FCA and City of London to create COVID-19 inspired digital sandbox
The Financial Conduct Authority (FCA) has teamed up with the UK capital’s governing body, City of London Corporation, to create a digital sandbox inspired by the challenges posed by COVID-19.
The digital testing environment will give start-ups and “large financial institutions” access to specific data sets.
These data sets will then be used for testing and validating new technology solutions which help with the country’s recovery from the ongoing pandemic.
“As we look towards recovery, it’s therefore vital that we continue to support innovation, and this digital testing environment provides us with the opportunity to do just that,” says Catherine McGuinness, policy chair of City of London Corporation.
Focus of the sandbox
Currently in pilot stage, the digital sandbox has carved out its data sets around three key areas.
The first focuses on detecting and preventing fraud and scams. During the pandemic, levels of fraud across all sectors have spiked.
The number of phishing emails reported to HM Revenue & Customs totalled 42,575 in March. This is up 74% since January, according to a freedom of information of request revealed by the Financial Times.
The second focus is around supporting vulnerable customers. During the pandemic, older generations in the UK most susceptible to the virus have struggled to perform basic, daily spending.
Challenger Starling Bank created a ‘spare’ debit card – Connected Card – in April. It was designed to help those self-isolating to give a trusted other buying power on their account whilst they stay at home.
The last pillar of the sandbox will focus around “improving access to finance” for small and medium-sized enterprises (SMEs).
Since March, most money reserves typically tapped by alternative lenders began to dry up. And for some, institutional investments have also fallen through.
Earlier this month, Tide revealed investors pulled out of a funding round at the last moment, causing the fintech to pause its Bounce Back Loan Scheme (BBLS) applications to the dismay of SMEs in need of cashflow.