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

The advent of regulatory sandboxes has emerged as a strategic policy instrument, with the objective of facilitating innovation in the financial technology (FinTech) sector, whilst ensuring the maintenance of regulatory oversight. These frameworks enable FinTech firms to experiment with new products and services in a controlled environment, thereby fostering experimentation and reducing the regulatory barriers to market entry. Despite the increasing global adoption of regulatory sandboxes, there is a paucity of empirical evidence on the actual impact of such initiatives on FinTech innovation and firm-level outcomes.The present study investigates the role of regulatory sandboxes in supporting FinTech development, with a specific focus on their influence on innovation processes and market entry dynamics. The present paper employs a qualitative multiple case study approach to examine three jurisdictions with distinct regulatory environments: namely, the United Kingdom, Singapore, and Hungary. These countries represent a range of regulatory maturity levels and sandbox design features, providing a substantial foundation for comparative analysis.The findings indicate that participation in a sandbox has a significant impact on firms' access to funding, the speed of product development, and long-term market integration. The United Kingdom and Singapore are exemplars of well-established regulatory ecosystems that are driven by innovation, while Hungary offers insights into the potential of the sandbox model in emerging markets. The present study contributes to the growing corpus of literature on the subject of FinTech regulation, and it provides policy-relevant recommendations for the optimisation of sandbox design in order to balance innovation and oversight.