CBJ approves three Entrepreneurial Companies to Enter the Regulatory Sandbox Environment (JoRegBox)
On Thursday, October 31, 2024, the Central Bank granted approval to three pioneering companies to begin testing their mature digital financial products within the regulatory sandbox for financial technology and innovation in the financial and banking sector (JoRegBox). This testing will take place in the real market with real customers, under the supervision and oversight of the Central Bank.
The Central Bank indicated that this decision comes as part of achieving the vision for financial technology and innovation that was launched in August 2023 as part of the initiatives of the Executive Program for the Economic Modernization Vision (2023-2025). The goal is to provide a suitable environment to promote financial technology (Fintech) and innovation within the Jordanian financial and banking sector, making Jordan a leading regional center and an investment destination for modern financial technologies. The regulatory sandbox emerges as an effective tool provided by the Central Bank to innovators and entrepreneurs in support of innovative digital financial solutions, enhancing the efficiency of financial services, improving the experience of financial consumers, and supporting levels of financial inclusion in the Kingdom.
The Central Bank stated that the innovative digital financial solutions that will begin testing within the regulatory sandbox environment are; (E-Damana) provided by Damana Digital Assurance for Software Development. This product functions as an electronic platform for offering digital assurance services for large-scale payment transactions, such as real estate and vehicles. Through the platform, the buyer as the price for a specific good or service pays a specific amount, after which the commercial transaction between the parties is documented through the platform. The funds paid remain in a designated escrow account at one of the Jordanian banks, and once the product/service is received and verified, the amount in the escrow account is transferred to the seller’s account.
The second product, (Watheq), presented by the Trusted Communication Company for designing and developing software and computer systems, is an electronic platform that provides digital warranty services for buying and selling transactions in the retail payments market, such as low-value goods and services. On this platform, the buyer, which is the price for a specific good or service, pays a specific amount and the commercial transaction is then documented among the parties through the platform. The paid amounts are held in a specific escrow account at one of the Jordanian banks. Once the product/service is received and verified, the amount in the escrow account is transferred to the seller’s account.
While the third product (CRIF Cosmo), offered by CRIF IT Solutions, is an electronic platform for providing credit risk assessment services. Through this platform, credit risk for customers is evaluated by measuring the payment intention of individuals or micro, small, and medium-sized enterprises based on their personal characteristics. This serves as one of the tools that financial and banking institutions providing credit can rely on when making decisions about granting credit to their clients, alongside other tools currently available in the market.
The Central Bank indicated that its decision to approve the commencement of testing for the previously mentioned innovative digital financial solutions comes in light of the completion of its working teams' studies and evaluations of the applications submitted to the regulatory sandbox (JoRegBox) during the first cohort announced at the launch ceremony of the regulatory sandbox on February 18, 2024. Nine applications were submitted to the regulatory sandbox, of which three have been approved for testing in the sandbox environment after successfully passing the evaluation stages.
It should be noted that the Regulatory Sandbox for Financial Technology and Innovation in the Financial and Banking Sector (JoRegBox) is a secure, very experimental regulatory environment supervised and monitored by the Central Bank. It allows entrepreneurs and innovators to conduct tests of financial products, services, and innovative business models using digital solutions developed based on modern technology with real clients, following a risk-based approach and within clearly defined standards and controls, with the utmost degree of transparency.
In this regulatory environment, innovative digital financial solutions undergo a comprehensive testing and evaluation process without direct compliance with specific regulatory requirements under the applicable legislation while they are in the regulatory sandbox. This approach actively promotes innovation in the use of financial technology and accelerates the market entry phase.