The UK Financial Conduct Authority is looking for a technology supplier for the next iteration of its “Digital Sandbox” which start-ups can use to develop financial service proofs of concept.
The FCA Digital Sandbox launched in 2020 with an initial cohort of 28 companies.
Since then a second cohort of a dozen start-ups and innovators has used the platform, which provides synthetic data and a digital testing environment for innovative financial products and services.
The tender for the new FCA Digital Sandbox platform, expected to cost up to £1 million, said: “To assist the FCA in achieving its goal of being an agile, innovative, confident, and data-driven regulator we are inviting vendors to tender on the build and licencing of the Digital Testing Environment (DTE)."
The regulator, which oversees over 50,000 firms, added: "The DTE will aim to facilitate firms at early-stage ideation with access to data, within a secure environment that facilitated experimentation and scaling for proof of concepts. This will become form a part of FCAs external and potentially internal innovation services.”
The call for tenders closes at 16:59 on 27 June 2022.
In a comment to The Stack, an FCA spokesperson said: “The FCA welcomes innovation, and through initiatives like the Digital Sandbox we’re providing the tools to support and test new ideas. Following a successful pilot, we are committed to establishing a permanent model for the Digital Sandbox, building on our experience to date.”
In its report on the pilot phase of the FCA Digital Sandbox, the regulator noted the most anticipated and valuable feature for participants was the availability of synthetic data – data which looks like real-world data from financial services, but which has been artificially generated. The use of synthetic data allows concepts to be tested and validated, without the enormous risks which come from using real-world datasets.
Feedback from the pilot group on the synthetic data was mixed, with only around half finding it met their expectations. In its report the FCA said it would explore making datasets more tailored to a specific theme for each sandbox cohort, and focus on making it more granular, rather than a broadly-applicable set.
All the synthetic data used had been generated at a “DataSprint” event, and the FCA report noted some challenges with this: “Industry participation at the DataSprint was much higher than expected but lacked the sustained participation that is key to producing high quality data assets. As a crude example, 10x data scientists for 1 hour does not equate to the output of 1x data scientist for 10 hours.
“Ultimately, it did not deliver the finalised data sets required for the sandbox but did lead to good engagement. Future versions of similar efforts should include participants to the sandbox being selected prior to a DataSprint, so they could define their requirements and work with data scientists to build bespoke synthetic data,” the report added.
Along with synthetic data, the FCA Digital Sandbox also provides collaboration facilities, an API marketplace, and mentoring. And in general feedback from participants was positive.
“Overall, 84% of responders cited the pilot as having accelerated their product development. While it is difficult to ascertain or quantify this level of acceleration, analysis shows that the biggest factor was ready access to data in developing an early stage PoC,” said the FCA report.
“Several participants estimated they had accelerated their development by 4-6 months, with one going as high as 18-24 months, largely by negating the initial need to identify and work with an industry partner to get a PoC off the ground, or sourcing or generating data themselves.”