The Danish FSA has established the FT Lab with the overall purpose of:
- Providing a basis for testing innovative financial products and services
- Promoting the development of beneficial financial products and services for the consumers and the society
- Enabling the Danish FSA to better understand Fintech
- Supporting the use of new technology in the financial sector
However, it is important to note that companies participating in the FT Lab are subject to the applicable legislation.
The use of new technology in the financial sector can be difficult to place within the scope of the existing financial regulation. This creates a need for an environment – FT Lab – where selected companies are able to test their business model, before they optionally apply for a full license within the financial regulation.
The framework of FT Lab is almost done, and the FSA will open up for applications in the beginning of 2018. Companies can already now consider the description of the purpose and the eligibility criteria to determine, whether FT Lab is relevant for their company.
Only a limited amount of companies can be part of the first cohort of FT Lab. The Danish FSA will therefore open up for applications in the first quarter of 2018. Based on the initial experiences with the first cohort, the FSA will again open up for applications from companies at a later date, e.g. when the companies from the first cohort are leaving the FT Lab.
As a starting point Fintech entrepreneurs as well as established Fintech companies can apply. Entry to the FT Lab will be granted on an assessment based on the eligibility criteria listed below.
The Danish FSA expect a test in the FT Lab to run for up to six months depending on the specific agreement between the Danish FSA and the concerned company.
2. What can be done in the FT Lab?
The purpose of FT Lab is to create a safe environment, where companies can test new technologies and business models.
In cooperation with the FSA, the companies can test their products or services on real costumers. The intention of FT Lab is to provide companies an efficient process to clarify whether their activity requires a license and thereby reducing time to market. Concurrently, the company as well as the FSA will obtain knowledge of the innovation and to which extend the company operates within the scope of the financial regulation.
FT Lab is for companies with innovations or business models that can be difficult to place within the scope of the existing financial regulation. It is a requirement that the companies are ready to test their product or business model on real costumers.
The Danish FSA will create the testing framework in cooperation with the company to be certain that testing is safe for the company as well as the costumers. The FSA and the company will enter into an agreement outlining under which limitations testing can be carried out. Examples of limitations is the allowed number of costumers and the scope of business. The company shall regularly assure the FSA that the test is being carried out correctly.
The Danish FSA will not assist the companies to find customers for the test.
3. Who can apply?
As this is a new initiative, the number of companies accepted into the FT Lab will be limited to a maximum of five. The FSA will assess all applications based on five eligibility criteria in order to decide whether the technology and/or business model is suitable for the FT Lab. The company does not have to fulfill every criteria, but the innovation and/or business model cannot be directly opposed to any criteria. The FSA will make an overall assessment of the application based on all criteria. A final decision will then be made as to which companies are offered access to the FT Lab. The eligibility criteria are:
- Is the activity directly or indirectly covered by the financial legislation?
- Is the technology or the business model new?
- Is the product or the service beneficial for the consumers and/or the society?
- Is there a need to participate in the FT Lab?
- Is the company ready to test in the FT Lab?
This table explains the factors indicating whether an application meets the eligibility criteria. The table is purely indicative as to which factors the Danish FSA can include in the assessment of the applications.
As a starting point, the FT Lab will be open for three categories companies:
- Financial companies that already have a license within the financial legislation, but wish to test a new technology and/or business model.
- Companies that do not have the required license within the financial legislation to provide the desired activity.
- Companies where it is uncertain whether the activity requires a license within the financial legislation.
An example of a company covered by category 1 is a bank or insurance company, optionally in cooperation with a fintech-company that wants to test a technology and/or business model in FT Lab.
An example of a company covered by category 2 and 3 is a fintech-company which has not yet obtained a license within the financial legislation, or a company that has not yet tested the activities covered by the financial legislation.
Regarding companies covered by category 2, the FT Lab will as a start be limited to the following types of companies:
- Issuers of electronic money
- Payment service providers
- Account information services
- Registrered alternative investment funds
- Alternative investment funds
- Financial advisors (including advisors on investments and mortgage credit intermediaries)
- Insurance broker
- Multilateral Trading Facilities
In these cases, the company will have to obtain one of the above listed licenses to start the test in the FT Lab. This will include a number of conditions and restrictions on e.g. customers, the volume of investments and the scope of activities.
Before applying to FT Lab, a company should thoroughly examine the material made available on these pages (link). FT Lab is for companies that need to test new technologies or business models on real customers. Hence, it is of utmost importance for participation that the product or business model is mature enough to be tested. It shall e.g. be possible to enter into agreements and test the product or business model during the testing period.
Likewise, the company should examine the eligibility criteria thoroughly, as part of the application will include an explanation as of why the company fulfills these.
All applicants must complete the following application form.
Please forward the completed application form and potential appendices to firstname.lastname@example.org
The Danish FSA must receive the complete application no later than 23 March 2018. Companies applying after this date will not be considered for entry into the first cohort of FT Lab.
The Danish FSA will host a briefing session about FT Lab on Wednesday 28 February, 14.30-16.30. Registration for this is possible by mail to email@example.com by Monday 26 February. The space is limited, hence the Danish FSA reserves the right to limit how many people can attend from each company.
The presentation from the briefing session is found here.