Innovation is championed by all economic theorists as a key element for economic growth. Although various definitions of the term exist, innovation is the ability to transform a novel idea into value. Value for the client, for the provider, and, in general, for society. Given this perspective, who could resist the virtuous cycle that innovation enables? <\/p>\n
For many years, the Spanish banking system has prided itself on being a pioneer in incorporating new technologies. This has been the case, for example, in payment methods. However, the digital era brings new challenges. There are new channels for interaction and commercialization, an increasingly digital, informed, and demanding customer eager to receive better service. There are also new technologies that allow extracting value from information, transforming processes, and gaining efficiency. And, in this context, new competitors emerge, with a lighter burden in terms of regulation and legacy systems. <\/p>\n
Given this new environment, the financial industry cannot afford to miss the innovation train. However, to do so, it must overcome significant challenges linked both to its regulatory corset and its own idiosyncrasies, which hinder the adoption of a “test and learn” approach, essential for innovation. <\/p>\n
A regulatory ‘sandbox’ must be our strategic commitment in the banking sector.<\/p><\/blockquote>\n
Regulatory and supervisory authorities also face a great dilemma when deciding which approach to adopt regarding new technological developments and new entrants. The demanding level of traditional prudential measures to ensure necessary financial stability can hinder the flexibility and agility of many promising business cases, with the future risk of losing ground in terms of competitiveness and development. <\/p>\n
The challenge, then, is to find an optimal balance between ensuring the proper functioning of the market and facilitating innovative processes. Many countries have already begun to implement initiatives to address the challenge introduced by digital transformation in the financial sector. One of the most widely adopted instruments is the implementation of an experimentation field or regulatory sandbox. <\/p>\n