The REGTECH Book

Sandbox Games for RegTech

By Dominik Witz

Head of Banking Compliance and RegTech, Swisscom

On 2 August 2017, the rules for the license-exempt innovation space, the so-called sandbox, came in to force in Switzerland. Their purpose is to promote financial innovation and to improve the competitiveness of Switzerland as a financial centre. This chapter discusses this new proposition and examines its potential for the testing of RegTech solutions.

Regulatory Sandbox in the Stricter Sense

Through changes to the Swiss Banking Act and the Swiss Banking Ordinance, the shortcomings of the previous regime shall be addressed. So far, a Swiss financial service provider required a banking license approval as soon as it accepted more than 20 public deposits. Unless it could rely on one of the limited exemptions, it needed to seek authorization and subsequently ensure continuous compliance with the regulatory requirements. To abolish this obstacle to innovation, the new regulation establishes an approval-free room for innovation, the so-called ‘regulatory sandbox’. The regulatory sandbox allows financial service providers to offer new business models, products, and services and test their effectiveness, without having to seek approval and continuously ensure compliance with the regulations as well as without being supervised and monitored by the Swiss Financial Market Supervisory Authority (FINMA) in doing so.

Under the new rules, the parties eligible for the regulatory sandbox shall meet ...