The Central Bank of Nigeria (CBN) announced that its regulatory sandbox is now live. It made this announcement via a tweet on its twitter handle.
It launched the Regulatory Sandbox on the 13th of December 2022 nearly 24 months after the release of its Framework for Regulatory Sandbox Operations
A sandbox is a testing environment that isolates untested code changes and outright experimentation from the production environment and its real-world impact. Sandboxes are often used by software developers, system administrators, and other IT professionals to test changes to a system before implementing those changes in a live production environment. This can include testing new software, configurations, or scripts, as well as simulating different scenarios or conditions to ensure that the changes will not cause any unintended consequences.
With the launch of the CBN regulatory sandbox, entities can now conduct live tests of new, innovative products & services, delivery channels, or business models in a controlled environment, with regulatory oversight. This platform provides all the necessary information to support and facilitate innovation within the Nigerian Financial Space.
According to the apex bank in “Framework For Regulatory Sandbox Operations” document, this would enable it stay abreast of innovations while promoting a safe, reliable and efficient Payments System to foster innovation without compromising on the delivery of its mandate.
The introduction of a Sandbox is a positive step for the financial industry. It will promote the development of not only cutting-edge ideas, but also practical and sustainable ones. The Sandbox will provide an opportunity for innovators to experiment with their ideas and identify potential improvements in the design and delivery of payment and financial services in Nigeria.
The bank is now inviting participants in the financial system to submit Expressions of Interest to participate in the Regulatory Sandbox to explore novel applications of technology and innovation on behalf of our customers and stakeholders.
Eligibility of Sandbox Participants
The eligibility criteria for applicants is as follows:
Criteria One
The product, service or solution is innovative with clear potential(s) to:
- Improve accessibility, customer choices, efficiency, security and quality in the provision of financial services; or
- Enhance the efficiency and effectiveness of Nigerian Financial Institutions management of risks; or
- Address gaps in or open up new opportunities for financial benefits or investments in the Nigerian economy.
Criteria Two
Ensure that applicants will provide the proposed project within a limited transaction (value and volume) for better risk management and mitigation. The limits shall not be exceeded during the testing period.
Criteria Three
The applicant has conducted an adequate and appropriate assessment to demonstrate the usefulness and functionality of the product, service or solution and identified the associated risks which should be devoid of adverse effect to existing structures and consumer experience;
Criteria Four
The applicant has the necessary resources to support testing in the sandbox. This includes the required resources and expertise to mitigate and control potential risks and losses arising from offering of the product, service or solution;
Criteria Five
The applicant should have a business plan to show that the product, service or solution can be successfully deployed after exit from the sandbox.
The Sandbox application process is open to both existing CBN licensees (financial institutions with FinTech initiatives) and other non-regulated technology companies intending to test innovative financial solutions, products, or services deemed acceptable by the CBN.
The applicant should submit an application form along with all complete information and relevant details. Prior to submitting an application, the applicant can seek clarification regarding the sandbox by writing a mail to Sandbox@cbn.gov.ng
Kindly note that deadline for the submission of applications is February 1, 2023.
The introduction of a Sandbox for testing new financial products, solutions, and services is a positive step for the financial industry. It will promote the development of not only cutting-edge ideas, but also practical and sustainable ones. The Sandbox will provide an opportunity for innovators to experiment with their ideas and identify potential improvements in the design and delivery of payment and financial services in Nigeria.
