The Indian financial services sector is undergoing major changes today. With more than 600 startups in the space of lending, payments, insurance and trading space, Fintech startups are not only spearheading innovation, but are also prompting traditional banks and financial institutions to explore new technologies and investing heavily in digital service delivery channels.

However, fintech startups unlike others face additional challenges of operating in a heavily regulated industry and have stiff competition as their key competitors are well established banking players. To overcome this challenge, experts believe, adopting a “Regulatory Sandbox” based approach where the regulator works closely with emerging Fintech firms make better sense.

According to them, regulatory sandboxes provide safe spaces for experimenting. In brief they constitute a program adopted by regulators which provide a new set of rules for those people looking to test their new products and business models in a live environment. They combine release from specific regulatory frameworks with strict regulatory supervision over a time limited period. They can help to minimize legal uncertainties for innovators, and help to improve access to investment.

What makes the sandbox model particularly interesting is that it is a more bespoke approach to dealing with innovation, and a more nimble approach to the needs of innovators, the role of regulation and the needs of consumers. As experts believe, it can be a great way to unlock innovations for mass public adoption, because a regulatory sandbox balances the twin objectives of nurturing financial innovation and safeguarding consumer interest.

Read full news here: CXO Today