ABSTRACT
The present times have witnessed the emergence of regulatory sandboxes as a pivotal tool for ensuring regulatory compliance in the financial sectors. The primary focus in here is the regulation of the insurance and asset management sector. In the former, sandboxes provide companies with the ability to test new technologies and usage-based insurance models in a controlled environment enabling the experiment with innovative products which thereby improves operational efficiency. However, the usage of the sandbox is not only limited to the advantageous regulation of the same, and despite this various success, it faces limitations like the limitation on the time of testing which may hinder comprehensive risk assessments, and further it is to be noted. The transition from the sandbox environment to the broader market often requires the aid and guidance of stringent regulations. On the other hand, if the latter is considered in asset management, the introduction of sandbox has aided in the facilitation of cutting-edge tools like Robo advisors and AI-driven trading platforms, and these made the tools accessible to small-scale, investments and investors. This also comes with its own restrictions and limitations, and for the management sector, the limitation is placed on its ability to replicate real-time market complexities. To understand the intricacies of financial regulatory sandboxes, it requires a dive into the mechanisms to which innovative environments function. The bodies that take part in evaluating the effectiveness include fintech startups, established financial institutions, and Regtech companies. The insurance sector as well as the asset management sector has witnessed an impressive growth and conservative developments however, the rising markets have led both these industries to introduce innovative products and services and to provide their customers with a faster and more secure delivery approaches. It can be implied through the sandbox experiments that it promotes the influx of venture capital as well.
KEYWORDS
Regulatory sandboxes, investment, financial, venture, fintech, artificial intelligence.