Decree No. 100 of the Ministry of Economy and Finance of 30 April 2021 has approved the Regulation governing the procedures for carrying out the experimentation in Italy of FinTech activities, defined as "activities aimed at pursuing, through new technologies, the innovation of services and products in the banking, financial and insurance sectors".
Such experimentation consists of the so-called "regulatory sandbox", which Bank of Italy defines as a controlled workspace where supervised intermediaries and FinTech operators can test, for a limited period of time, technologically innovative products and services in the banking, financial and insurance sectors, in constant dialogue with the Supervisory Authorities (Bank of Italy, Consob and Ivass).
An important role in the experimentation is given to the Committee (established at the MEF), which shall monitor the evolution of FinTech at national, European and international level, facilitate the contact of the operators with the institutions and authorities, collaborate and exchange information with the competent foreign institutions, but above all carry out activities in the area of FinTech experimentation.
Art. 5 of the Regulation states that experimentation may be requested for a technological innovation activity affecting the banking, financial or insurance sector and which, alternatively, (i) is subject to authorisation or registration in a register held by at least one of Consob, the Bank of Italy and Ivass, (ii) falls within a case of exclusion provided for by law; or (ii) consists of a service or activity affecting regulated profiles in the banking, financial or insurance sectors to be provided in favour of a supervised entity, (iv) or to be performed by a supervised entity (even if an EU member and operating in Italy under the freedom to provide services regime).
The Bank of Italy, Consob and IVASS have now established that the first timeslot for the submission of applications for admission to the regulatory sandbox will be open from 15 November 2021 to 15 January 2022. For such timeslot, no limitations have been set neither in terms of maximum number of eligible projects nor for their specific subject. In order to be eligible, the activity must comply with all of the following requirements
(a) it is significantly innovative, i.e., through the use of new technologies, it contributes to offering services, products or processes in the banking, financial or insurance sectors that are genuinely new and different from what already exists on the national market;
(b) its designed structure would require a derogation from one or more supervisory guidelines or acts of a general nature adopted supervisory authorities;
(c) provides added value in terms of quality of service, promotion of competition, conditions of access to the market, availability, end-user protection or costs; efficiency of the banking, financial, insurance system or operators involved in it; reduction of regulatory burden in the banking, financial, insurance sector; improvement of operators' systems or procedures;
(d) its stage is sufficiently advanced for experimentation and is expected to be economically and financially viable or has adequate financial backing.
Access to the experimentation is tipically allowed to FinTech operators, defined as those that carry out or intend to carry out FinTech activities, regardless of whether they are subject to regulation or supervision by the authorities, and is not allowed to those which are subject to over-indebtedness or insolvency procedures.
The application for admission must contain, inter alia, a detailed description of the project, its goals, duration, expected added value, the reasons why an experimental phase is required, as well as a description of the elements of novelty; a preliminary feasibility study (proof of concept), an indication and assessment of the potential risks and a specific indication and description of the appropriate measures that will be taken to address them and protect users. Each project admitted to the experimentation has a maximum duration of eighteen months, subject to possible extension, but even before submitting the request, the operators interested in the experimentation can start informal contacts with the supervisory authorities.
Those admitted to the experimentation are enrolled in a special register kept by the Committee, and the competent authority monitors the progress of the experimentation, on which it reports to the Committee at least every six months. At the end of the trial, the derogations provided for in the relevant projects will cease.
Given the purpose pursued by the regulatory sandbox, this first window will certainly allow the identification of innovative solutions in the sectors most affected by the unstoppable Fintech revolution, which will also have an immediate effect on existing regulations.