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Law360, London (May 5, 2020, 12:25 PM BST) -- Britain's finance watchdog has said it will speed up plans to create a permanent technology hub where businesses can try out new ideas for digital financial services products to help fight the worst effects of the COVID-19 pandemic.
The Financial Conduct Authority said Monday that it is moving forward with plans to create a so-called digital sandbox. The space will allow companies to experiment with new technology to adapt financial services in the digital age with the support and oversight of regulators.
The FCA already had plans in the works, but said it has brought them forward to help companies struggling to adapt to the virtual environment created by the coronavirus crisis. The outbreak has killed more than 250,000 people worldwide and battered the global economy.
The sandbox program will "provide enhanced regulatory support to innovative firms tackling challenges caused by the coronavirus pandemic," the watchdog said. The "permanent digital testing environment" will add significant value to the financial services sector.
The sandbox would allow firms to test new ideas for digital financial services on a small scale with help from the regulator. The watchdog would provide data to help businesses test out their ideas, and would offer a collaborative program where firms can work together on new projects.
The program would also have a so-called observation deck, where entrepreneurs could watch their peers test out new products.
The watchdog would be able to step in to provide help in complying with regulations and could also set specific challenges that align with what the FCA wants to see developed. The regulator is seeking applications and wants to open a pilot program in the summer.
Insurers have also embraced the idea of sandboxes as a way of encouraging companies to use big data, artificial intelligence and other technological advancements to push the sector forward.
Lloyd's of London runs a 10-week incubator program and invites 12 start-up companies to come and test out innovative ideas in four main areas: data and models, new insurance products and markets, the future of transport cover and the digitization of insurance.
Previous entrants to the the Lloyd's Lab program, have tackled questions such as how to provide cover for the so-called gig economy, how to modernize flood and natural disaster insurance as catastrophic weather events become more frequent and how to insure drone flights.
--Editing by Ed Harris.
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