BSP pushes reg’l ‘sandbox’ for fintech

MANILA, Philippines — The Association of Southeast Asian Nations (ASEAN) is looking at establishing a regionwide sandbox that would allow major players to experiment with new technology and offer financial products and services.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said monetary authorities in the region have started discussions recently in Thailand about the possibility of the establishment of a regionwide sandbox.

“Now, we’re talking about creating a regional sandbox. Singapore and other countries are part of the discussion we held recently in Bangkok to create a regional sandbox where providers can come in and basically experiment, and we regulators can learn from it,” he said.

The proposed sandbox would allow firms to experiment with new technology and offer innovative financial products and services – but within a clearly defined space and for a limited time period.

The sandbox experiment would only allow the product or service to be offered to a limited number of customers, or limit the number of transactions allowed within the pre-set sandbox period.

Espenilla said authorities agreed that the establishment of a regional sandbox is more efficient and cost-effective as it minimizes duplication of efforts and promote expansion of financial technology (FinTech) innovations compared to a ‘sandbox’ on a per country basis.

“When they come to our jurisdictions, they don’t have to replicate the experiment. It’s more cost-effective. Instead of a country sandbox, it’s a regional sandbox,” he said.

Espenilla said the central bank adopted the “test and learn approach” as early as 2004, allowing regulated entities to operate innovations in a “live environment” under controlled conditions and without the immediate burden of complying with rules and requirements usually associated with the activity.

He explained the purpose of the approach is to separate the running of untested or unverified programs to prevent the spread of software vulnerabilities.

Last November, Espenilla and Monetary Authority of Singapore managing director Ravi Menon inked a FinTech cooperation to provide greater avenues for greater collaboration through a more defined and referral system for FinTech players.

The agreement also unlocks diverse opportunities for new collaborations to prosper that maximize benefits of innovative technologies.