Following the approval of the Law for the digital transformation of the financial sector, the Regulatory Sandbox began to operate in Spain, which has been a particularly important step forward in the regulatory framework for financial innovation. In this regard, it is important to understand the goals and benefits of the Spanish Regulatory Sandbox.
Goals of the Spanish Regulatory Sandbox
Within the goals of the Spanish Regulatory Sandbox, we can say that the creation and implementation of the Regulatory Sandbox in Spain meets the main goals that any country leading financial innovation must carry out:
GOAL 1. Monitoring financial sustainability and minimizing risk
Monitoring financial sustainability and minimizing risk, with supervisors close to the innovation to see how it can be developed within existing frameworks or, if necessary, tailor-made.
GOAL 2. The mitigation and adaptation of the regulatory burden
The mitigation and adaptation of the regulatory burden that innovative projects have to bear, and which in turn may compromise their viability.
GOAL 3. Understanding of the functioning and content
Facilitate understanding of the functioning and content of these new activities for supervisors and regulators.
GOAL 4. Foster the development of open innovation
Creation of an enabling environment to foster the development of open innovation and encourage collaboration between the traditional sector and FinTech, InsurTech and RegTech.
GOAL 5. Attracting international investment and entrepreneurship
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“The Regulatory Sandbox has meant a relevant advance in the regulatory framework for financial innovation”
Benefits of the Spanish Regulatory Sandbox
The implementation of the Sandbox in Spain implies multiple advantages for the development of the FinTech and InsurTech sector, highlighting, among them, the following:
There is no doubt that having a regulation adapted and proportional to the needs of firms that are in their primary stages of development or maturity, can mean both a revulsive to their creation, and a reduction in costs and time in the launching of products and services of these entities to the market.
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Security and legal certainty
The implementation of Regulatory Sandbox may allow some of the FinTech, RegTech and InsurTech companies to enjoy the testing period so that they can gradually and progressively achieve the requirements for obtaining an ordinary license. In this way they would not be required to meet all these requirements at the outset, making many of the disruptive technology business models available to the market and helping them to flourish in a safe and legal manner.
Increase the supply and quality of services
Increase the supply and quality of FinTech and InsurTech services, creating effective competition in the market. This will be reflected in the ultimate benefit to the final consumer, as more competition will lower prices and improve service, resulting in social benefit and therefore public interest.
Competitiveness at an international level
We are seeing how companies that great talent and potential at an innovation and business model development level have, see the need to launch 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 at a legal, economic and investment level.
Furthermore, it will not only help startups, but also companies already established in the market, improving their approach at the organizational level by expanding their capabilities and innovation strategies, responding to specific cases by launching new products and similar services more effectively and efficiently.
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