FCA offers ‘supercharged sandbox’ for AI experimentation

The UK’s Financial Conduct Authority (FCA) launched what it is calling a “supercharged sandbox” in June, aiming to support financial services firms as they experiment with artificial intelligence (AI) in an isolated environment.

The sandbox is being run in collaboration with US technology provider Nvidia, which will provide participants with its accelerated computing platform and AI enterprise software. Applications closed on August 11 and the sandbox will begin experiments this October. 

According to Alpesh Doshi, managing partner at Redcliffe Capital, which specialises in digital transformation, data and AI, one of the main benefits of the sandbox is access to Nvidia’s tech platform within the FCA’s upgraded digital sandbox environment. This provides better synthetic and curated datasets, tooling and direct regulatory support, to speed up AI experimentation and proof-of-concept development.

“Being able to test with Nvidia’s sandbox enables fintechs to build and test solutions that combine [regulatory solutions] and AI together,” he said.

FCA says this “supercharged”, or upgraded, version of the sandbox offers advanced graphics processing unit (GPU) compute resources, which enable users to train, refine and experiment with AI models efficiently.

Accelerate

Firms accepted to the sandbox will have access to the Nvidia AI Enterprise software suite, a cloud-native suite of software tools, libraries and frameworks that accelerate and simplify the development, deployment and scaling of AI applications.

However, Doshi points out that Nvidia should also benefit from the collaboration, since it will give firms hands-on use of the tech company’s full stack of tools inside the FCA sandbox, which will inherently increase exposure to and familiarity with its offering. 

“While the FCA frames it as enabling innovation, it also functions de facto as a product showcase that could generate downstream commercial interest for Nvidia,” he said. “It also help Nvidia to understand which use cases people are building for, and helps the design and build infrastructure and software.” 

Speaking at Julyʼs AI and Digital Innovation Summit in London, Jessica Rusu, the FCAʼs chief data, information and intelligence officer, said the companies applying to the sandbox were focusing on topics ranging from financial inclusion and financial wellbeing to financial crime and fraud. 

According to Rusu, 75% of firms have already adopted some form of AI, based on data from joint surveys with the FCA and the Bank of England. However, many are using it internally rather than in ways that could benefit customers and markets, she noted.

Rusu added that the FCA is testing large language models (LLMs) to analyse text and deliver efficiencies in its authorisations and supervisory processes, in addition to customer-facing tools. Tests include using predictive AI in its supervision hub and using AI voice bots to direct consumers to the right regulatory agency. 

In her speech, Rusu dismissed the need for new rules to govern the growing AI market, maintaining that existing frameworks, such as the Senior Managers Regime and the Consumer Duty, are sufficient. 

However, not everyone in the industry is bullish on the new AI sandbox. 

Caution

Charles Radclyffe, CEO of EA Global AI, which provides an autofill platform for complex corporate documents, said: “A sandbox is a place I send my kids to play in the garden confident that they can make a mess and I only have to worry about the odd bit of cat poo if I don’t fasten the net down at night.”

While the FCA’s supercharged sandbox is a “more robust set-up” than a children’s toy sandbox, it may still have its “fair share of digital and regulatory cat poo” and the “concept of ‘sandboxing’ still feels flimsy”, added Radclyffe. 

A regulatory sandbox is not for “serious solutions” that are going to make it to production. “Sandboxing is fine for toy solutions, or tech where the practical realities are still unclear, but I think best avoided for startups, who should really focus on building solutions that can get to revenue quickly,” he added.

However, Eligible.ai co-founder Rameez Zafar believes the FCA sandbox is a place where his firm can test ideas they would never be able to try in a live production environment straight away. Available tools include more than 200 anonymised datasets, 1,000-plus application programming interfaces (APIs), and guidance from both the FCA and Nvidia.

“It is rare to have that mix of speed, scale, and safety in one place,” he says. “Nvidia’s platform lets us crunch millions of data points and run complex simulations in minutes. It takes the gap between small innovators and the big institutions and shrinks it fast.”

Zafar also points to the benefits of working with the regulator from the outset, meaning compliance is built in and can directly support Consumer Duty objectives.

Nvidia

However, access to the Nvidia tech stack isn’t the main draw for every company applying to the sandbox. Jason Nabi, founder and CEO at WealthAi, an agentic AI operating system for wealth management, queries why the sandbox is so tightly tied to Nvidia, and whether it may limit his firm’s experiments if they are accepted to the programme. 

“We’re not developing models on Nvidia, weʼre a multimodal platform with a particular sort of proprietary technology, but we leverage things like anthropic MCP [model complex protocol] and other sorts of base layer technologies,” he said. “We’re quite flexible in that approach — we’ll pick the right model, the right infrastructure, the right architecture for not only our business, but more importantly, for the use cases that we support, or for the client scenarios that we support.”

Despite the question mark over Nvidia, Nabi says his firm is applying to be “part of the conversation” and will “listen to our peer group” on the direction and growth of the AI market in the UK and the direction in which the FCA is headed. 

He agrees with the FCA that regulation should be focused on the financial activity, not the technology. “But you have to have a level of transparency and understanding around the technology and what it’s delivering,” he added. “The FCA is taking a bit of a proactive stance, and this is good for the industry”. The “curious” part is that it is “sponsored by Nvidia”. 

Complementing the supercharged sandbox, the FCA is also launching AI Live Testing, which focuses on firms who are in the discovery and experiment phase of their AI product development.