The Bank of Lithuania has announced that it will be opening its regulatory sandbox to applications from October 15.
Lithuania’s regulatory sandbox will be only the third of its kind to open in continental Europe and will take on an increased importance post-Brexit.
“Having developed an innovation-friendly space, we seek to pave the way for faster and easier access to new financial solutions. Ideas generated in the sandbox could quickly move beyond its limits and increase competition in the financial market – without a doubt, this would bring identifiable benefits to consumers, such as more convenient, safer and cheaper financial services,” said Marius Jurgilas, a member of the Bank of Lithuania’s board.
Regulatory sandboxes are closed environments that allow live testing of innovations by tech companies under the regulator’s supervision.
“In Europe, the Authority for the Financial Market (AFM) and De Nederlandsche Bank (DNB) in Holland, combined forces for a regulatory sandbox, while Denmark’s Financial Supervisory Authority (Finanstilsynet) launched the FT Lab. Apart from the UK, these are the only two European countries that offer a Fintech sandbox program. With Britain’s decision to leave the EU, the European Union’s banking watchdog indicated that there is an urgent need for a cross-border sandbox and innovation hub that will nurture the continued growth of Fintech start-ups in the EU,” writes Amy Matthews, resource manager at Vibrant Inc, an American company specialised in providing Enterprise Resource Planning (ERP), to clients globally.
The Bank of Lithuania’s sandbox entrants will be able to test their innovative financial products or business models in a live environment, with real consumers.
Added benefits include the temporary lifting of some supervisory requirements.
In addition, the Bank of Lithuania has announced that its sandbox is open to both existing authorised financial institutions and start-ups.
“The sandbox would be especially useful in cases when regulation of innovations is insufficient or unclear. Strong cooperation between innovators and the regulator could help understand the impact of financial innovation on consumers, identify emerging risks, determine potential regulatory shortcomings and eliminate or reduce any possible negative effects,” said the bank in a statement.