FT lab

The Danish FSA's sandbox initiative, where selected companies have the possibility to test their innovations in a secure environment.

1. Purpose

The Danish FSA has established the FT Lab with the overall purpose of:

  1. Providing a basis for testing innovative financial products and services
  2. Promoting the development of beneficial financial products and services for the consumers and the society
  3. Enabling the Danish FSA to better understand Fintech 
  4. Supporting the use of new technology in the financial sector

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. Hence, the FSA created FT Lab as a place where selected companies can test their technology or business model.

FT Lab ensures that companies can test their technologies and business models faster. Testing will always happen within boundaries set by the FSA in collaboration with the company. This approach enables both the companies and the FSA in understanding the use of innovative technology and business models within the scope of finance.

FT Lab will be open to up to five companies at any given time, and it is open to applications from fintech entrepreneurs as well as established companies.

The Danish FSA expects a test to run for up to six months depending on the specific agreement between the FSA and the concerned company.

2. What is possible in FT Lab? 

FT Lab is a safe environment, where companies can test new technologies and business models. 

In cooperation with the FSA, companies can test innovative products or services, giving companies an efficient process to clarify whether their activity requires a license. Concurrently, the company as well as the FSA will obtain knowledge of the innovation and to which extend the activity falls within the scope of the financial regulation. 

FT Lab is for companies using new technology or business models that can be difficult to place within the existing financial regulation.

The Danish FSA will create a testing framework in cooperation with the company to be certain that testing is safe. The FSA and the company will enter into an agreement outlining the specific limitations. Examples of limitations are number of costumers and scope of business.

The Danish FSA will not assist the companies to find customers for the test.

3. Who can apply?

FT Lab will be limited to a maximum of five companies at any given time. The FSA will assess all applications based on criteria listed below. The company does not have to fulfill every criteria, but the innovation or business model cannot be directly opposed to any criteria. The FSA will make an overall assessment of the application based on all criteria. Afterwards, the FSA selects which companies to offer access to FT Lab.

FT Lab eligibility criteria: 

  • The activity is directly or indirectly covered by the financial legislation
  • The technology or the business model new
  • The product or the service is beneficial for the consumers or the society
  • There is a need to participate in the FT Lab 
  • The company is 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:

  1. Financial companies that already have a license within the financial legislation, but wish to test a new technology and/or business model. 
  2. Companies that do not have the required license within the financial legislation to provide the desired activity.
  3. 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)
  • Stockbroker
  • 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. 

4. Application

Before applying to FT Lab, a company should thoroughly examine the material made available on these pages. It is important for participation that the product or business model is mature enough to be tested.

All applicants must complete the following application form.

Please forward the completed application form and potential appendices to fintech@ftnet.dk 

5. First experiences with FT Lab

  • The FSA received six applications for the pilot round of FT Lab

  • Two companies initiated testing

  • These tests revolved around machine learning and blockchain

  • Focus of the pilot round was in understanding how new technology in connection with know financial activities can comply with existing regulation

6. More information on regulatory sandboxes

The European Supervisory Authorities have publicised a joint report on regulatory sandboxes and innovation hub here.

Last updated 18-03-2024