Fostering regulator-innovator collaboration at the frontline: A case study of the UK’s regulatory sandbox for fintech

Abstract

When supervising emerging technologies, regulators are more effective when they collaborate with business. Yet, innovative businesses are often small, inexperienced, and mistrustful. How can regulators motivate them to collaborate? This study examines this question by applying responsive regulation theory to a case study of the United Kingdom's regulatory sandbox for financial technology. This study illustrates how frontline regulatory interactions foster regulator–innovator collaboration, in ways that differ from how these interactions foster collaboration between regulators and the mature industries upon whose study responsive regulation is based. As one of the first academic studies to collect data from sandbox participants, this article offers unique insights into “what works” about the United Kingdom's much-imitated model.