans were from launch as compared to what is in place today, which Bob told us is far bigger in scope. Carrie helped Bob explain the story, by asking questions around what worked and what didn’t, what some of the lessons learned have been, and the results to date.

Collaboration has been a global mandate for the FCA from the beginning, and so many other regions have created co-operation agreements to enable companies from other markets to participate. The group Bob leads has amazingly received 700 requests for assistance and advice, and of those they took on, 25% of those have come from large banks who are experimenting with small start-ups. About 25% of the inquiries the FCA receives are from start-ups outside the UK. Oh, and unlike a typical “testing sandbox” which is a place, the FCA Regulatory Sandbox is not a physical space – it’s a set of tools, resources, oversight and guidelines.

The FinTech Growth Syndicate would be very happy to share Bob’s answers to Carrie’s questions, along with our own research and insights about regulatory sandboxes around the world, and the need for Canada to move faster toward enabling experimentation in this manner. Please give us a call!

Sue Britton

FinTech Growth Syndicate, 628 Fleet Street, Unit 1006, Toronto, ON, M5V 1A8