I just spoke at Russia’s Eastern Economic Forum, a Davos for the Russian world and beyond. Hosted by Vladimir Putin there were stellar guests attending including Prime Minister Narendra Modi of India and Prime Minister Shinzo Abe of Japan, as well as other world leaders and Chris Skinner.
— Chris Skinner (@Chris_Skinner) September 5, 2019
A big affair.
I was asked to pop over (to Vladivostok) to talk about regulatory sandboxes. Russia has a number of sandboxes being created in everything from healthcare to transportation, cryptocurrencies to AI and education to administration. Interesting developments indeed.
One of the speakers on my panel said that sandboxes have nothing to do with speed-to-market but are all about testing in a confined space. I disagree. I think it’s all about speed-to-market. We didn’t have a chance to debate that on the panel, but regulatory sandboxes are only needed imho if you have markets that can kill.
Airplanes and trains can kill, as we know; healthcare and drugs can kill too, obviously; and banking and finance can kill also. It can kill economies, countries and cause people to take their lives as evidenced during any recession. These are the markets that demand sandboxes as you don’t want to test ideas on live markets where the customers may die.
Technology and media are different. Losing a selfie is nothing like losing a million dollars. Hence, those markets are much less regulated. The average bank deals with five times more regulation than the average tech company, for this reason. It’s also why the much-hyped discussion about a Kodak or Nokia moment in banking is complete baloney. Banking is not the same as making a phone call or taking a picture. Banking can kill. This is why another panellist said that whoever is running a sandbox should be immune from any criminal liability for subsequent actions, such as someone dying from taking a drug that had not completed full testing. Interesting.
This debate moves along further, in that the real reason for regulatory sandboxes is to speed innovations to market. By bringing together regulators, technologists, industry and academia, you can do things far faster and far more co-ordinated than ever before. I regularly make the point that this is why London, Hong Kong, Singapore, Dubai and other FinTech sandboxes succeed, because all of the constituent stakeholders sit in the same street. In London, I can meet government, treasury, regulators, central bank policymakers, technology leaders, consulting firms, auditors, accountants, banks and insurance heads, all in the same day and sometimes in the same room. You can’t do that in America where Wall Street is miles from Washington and Silicon Valley.
But you can do this if you have a sandbox, as the resources are placed in the playroom for all to play with. All of the constituent players need to be in the room for the sandbox to work.
Then there’s the final part, which is that the sandbox is a playroom. It’s for kids to experiment. That’s what the term sandbox invokes in the head: a children’s playroom. The real question is how to take the kids the ideas play with in the playroom and make them mainstream. This is often where sandboxes fail, as they approve ideas in draft but have little connectivity to taking those ideas into reality. It is an important aspect of any aspect of innovation. Sure, you can derisk the innovation by placing it in a sandbox playroom but, if the idea is any good, how do you then take it to market?
I think this is where my fellow panellist was making his point in terms of it is not speed. It is testing. However, my counterpoint is that testing is no good if there’s no way to take the test to reality.
All in all, it was very interesting and adds to my CV another little line: international speaker alongside the likes of Vladimir Putin, Narendra Modi and Shinzo Abe. It’s a stretch maybe, but hey, I was on the same agenda.