This post is the fourth a series dedicated to the Regulatory Sandbox. Its importance lies…
The approval of the preliminary bill that regulates Sandbox in Spain will develop an attractive and investment-friendly environment. Over all, it will position Spain internationally as one of the countries with more financial innovation and will strengthen FinTech ecosystem. Future success relies on implementation and execution.
According to Mónica Rodríguez, Open Innovation Specialist at Finnovating, «one of the great challenges will be to provide supervisors with resources to reach all its potential.» In this sense, it was made public that the Treasury will team up 8 different specialists, specially trained and able to work together in all the coming projects.
Sandbox must be considered not only for FinTech companies, but also understood as a space of collaboration with big companies of the industry. In order to launch initiatives that have been trying to develop in Spain for a long time, but after the political uncertainty of the last months, were considering to leave the country. Now these projects revisit the options of settling in Spain.
Main objectives to lead financial innovation
A sign of this is that number of companies getting in touch with Finnovating is increasing. As a global open innovation platform, we know the ecosystem, the opportunities it presents, and the limits that make it up. In this regard, we have received many requests from companies in Europe and Latin America that want to enter Sandbox. It is important to understand that the approval, and correct execution of Sandbox, represents a great opportunity for our country. Also, should be noted that they are not only FinTech companies, but RegTech, InsurTech and other X-Tech that were trying to access and now, finally, they will have the opportunity to innovate in Spain with security and transparency for both the user and the provider.
The creation and implementation of regulatory Sandboxes meet the four main objectives that any country who wants to lead financial innovation must carry out:
- Financial sustainability control and risk minimization. It is important to have supervisors close to innovation to see how it can develop within existing frameworks or, where appropriate, create them to measure.
- Mitigation and adaptation of the regulatory burden they have to support as innovative projects and may compromise their viability. Thus, facilitating the supervisory and regulatory bodies to understand, first hand, what these new activities consist of.
- Creation of an ideal space to encourage the development of open innovation and collaboration between the traditional sector and FinTech, InsurTech and other X-Tech.
- The attraction of entrepreneurship and international investment.
Sandbox in Spain advantages for the development of the FinTech sector
Therefore, the implementation of a Sandbox in Spain would imply multiple advantages for the development of the FinTech sector, highlighting, among them, the following:
- Growth of the sector. Having a regulation adapted and proportional to the needs of entities in early stages can be both a revulsive to its creation, as well as a reduction in costs and time in the market launch of products and services of such entities.
- Security and legal certainty. The Sandbox implementation may allow some of these X-Tech to enjoy the testing period so they can reach the requirements of obtaining an ordinary license gradually and progressively. In this way, they would not be required to comply with all the requirements at the beginning, making many of the business models with disruptive technologies have a place in the market helping their flourishing in a safe way and within the law.
- International competitiveness. We are seeing how companies that have great talent and potential are launching their products outside our country. With the implementation of the Sandbox, a concentration of talent in Spain would be achieved, as well as a greater international attraction both at legal, economic and investment levels. In addition, it will not only help startups in particular, but also companies already established in the market, improving their organizational approach by expanding their capacities and innovation strategies, responding to specific cases by launching more effective and efficient products and services.
- Increasing in the offer and quality of FinTech services, creating effective competition in the market. Ultimately, will be beneficial for the final consumer, as with more competition, prices will be lower and the service will be improved.
Although we are still waiting for its real implementation, the approval of this draft bill is a step in the right direction.