Build More Than Sandcastles with Financial Sandboxes

Fintech may be an ever-expanding enterprise, but developers aren’t in the business of rushing their innovations.

Even though those at the top stand to reap untold rewards with the right products, the 2008 financial crash has seen big businesses and regulators avoid the light-touch approach to innovation. Today, with 39 fintech firms valued at a combined $147 billion/£115 billion, safety and financial security are paramount. Indeed, with such much on the line, companies are now taking every precaution possible before launching a new product.

Fintech Creating a Safe Place to Play

With that in mind, the sandbox strategy has become a standard across the industry. A term taken from computer security, sandboxes provide a partition between a live network and a test net. By using a sandbox, developers can test new commands and isolate faults without compromising an existing system. Using this dynamic, fintech companies are now using sandboxes to ensure financial products are not only secure but performing in the way they’re intended.

Expanding on the use of partitions within fintech, consumers are being offered an ever-increasing number of sandbox options. From financial simulators to demo games, individuals can explore potential investments without putting their money on the line.

Turning Serious Investments into a Game

This idea of turning simulations into games is one that’s also been adopted by the gaming industry. With online casino gaming now worth in excess of $45 billion/£35 billion, more novices are now eager to explore the financial potential of the industry. However, with real money on the line, playing slots and the like is always a risk. Therefore, to mitigate any financial burden, free demo slots have become popular, as you can see here. Providing full functionality without the cost, these free-play games provide that same safe environment as virtual trading platforms.

Perhaps the most interesting sandbox innovation for consumers is the growth of free investment platforms. Running parallel with their real money counterparts, these platforms allow novices to invest in stocks, shares and contracts for difference (CFDs) using a virtual bankroll.

Perhaps the most interesting sandbox innovation for consumers is the growth of free investment platforms. Running parallel with their real money counterparts, these platforms allow novices to invest in stocks, shares and contracts for difference (CFDs) using a virtual bankroll.

In tandem with a virtual bankroll, financial simulators can be used to test the potential profitability of an investment. On a basic level, Monte Carlo simulations can be created inside Microsoft Excel. By entering certain values, the Monte Carlo method assigns probabilities to potential outcomes. Or, as described by Investopedia, Monet Carlo Excel spreadsheets can compute “the probabilities for integrals” and solve “partial differential equations, thereby introducing a statistical approach to risk.”

Similarly, by using products such as Countdown to Retirement, individuals can get an idea of their future financial status without crunching the numbers.

As a consumer, the benefits of these so-called sandbox options are obvious. By giving you ways to explore the financial sector without the cost, companies are not only reducing individual risk but their own risk. What’s more, they’re providing new opportunities for the uninitiated. By removing financial barriers and giving novices a safe way to learn, fintech has become a more responsible industry for all involved.

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