By Qudsia Bano
Something new is happening in Pakistan’s financial world — the Regulatory Sandbox by the State Bank of Pakistan has opened a special testing ground for new financial technology ideas. It’s a key part of the bank’s Vision 2028 plan to modernize how money moves and make financial innovation safer and smarter.
What the Regulatory Sandbox Means for Fintech in Pakistan
For the first time, companies can test their new digital products in a controlled setting before bringing them to the public. The sandbox lets banks, startups, and tech firms try out new financial tools under relaxed rules — but still with strong consumer protection. It’s designed to help fresh ideas grow without putting the financial system at risk.
First Cohort Focuses on Open Banking and Remittance Solutions
Applications for the first batch were accepted from August 25 to October 5, 2025. The focus was on three major areas — Open Banking, technology-driven remittance solutions, and remote merchant onboarding. Each participant has a limited number of users and transaction limits. After the testing phase, the central bank reviews the results to decide if the products are ready for wider launch.
Balancing Innovation with Financial Stability
Officials say the program is built to strike a balance between new ideas and financial stability. By testing products under supervision, the State Bank can watch how they work in real time and gather real-world data.
This helps regulators make fair and flexible rules instead of broad ones that might not fit every new technology. The sandbox also allows teamwork among multiple regulators, including the SBP, the Securities and Exchange Commission of Pakistan (SECP), and the Pakistan Telecommunication Authority (PTA), since new financial tools often overlap with telecom and insurance sectors.
Experts Call It a Game-Changer for Pakistan’s Fintech Sector
Experts see this step as a big boost for Pakistan’s fast-growing fintech sector. Since 2019, when the first Electronic Money Institutions were launched, the country has seen a wave of innovation.
The sandbox now lowers the barrier for startups working on things like blockchain payments, regulatory technology (RegTech), and artificial intelligence–based credit scoring. International investors are also expected to take notice, seeing this move as proof that Pakistan’s regulatory system is growing more mature and forward-looking.
Consumer Protection and Digital Finance Safety Remain Central
At the same time, the State Bank stresses that protecting users remains its top priority. All participants must meet strict data security and transparency standards, clearly inform customers about risks, and have strong complaint-handling systems. Every experiment is tracked by the bank’s Fintech Supervision Unit, which reports directly to top management. The findings from this first testing group will help shape future updates to Pakistan’s digital payment and cybersecurity rules.
Expanding Financial Inclusion and Digital Payment Access
Economists believe the sandbox could help more people enter the financial system, especially young workers, freelancers, and small businesses. By encouraging cheaper, tech-driven financial services, it could open new opportunities for those traditionally left out of the banking system.
Officials told this reporter that once successful models are approved for full-scale launch, they could expand Pakistan’s digital payment options and spark healthy competition in the market. With this initiative, Pakistan joins countries like Singapore and the UAE, where regulatory sandboxes have already helped shape the future of safe and smart digital finance.
Author Profile
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Qudsia Bano is a financial correspondent focused on Pakistan's fiscal health.
Her reporting, driven by SBP data, tracks the country's vital foreign exchange reserves. Bano’s work highlights the central bank's success in stabilizing reserves near the $19-20 billion range, underscoring its crucial effort to maintain exchange rate stability.
