Fintech start-ups in Iran have received a boost of support with the Central Bank of Iran (CBI)’s recent launch of its regulatory sandbox — a major part of the regulator’s plans to reform the country’s banking sector, which is currently the only fully-fledged Islamic banking system in the world.
The sandbox aims to address regulatory challenges that both fintech start-ups and the central bank face, particularly when it comes to innovative solutions in the finance and banking sectors. Work on the sandbox began last year, with the CBI announcing in February 2022 that it is in the processing of finalizing the sandbox before launch.
The National Informatics Corporation (NIC), the CBI’s financial solutions development arm, has been in charge of developing and launching the long-awaited regulatory sandbox.
“The goals of the sandbox are to identify and manage the risk of new technologies, support innovations and improve financial technologies, reduce time and costs spent (by fintech start-ups) to enter the market and facilitate communication and coordination between regulators and key stakeholders to overcome barriers and challenges (in the fintech sector),” Ali Abdollahi, CEO of NIC, said.
The sandbox will also examine legal barriers and assess risks, test products and services, facilitate the implementation of rules and regulations and allow businesses to test their products, all within a controlled environment.
“Our first call will be in July and the sandbox door will be open for a month (for start-ups) to present their ideas based on specific (fintech) criteria that has been set and specified,” Ali shared. The presentations and proposals will be reviewed and successful candidates for the sandbox will be announced in the next session, he added. The candidates can then begin their testing and monitoring process within the test environment and infrastructure.
Ali also noted that while the sandbox application process typically takes around 12 months elsewhere in the world, the NIC’s goal is to complete the process within three to four months. He added that the CBI and the NIC plan to work closely with other regulatory test environments within the country as well as abroad.
In January this year, the Securities and Exchange Organization also launched its regulatory sandbox.