ADGM Launches Digital Sandbox To Accelerate Financial Innovation And Inclusion Across The Region

Abu Dhabi Global Market (ADGM), the financial arm for the global market in the Emirati market, announced an initiative to launch a fintech digital sandbox on the first day of FinTech Abu Dhabi on September 17^th.  The digital sandbox would gather financial institutions and innovators in that space to experiment on products and solutions in a digital platform environment, supported by regulatory standards developed by the Financial Services Regulatory Authority of ADGM.

"I am pleased to announce a transformational initiative today," says ADGM's Chairman Ahmed Al Sayegh. "We are building the ADGM Digital Sandbox, a digital environment to host the testing of new FinTech products by industry participants, with direct regulator engagement."  The ADGM Digital Sandbox promises to provide institutions and startups with the ability to connect and share data, solutions, and ideas to accelerate digital adoption, as well as push financial innovation and inclusion beyond UAE's borders. Al Sayegh adds that the digital marketplace has the potential to enable cross-border connectivity with other global FinTech hubs. "This initiative dovetails well with Abu Dhabi’s approach towards a digital economy."

The ADGM digital sandbox would provide a platform on which fintech institutions would source and procure fintech solutions locally and globally, run tests digitally on the platform, and adopt and orchestrate the best ones that meet their business needs. It would also allow fintech startups and entrepreneurs to offer their innovative solutions to international market players, and tap cross-border market access and opportunities to grow and scale their business. Participants in the UAE and regional markets would be able to connect with other international markets and vice versa.

One of the biggest challenges fintech institutions encounter in their ability to embrace innovation relates to integration of their legacy banking systems with the fintechs' solutions.  The ADGM digital sandbox will support and enable APIs that connect legacy systems of fintech entities in a cost-effective and scalable manner, with synthetic data hosted on the cloud in a secure manner.  

"The objective of the digital sandbox is to help financial institutions build deep digital capabilities to tap market opportunities, and promote financial inclusion through innovative technologies to better cater to the underserved population in the MENA region," says Richard Teng, CEO of ADGM’s Financial Services Regulatory Authority (FSRA). To promote industry adoption, interoperability, financial inclusion and convergence to higher standards, the FSRA of ADGM will develop guidance on the standards and IT security requirements for open APIs and cloud adoption. Based on FSRA’s regulatory standards for the usage of the platform, it will be able to provide a regulated environment for experimentation.  With the advent of innovative supervisory technology, FSRA will be able to leverage the digital sandbox to supervise the test activities of FinTech participants that are licensed in its Regulatory Laboratory (RegLab) in real time.  

"On regulatory collaborations, ADGM is honoured to host the second regional regulators’ roundtable for FinTech today," Al Sayegh adds. "This gives financial regulators in this region the platform to learn of new business models in the FinTech space and share expertise in overcoming common challenges."

Main Image: Ahmed Ali Al Sayegh, Chairman of ADGM.