Fintech Supervisory Sandbox: Pilot Conditions for Banks and Tech Firms
HKMA's sandbox lets banks and tech firms pilot fintech with limited customers without full compliance.
Introduction
The Fintech Supervisory Sandbox (FSS), launched by the Hong Kong Monetary Authority (HKMA) in September 2016, allows banks and their partnering technology firms to conduct pilot trials of fintech initiatives. These trials involve a limited number of participating customers and do not require full compliance with the HKMA’s supervisory requirements. The FSS is open to fintech and other technology initiatives intended to be launched in Hong Kong by banks.
Purpose and Scope
The FSS is designed to facilitate innovation while ensuring that the sandbox is not used as a means to bypass applicable supervisory requirements. The HKMA has not laid down an exhaustive list of the supervisory requirements that may potentially be relaxed within the FSS environment. This means that each pilot project is assessed on a case-by-case basis, with flexibility in determining which requirements may be relaxed.
Eligibility and Sponsorship
To qualify as an FSS 3.1 pilot project, a bank in Hong Kong must act as the project sponsor. This requirement ensures that all pilot trials are anchored by a regulated entity, maintaining accountability and oversight.
Funding Support for R&D Projects
In addition to the pilot trial function offered by FSS 2.0, FSS 3.0 facilitates eligible trial projects of research and development (R&D). These projects can apply for a maximum of HK$1 million in funding support under the Innovation and Technology Commission’s Public Sector Trial Scheme (PSTS). This enhancement broadens the sandbox’s support for innovative fintech solutions.
Frequently Asked Questions
What is the Fintech Supervisory Sandbox?
The FSS is an initiative by the HKMA that allows banks and their tech firm partners to pilot fintech initiatives with a limited number of customers without full compliance with supervisory requirements.
Who can apply to the FSS?
The FSS is available to banks in Hong Kong for fintech and other technology initiatives they intend to launch, provided they have a bank in Hong Kong as the project sponsor.
Can the sandbox be used to bypass regulations?
No, the FSS should not be used as a means to bypass applicable supervisory requirements.
What funding is available under FSS 3.0?
Eligible R&D trial projects may apply for up to HK$1 million in funding support through the ITC’s Public Sector Trial Scheme.