There is no doubt that the RS is the right way forward for the RBI to get a ringside view of the rapidly evolving FinTech space. This would enable it to have a better understanding of the regulatory flexibility required to support innovation and help in incorporating the same into its broader regulatory and policymaking work. The RS helps both innovators and incumbents to significantly reduce the time to market. However, the exploratory nature of the exercise warrants that adequate safeguards are in place in the RS environment.
The success of the RS, though, lies in how innovators use this opportunity. Innovators can get actual market feedback and assess the commercial viability of their offerings from the sandbox. The FCA, in its lessons learnt publication,4 had highlighted that a number of start-ups which didn’t have partnerships with established financial institutions before entering the RS couldn’t make full use of the RS environment due to the lack of a customer base.
Innovators would be required to work in close coordination with other regulators and other ecosystem partners such as state governments, the Central Government and its digitisation programmes, end customers, merchants, cloud providers, incubators, accelerators, innovation labs already in operation at firms, and even educational and R&D institutes to meet the common goals faster. The final enabling framework will put together all the jigsaw pieces, bringing all contributors on the same page, clearly laying out collaboration-related expectations and, in general, weeding out all instances of ambiguity to ensure a smooth journey.