The Financial Conduct Authority has received more than 600 applications to its regulatory sandbox since its launch in 2016.

The sandbox provides access to regulatory expertise and tools to facilitate pre-launch testing. It is designed to give firms a chance to test their technology and business models.

In August 2021, it moved to an always open model, allowing firms to submit their applications throughout the year.

Since then it has received 94 applications and accepted 20 firms.

It said propositions operate in sectors including retail lending, retail investments, retail banking, payments and wholesale.

Since 2021, the main types of innovation have been dominated by data and technology infrastructure, with firms using AI/machine learning and predictive analytics, distributed ledger technology (DLT) / blockchain technology, open banking, APIs and digital ID, it said.

The 20 firms accepted since August 2021 are: Aklimate Ltd trading as Cocoon; Amplified Global Limited; Etive Technologies; Far4All Finance; Fluenccy; Granular; Green Growth Investments; Greenomy; Intellibonds Limited; Investment Tribe; Karfu; Little Steps Financing Limited; Noggin HQ; Notabene, Inc; OneID; Platern; SuperFi Finance Limited; The Investing and Saving Alliance; Trust Power; and Xpand.

Applications to the regulatory sandbox since its launch include: 

• Distributed Ledger Technology (DLT) and blockchain
• Artificial Intelligence (AI)
• Open Banking and Application Programme Interface (API)
• Digital ID
• Data analytics
• Crypto and DeFi
• Infrastructure and process innovation
• Environment, Social and Governance (ESG)
• Robo advice
• Embedded finance
• Services aimed at facilitating access to finance
• RegTech

The regulatory sandbox can be accessed by authorised firms, unauthorised firms that require authorisation and technology business that are looking to launch products to UK financial services firms.

The FCA said sandbox tests are expected to have a clear objective, such as reducing costs to consumers, and to be conducted on a small scale. In order to qualify for the sandbox there should also be few, or no, comparable offerings already established in the market.

By using the sandbox, firms can test products and services in a controlled environment. This can reduce time-to-market and costs. It can also allow firms to identify appropriate consumer protection safeguards for new products and services.

It also offers tools such as restricted authorisation, individual guidance, informal steers, waivers and no enforcement action letters.