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Data Defence: Why You Should Be Using Sandboxes in Fintech Development

by Josh Biggs in Finance on 16th September 2019

With the increase in technology development comes a growing concern for the protection of personal information and other data. Especially so in the fintech sphere. Every year, regulatory bodies are trying to find ways to regulate these developments to protect consumer data and financial affairs. However, there is a view that strict regulation hinders innovation in the field of development. This is often cited as the reason why technology is not easily adopted when it comes to financial services. The use of a sandbox, a security mechanism, is often seen as the best method to ensure customer protection and to lower risks from new and innovative tech. Furthermore, fintech sandboxes do not hinder the development of innovative technology and are seen as the best solutions for tech development in the financial sphere

Growing sophistication in fintech development leads to higher risks for consumers. Many financial companies are avoiding innovation in development, as there is a great concern in whether new products or services comply with current financial regulations and banking standards. Fintech sandboxes can help innovators overcome these challenges. For mobile innovators and fintech web developers, the process of creating new products and services is also becoming more complex with strict regulations. Fintech sandboxes can assist both developers and financial companies to develop and to use innovations. It opens the path for companies to hire fintech developer more often to create improved technologies for consumers. 


What is a sandbox and how can it be used in fintech?

A sandbox is a software platform that creates a layer between innovations and financial organizations and allows for smooth collaborations. A sandbox creates a real-time environment that developers and testers use to view characteristics that can show up in an end-user situation. This helps to create solutions and responses to all the processes a development can face. 

There are many benefits to using sandboxes. It assists financial organizations to experiment with new services and products within a very real environment to find issues and to safeguard the organization against any loopholes. In other words, the sandbox allows for thorough testing of new technologies before it gets accepted within a company’s systems. Furthermore, it allows developers to create new products and services with the confidence that it will pass strict regulations. 

While sandboxes can improve development processes greatly, it can also create some issues. Sandboxing can introduce bugs and software attacks. A sandbox offers an additional layer of security and in turn, extra complexity and a new attack surface for bugs to appear. 

What is fintech and what is its role in the future?

Before going into further depth of how sandboxes can be used in fintech, it is important to understand the concept of exactly what ‘fintech’ is. The term is used to refer to developments in the technology and financial field. It specifically refers to companies that use tech innovations and software to offer improved financial services to customers. This includes mobile and web fintech apps for payment purposes, as well as the management of finances. 

These days, with the rise of cybercrimes and the stealing of personal data, as well as financial theft, data and cybersecurity have become increasingly important. When it comes to fintech developments, this needs to be taken into account. With innovations come the risk of loopholes for cybercrimes, therefore, developments need to pass strict regulations and standards tests. 

Luckily, with the use of sandboxes and all the security benefits it offers, great growth and more improved innovations may be seen in the future of fintech. 

Why is it important to invest in a sandbox for fintech development?

Better fintech regulation 

Sandboxes offer a real-time environment for new products and services to be tested. This way any loopholes can be identified and improvements can be made. New developments can pass regulations and financial companies wanting to use these products and services can comply with regulations with confidence. 

Regulating without hindering innovation 

One of the primary aims of using a sandbox is to have fintech companies and developers comply with regulations without boxing them in with several rules. 

Reduced time-to-market

When developers use sandboxes, they limit the time used for testing and improvements that need to be made. With this software, developers can create products and services, test quicker and launch to the market faster. 

Customer security 

Another goal for sandboxes is to increase fintech security for customers. Firstly, because products and services are tested before use and have to pass certain rules. Secondly, regulatory bodies can implement more focused standards the developments need to pass. 

Smooth processes for consumers

Once fintech developments pass regulations and are adopted by financial companies, these new technologies can improve processes for consumers. This can include improved payment methods and financial management.

Smooth processes for developers 

Sandboxes allow better testing processes and, therefore, developers can create products and services more efficiently.  

Engaging different players 

With better testing processes and improved outcomes, different players can get involved. This can include banks and investment organizations looking for refined applications for their customers. 

More opportunity for investors 

Once new fintech technologies pass regulations, investors can invest in these new developments with confidence. Products and services will be ready for use and investors do not have to face increased doubt of whether it will be successful or not. 

More confidence for all parties involved 

Sandboxes offer improved confidence for both developers, financial companies and end-users. This software allows developers to provide new technologies that are safe to use and that comply with regulations. 

Growing fintech recruitment 

Sandboxes allow products and services to be accepted in the financial industry faster. With the growing fintech trends, more developers are needed. 

Bottom line

Fintech companies are becoming more innovative with their products and services. However, with all the innovations, regulations need to be kept in mind, especially with the rise of data and cybercrimes. By using sandboxes, fintech developers have the confidence to develop without having to stress about questions of whether they comply with financial regulations or not. On the other hand, financial companies can invest in these innovations knowing they also comply with the standards.


Categories: Finance