Why India Needs a Regulated Fintech Testing Hub A testing hub or sandbox helps entrepreneurs validate, test and evaluate their products before it is launched for the public

By Sanchita Dash

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.


You fall and then you rise — this can just be the start-up mantra across all verticals. Many start-ups with good ideas fail to make the cut, owing to pressure from not just investors but also the market. More often than not, entrepreneurs fail to understand their consumers and when the product is launched, it too fails to connect with most.

This is where the need to have a sandbox or testing hub is most keenly felt. Here, sandbox, much like its literal morning, prevents start-ups from slipping into their doom.

A sandbox helps entrepreneurs validate, test and evaluate their products before it is launched for the public. This testing environment also helps entrepreneurs know the regulations of the business beforehand.

Though accelerator and partnered incubation programmes already exist in India, the need for a regulatory sandbox has been rising steadily, especially in the fintech sector. The government of India is coming up with new regulations for the space.

On the global front, Japan has recently launched a fintech testing hub and Bahrain launched a regulatory sandbox. The Monetary Authority of Singapore, too, has launched a regulatory sandbox that acts as a safeguard for fintech start-ups, allowing them to test their products.

The need for a regulatory sandbox in the fintech space that is accessible to start-ups across India becomes even more essential, owing to its ambition of becoming the next big Fintech hub in the world.

A Good Idea for India

India has currently over 900 start-ups in the fintech sector and the number is growing too fast. Experts believe that the opening of a testing hub or a regulated sandbox for fintech start-ups will help not just start-ups but also the government.

"It will be a good idea to have a regulated sandbox or a testing hub. One of its functions is to help start-ups build their technologies, leveraging the APIs provided by banks. So, they will be able to bring about real-time solutions on dummy data. Tech is evolving very differently these days and the introduction of a regulated sandbox will only enable new tech," said Venkatesh Hariharan, Director, Fintech, iSPIRT.

Akhil Handa, Advisor to MD and CEO and head of digital finance, Bank of Baroda, too, believes that a sandbox, especially at the regulatory level where multiple banks can participate, will work well for the Indian start-up ecosystem.

"Testing is often tedious or time-consuming, is what we have realized from our experience of engaging with fintech start-ups. They are always pushing the boundaries, which means they are dealing in sectors which are either unregulated or are not clear about the regulations. This is why it is important to have a testing hub at the regulatory level," said Handa.

Works for Both Sides

Having a regulated sandbox will not just benefit start-ups but also the government and corporations. They don't have to go hunting for innovative ideas that could revolutionize the sector. A sandbox would require banks to open up their APIs and Handa said they were already doing so with great passion. "We have already opened up a few of our APIs and we will continue to do so," he added.

Beyond the currently existing platforms, where banks are a part of accelerator and incubator programmes, at a place where decisions are formed and regulations are brought about, it often becomes difficult to keep up with the tech world. However, this could change things. "Having a sandbox will enable new, innovative tech in various areas, be it small-ticket lending or payments. This will also accelerate the government's goal of financial inclusion. Moreover, this will help the government know what are the innovations possible in the segment," added Hariharan.

A hassle-free Entrepreneurial Journey

Well, not completely hassle-free but closer. Entrepreneurs believe that having a regulated sandbox will do away with some of the hurdles that come their way. "It makes a lot of sense to have one. With a sandbox, with test APIs from partner companies or banks available on one platform, I will bypass the hassle of reaching out to them individually. Not just that, query resolution will be an easier process," said Vijay Khubchandani, a serial entrepreneur.

Wavy Line
Sanchita Dash

Entrepreneur Staff

Former Senior Correspondent, Entrepreneur India

In the business of news for 5 years now. Making my way across India thanks to my career. A media graduate from Symbiosis, Pune, I have earlier worked with Deccan Chronicle (South India's leading English daily), T-Hub (India's largest incubator) and Anthill Ventures (a speed-scaling platform). 

Stories, movies and PJs are my thing. 

If you hear 'The Office' opening score randomly, don't worry it's just my phone ringing. 


Related Topics

Business News

Woman Ties the Knot at White Castle Almost 30 Years After the Chain Gave Her Free Food as a Homeless Teen

Jamie West was just 12 years old when she ran away from the foster care system.

Business News

New York Lawyer Uses ChatGPT to Create Legal Brief, Cites 6 'Bogus' Cases: 'The Court Is Presented With an Unprecedented Circumstance'

The lawyer, who has 30 years of experience, said it was the first time he used the tool for "research" and was "unaware of the possibility that its content could be false."


Surprise Attack: Ashneer Grover Returns To Television With Roadies

Ashneer Grover, the former managing director and co-founder of BharatPe, caused quite the stir among his fans over the weekend when the promo video of Roadies 19 was released.

Business News

More Americans Are Retiring Abroad, Without a Massive Nest Egg — Here's How They Made the Leap

About 450,000 people received their social security benefits outside the U.S. at the end of 2021, up from 307,000 in 2008, according to the Social Security Administration.


How to Be a Good Role Model for Your Employees, Customers and Community (and Why It's Important)

How your choices can ignite a positive chain reaction and transform your business.


8 Ways to Improve Your Online Presence in 2023

A robust online presence is crucial to the success of your business.