January 27, 2022

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NBS Regulatory Protection Mechanism will develop new financial solutions and protect consumers and the market

NBS Regulatory Protection Mechanism will develop new financial solutions and protect consumers and the market

The Board of Directors of the National Bank of Slovakia (NBS) approved the statute of the Regulatory Protection Status Committee. This test environment for innovative financial products and services for FinTech companies will start operating under the management of NBS from January 1, 2022. Its goal is to support financial innovations in the Slovak financial market and contribute to its better protection.

Photo: shutterstock

Test environment for new software

Sandbox concept was created In the information technology sector I gradually found the app too in the field of finance. It is a test environment, separate from the main production environment, where programmers can do this Create and test new software solutions.

“The regulatory sandbox is A space to test innovative financial productsservices and business models under strict rules. They are known to the regulatory protection mode participants in advance and their participation in the regulatory safeguard mechanism It requires knowledge of these rules, explains NBS spokesperson Peter Mager.

According to him, it can be, for example, an innovative financial product – Buy Now Pay Laterinnovative service remote client identification tools Or an innovative business model like Providing crowdfunding services for businesses Crowdfunding.

In the regulatory sandoxbe, its participants are subject to strict conditions targeting Review tested solutions and ensure consumer and financial market protection.

To support innovation in the financial sector

At the same time, the introduction of a regulatory protection mechanism for the financial market is a positive sign of this The National Bureau of Statistics supports innovation support, As well as cooperation with innovative companies.

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In addition, companies undergoing regulatory sandbox testing It seems more interesting to the investors themselves, making it easier for them to obtain additional financing to enter the market and achieve further growth.

The main purposes of using the sandbox for control:

  • Supporting financial innovation and financial technology for companies that offer new products or services or use innovative business models;
  • Supporting a more efficient financial services delivery system and more effective risk management in existing financial market entities;
  • Support creating opportunities for the supervisor to understand new technologies and business models;
  • promoting effective competition in favor of consumers;
  • Promoting consumer financial inclusion, i.e. making financial services available to financially excluded segments of the population.

Efforts to reduce potential problems

By testing new technologies in a regulatory protection environment on a limited set of customers, companies will have the opportunity Identify and eliminate problemsthat arise when an innovative product or service is offered and can lead to, among other things Failure to comply with relevant legislation.

At the same time, based on the test, the participant will be able to Create an appropriately innovative product or service before offering it to the general public. Thanks to several months of active cooperation with the National Bureau of Statistics, the company will demonstrate how it can conduct its innovative business in accordance with legal regulations.

Criteria for entering the regulatory protection environment

The company that will be part of the regulatory protection mechanism You must be professionally prepared to draft a test plan Whether you want to deal with NBS guidelines.

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At the same time, it will be necessary to establish the need to test the product or service. The application of technology within Slovakia is also important, so regulatory protection It will mainly focus on companies that will implement their output, products and services in Slovakia. However, this will not prevent companies from operating in other countries in accordance with the relevant legislation.

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Another important aspect is the positive effects on financial stability and the financial consumer, Which means that the regulatory protection environment must be designed primarily to test a technology, product or service whose application will have a positive impact on society and long-term development, whether in the form of an appropriate, safe and affordable product or service.

Only for entities under the supervision of the National Bureau of Statistics

Among the potential participants in the regulatory protection environment Only entities operating under the supervision of the National Bureau of Statistics will be able to belong, straight entities Who will apply for a permit.

However, the test will not be able to attend those who They are not currently performing regulated activities under the supervision of the National Bureau of Statistics They do not provide services closely related to the regulated activities of the supervised entities. This, for example Crypto-related service providers.

Sandbox participants can be:

1) the supervised entity,

2) a foreign supervised entity,

3) the applicant for a permit,

4) the service provider,

5) the entity subject to future supervision.

Selection of candidates before the test

Entries must precede the NSO’s regulatory protection status Submit the application, which will be evaluated by the National Bureau of Statistics. Companies can submit their applications in paper or electronic form. After submitting the complete application, he has The National Bureau of Statistics will decide for a period of two months whether to allow the interested party to enter the regulatory protection environment.

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The preparatory stage is followed by, for example, the maximum number of customers or The basic probationary period should not exceed six months. If necessary, the entrant may request that NBS extend the deadline for a maximum of another six months.

In the testing phase itself, the selected participant Offers its innovative product or service either directly to the customer or to the supervised entitywith which he cooperates. During this stage, the selected company cooperates extensively with the National Statistics Office.

Upon completion of the test, the participant must submit to the National Bureau of Statistics within the specified period Final report to assess the extent to which pre-set goals have been achieved, describes the shortcomings and problems encountered in the test. After completing the test, the participant decides Whether to continue or discontinue the innovative product or service.