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The Role of Regulatory Sandboxes in FinTech Innovation: A Comparative Case Study of the UK, Singapore, and Hungary

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  • János Kálmán

    (Ferenc Deák Faculty of Law and Political Science, István Széchenyi University, H-9026 Győr, Hungary)

Abstract

Regulatory sandboxes have emerged as policy instruments designed to support FinTech innovation while maintaining supervisory oversight. By allowing firms to test financial products in controlled environments, sandboxes aim to reduce regulatory uncertainty and facilitate market entry. Despite their growing adoption, empirical evidence of their effectiveness remains limited, particularly in emerging markets. This study explores the impact of regulatory sandboxes on innovation and market access through a qualitative comparative case study of the United Kingdom, Singapore, and Hungary. Drawing on document analysis and thematic coding, the research evaluates sandbox design, regulatory support, and innovation outcomes across the three jurisdictions. Findings show that sandboxes enhance access to funding, accelerate product development, and foster regulator–firm collaboration. While the UK and Singapore benefit from mature ecosystems and structured frameworks, Hungary illustrates sandbox potential in developing markets. The paper contributes to FinTech regulation literature and provides policy recommendations for optimizing sandbox design across varied institutional contexts.

Suggested Citation

  • János Kálmán, 2025. "The Role of Regulatory Sandboxes in FinTech Innovation: A Comparative Case Study of the UK, Singapore, and Hungary," FinTech, MDPI, vol. 4(2), pages 1-16, June.
    • Handle: RePEc:gam:jfinte:v:4:y:2025:i:2:p:26-:d:1679603
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    References listed on IDEAS

    as
    1. Christopher Chen, 2020. "Rethinking the Regulatory Sandbox for Financial Innovation: An Assessment of the UK and Singapore," Perspectives in Law, Business and Innovation, in: Mark Fenwick & Steven Van Uytsel & Bi Ying (ed.), Regulating FinTech in Asia, pages 11-30, Springer.
    2. Giulio Cornelli & Sebastian Doerr & Leonardo Gambacorta & Ouarda Merrouche, 2024. "Regulatory Sandboxes and Fintech Funding: Evidence from the UK," Review of Finance, European Finance Association, vol. 28(1), pages 203-233.
    3. Drago, Carlo & Minnetti, Francesco & Di Nallo, Loris & Manzari, Alberto, 2025. "Uncovering patterns of fintech behavior in Italian banks: A multidimensional statistical analysis," Research in International Business and Finance, Elsevier, vol. 73(PA).
    4. Anagnostopoulos, Ioannis, 2018. "Fintech and regtech: Impact on regulators and banks," Journal of Economics and Business, Elsevier, vol. 100(C), pages 7-25.
    5. Zheng, Yulu & Wu, Xiaoli, 2024. "Fostering fintech innovation: A tripartite evolutionary game analysis of regulatory sandbox experiments," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1302-1320.
    6. Wendy McCallum & Meshach J. Aziakpono, 2023. "Regulatory sandbox for FinTech regulation: Do the conditions for effective adoption exist in South Africa?," Development Southern Africa, Taylor & Francis Journals, vol. 40(5), pages 1100-1116, September.
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