The Bank of Ghana in collaboration with EMTECH Service LLC has launched a regulatory and innovation sandbox pilot today, February 25, 2021 to promote innovation and diversity in the Banking sector.
This is in line with the Central Bank’s commitment to evolve an enabling and inclusive regulatory environment that provides opportunities for variation as well as promotes FinTechs and supports innovation.
Within the financial sector, a regulatory and innovation sandbox is a supportive and controlled policy environment that enables firms to test innovative products, services and business models under the supervision of a regulator, the Bank of Ghana noted.
The Bank of Ghana further revealed that the sandbox will be available to banks, Specialised Deposit-Taking Institutions (SDIs) and Payment Service Providers (PSPs) including Dedicated Electronic Money Issuers (DEMIs). Additionally, unregulated entities and persons that have innovations that meet the sandbox requirements can also have access.
Notably, the sandbox is of strategic importance in driving financial inclusion through innovative digital financial services. This is because it presents a vast number of opportunities including reducing the time-to-market as well as the cost of innovation for innovators, the Bank of Ghana mentioned.
Aside from saving time and cost, it will go a long way to enhance the knowledge of regulators by allowing them to learn about innovations faster. More so, this will provide valuable insight for regulators to evolve effective regulations.
“Effectively, the regulatory and innovation sandbox will provide a forum for financial sector innovators to interact with the sector regulator to test digital financial service innovations while evolving, enabling regulatory environment.
“In this regard, the Bank and the innovator are able to assess the usefulness, viability and safety of innovations through shared understanding of their respective interests”.Bank of Ghana
Also, with the sandbox, innovators will be encouraged to formalize their business and incentivise incumbents to experiment with new ideas.
Highlighting the innovations eligible for the sandbox environment, the Bank of Ghana disclosed that such mordenisms will have to satisfy any of the following broad categories:
The innovation should fall within a new digital business model which is not currently covered explicitly or implicitly under any regulation.
Next, this invention should be a new and immature digital financial service technology to be deemed suitable for the sandbox environment.
Another requirement to qualify for the pilot programme is that participants must present innovative digital financial services’ products that have the potential of addressing a persistent financial inclusion challenge.
“Within the broad categories outlined, the Bank of Ghana would give preference to products and services leveraging blockchain technology, remittance products, crowdfunding products and services, e-KYC (electronic know your customer) platforms, RegTech (regulatory technology), SupTech (supervisory technology), digital banking, products and services targeting women financial inclusion and innovative merchant payment solutions for micro, small and medium size enterprises (MSMEs)”.Bank of Ghana
The Bank of Ghana finally opined that through this project, it would like to reaffirm its commitment to addressing the financial inclusion needs of the unbanked and underserved persons and businesses.