Bulgaria’s finance ministry has announced plans to launch the first regulatory technology (regtech) sandbox in the Balkans.
Vladislav Goranov, the country’s minister of finance, made the announcement at the opening of the annual Fintech and InsureTech Summit in Sofia.
“The Bulgarian fintech industry is one of Europe’s leaders,” said Mr Goranov. “This is evident from the sensible growth of sales, entry into new international markets, and from the technologies that Bulgarian companies successfully develop and scale globally.”
Mr Goranov announced that the ministry of finance will be directly involved in the development of financial technologies in Bulgaria by setting up a regulatory sandbox (Sofia RegTech Sandbox) and participating in its management. This will be accomplished in close collaboration with financial institutions, established and start-up tech companies, as well as with relevant public institutions.
“Compliance with technological progress is an indicator of a sustainable environment for business growth. Our goal is to bring together, through an open dialogue, our efforts in order to encourage and support financial technologies developed locally, while positioning Bulgaria among the leading countries in the sector of innovation,” added the minister.
Mr Goranov highlighted the absence of clear regulatory guidelines as a challenge for institutions, regulators, market participants and fintech businesses alike.
This, however, also gives Bulgaria the opportunity to take proactive action in order to attract business players from all over the world. The regional and global dynamics in the sector and the competition among CEE countries to attract investment call for a closer dialogue between institutions, regulators and the fintech sector with the aim of adopting an effective and sustainable policy framework.
Mr Goranov pointed out that the ministry of finance’s pledge to support and develop the regulatory sandbox is a signal to the market that the ministry recognises its role in and responsibility for the development of the sector, the establishment of a framework for the development of fintech products, as well as for addressing the risks associated with the dynamic evolution of the market.
The organisers of the summit pointed out that Sofia was one of the top three fintech destinations in CEE, with the largest number of fintech start-ups in the region. Financial, technological and start-up players are actively engaged in mutually beneficial competition; however, two more ingredients are needed for this critical mass to turn into a productive ecosystem – a platform for generating content and a regular discussion forum.
The sandbox will be the first of its kind in the region and will allow global companies to test their products and services in a secure regulatory environment. In turn, this open dialogue with businesses will give institutions a better understanding as to what regulatory frameworks will be needed in order for the innovation sector to flourish.
The Sofia sandbox will be a regulatory-technological forum that will offer participants the opportunity to exchange ideas, make analyses, and organise discussions in the fintech field. Participation will be voluntary and non-profitable as the professional opinions, views and analyses expressed within the discussions of the respective working groups will be based on the expertise and professional competence of the participants.
The regulatory sandbox in Sofia follows the successful implementation of a similar sandbox in Lithuania, launched in 2018.
According to the Bank of Lithuania, at the end of 2018 there were 87 licensed fintech companies in Lithuania. At the end of 2019, there was a total of 113 licensed fintech entities in the country: 91 electronic money and payment institutions, 18 crowdfunding and peer-to-peer platform operators as well as five specialised banks, contributing to Lithuania’s growing reputation as a fintech hub.
Bulgaria will hoping for similar success.