BoG Launches Regulatory Sandbox

Dr. Ernest Addison

The Bank of Ghana (BoG) has launched a new tool to support the financial inclusion and stability agenda of the government.

The launch of the Regulatory and Innovation Sandbox, developed in collaboration with EMTECH Solutions, comes after its pilot implementation.

The sandbox would provide a framework for small-scale, live testing of innovations in a controlled environment.

According to the Central Bank, the move was in line with its commitment to continuously evolve a conducive regulatory environment that promoted innovation, financial inclusion, and financial stability.

A statement from the Bank noted that the framework would, among others, foster a deeper understanding of innovative products, services, and business models by the regulator.

It would also allow for potential improvements to legal and regulatory requirements to encapsulate emerging technologies and ensure careful monitoring and containment of any risks that may emerge.

The Sandbox was an opportune tool for harnessing the potential of technology to develop an efficient and inclusive financial service industry without risking financial stability, the Bank noted.

The Regulatory Sandbox was open to all licensed financial institutions including Banks, Specialised Deposit-taking Institutions, Payment Service Providers, Dedicated Electronic Money Issuers Financial Holding companies, and other Non-Bank Financial Institutions.

It was also opened to unlicensed FinTech start-ups that have innovative products, services, or business models that meet the Regulatory Sandbox requirements.

However, innovations eligible for the sandbox environment would be required to have new digital business models not covered explicitly or implicitly under any current regulation.

They must also have new and immature digital financial service technology as well as innovative and disruptive digital financial service products that have the potential of addressing a persistent financial inclusion challenge.

The Central Bank explained that over the past two years, the use of digital financial services among Ghanaians had recorded a remarkable increase because of enabling policies by the Bank and the Government under the national digitisation agenda.

Also, the restrictions imposed on the movement of persons as part of the COVID-19 containment measures spurred the adoption of digital financial services among individuals, businesses, government ministries, departments, and agencies.

The adoption of emerging technologies such as artificial intelligence, machine learning, and data analytic tools was also accelerating among Ghanaian financial service providers.

This has created enormous opportunities for innovative products and services including chatbot, Know Your Customer (KYC) and Customer Due Diligence (CDD) solutions, anti-money laundering and fraud monitoring platforms, credit scoring for digital credit products, and customer-centric product designs.

The Bank affirmed its commitment to provide the enabling environment for innovation to promote financial inclusion and facilitate Ghana’s digitisation and cash-lite agenda.

By Jamila Akweley Okertchiri