GFIN cross-border testing

Global Financial Innovation Network invites firms to participate in cross-border testing

Friday, 30 October 2020

The Global Financial Innovation Network (GFIN) is inviting applications from firms to test innovative financial products, services, business models or regulatory technology across more than one country or jurisdiction.

Twenty-three regulators across five continents are participating in this initiative, which builds on lessons learned following the GFIN’s 2019 cross-border testing pilot.

Cross-border testing 1.0

To facilitate the application process, the GFIN has developed several tools and solutions to improve the cross-border testing framework for a new cohort of firms, including:

• a single-entry application form for firms;
• a cross-border testing FAQs to help firms understand the process;
• an evolved ‘Regulatory Compendium’ clarifying the remit and interests of participating regulators and the types of innovation services available; and
• an extension of the application window to 9 weeks to allow firms more time to consider and prepare their applications.

Firms interested in applying to take part in cross-border testing should review the list of participating regulators and their respective Regulatory Compendiums and submit an application via the GFIN website before the 31 December deadline.

Participating Regulators

Cross-border testing pilot

The pilot was as much a trial for GFIN members as it was for firms. Regulators looked for firms who could be flexible and agile in their participation and could provide GFIN regulators with feedback on their experience. Firms benefited from the opportunity to test and compete in these regulated spaces, and their tests helped inform the future work of the network. Over time, trials could inform regulatory authorities about potential areas of regulatory convergence, although it was stressed this was meant as a longer-term opportunity.

In total, 44 unique applications were submitted across the 17 participating regulators. Every regulator participating in the pilot was the subject of at least one application. Each regulator has considered whether a proposed test meets its individual screening criteria, areas of interest, and they have considered their ability to support the activity.

Results of cross-border testing

After this initial screening of 44 applications, GFIN members continued working with 8 firms. The next phase was for firms to develop testing plans with the relevant regulators for their cross-border trial, some of which would involve live transactions. Firms that developed a testing plan satisfactory to each jurisdiction’s criteria would take part in the pilot testing phase.

In January 2020, GFIN made the decision that they were unable to take forward any of the eight firms to begin testing as the firms did not develop a testing plan that satisfies each jurisdiction’s criteria (e.g. the firm’s business is still in development and not ready to test; lacking formal partnerships). GFIN is exploring how it might be able to assist these firms in other ways, either outside the GFIN framework or inviting them to re-engage with the Network when they are closer to being ready to test.

Lessons learned and next steps

The cross-border testing pilot provided GFIN members with valuable experience and feedback which will help the network continue to evolve the framework for future cohorts and ensure that firms are ready for testing.

In October 2019, GFIN met in Montreal to reflect on the pilot and consider the future of cross-border testing, including how processes and structure should change as a result of our experience. In the year since the GFIN launched the cross-border testing pilot they’ve continued to hear that industry is enthusiastic about the support and coordinated services GFIN could provide. Members agreed there is merit in continuing the work on cross-border testing given market demand and the chance for further regulatory learning and collaboration. The EY Fintech Australia Census 2019 highlighted access to international markets and expansion continues to be an important issue for firms, including among developed economies. At the same time, global fintech investment was at an all-time high in 2018 increasing 120% from $50.8 billion USD in 2017 to $111.8 billion USD. Anecdotally, GFIN members continue to have conversations at the domestic level with firms who are strongly supportive of regulators finding more efficient ways to provide coordinated services.

For these reasons, GFIN is committed to developing further the framework of cross-border testing and is now launching several solutions as part of cross-border testing 1.0, or the post-pilot phase. The Network is launching these new solutions ahead of the planned opening of applications for a new cohort in H1 2020.

As part of the Network’s commitment to having an open dialogue with industry, the GFIN has prepared the “Cross-border testing: lessons learned” report to reflect on the pilot period from January 2019, including its achievements and the challenges it faced. The report also includes next steps and solutions to improve cross-border testing for the next phase. GFIN is excited to implement these solutions, continue supporting firms and create an environment to allow the testing and scaling of new technologies in multiple jurisdictions.

Download the "GFIN Cross-border Testing: Lessons Learned" report