In the product development process, a trial ecosystem is required before the product can be implemented. While it ensures product’s compatibility with the existing system, the trial also guarantees the product from various security risks. Hence, sandbox plays an important role in the product’s trial ecosystem. 

But, what actually is a sandbox, and how important is its role in the product development?

Sandbox serves as a virtual ecosystem to carry out various testing related to product development and cybersecurity. Bank Indonesia, for example, have been developing a sandbox to facilitate the needs of technology development around financial and payment systems.

On top of that, sandbox is an effort to maintain the speed of fintech innovation in the digital payment system business. It is also an effort to speed up the digital financial economy.

 

What is A Sandbox?

Programmer using sandbox to conduct program trials

Sandbox is an artificial ecosystem that serves to conduct a series of trials before a product can be publicly released. Through sandbox, developers conduct various integration tests to check for various security risks and possible integration failures, as well as to learn about the causes.

In the trial process, developers can access various documents related to the program operation. They don't have to worry about bothering the running system. For the developers, a sandbox provides the flexibility to identify potential programming errors and those that may arise as a result of being hacked by external parties.

To better understand sandbox in financial industry, take Sandbox 1.0 as an example. Simply put, Sandbox 1.0 is a regulatory sandbox developed by Bank Indonesia. A regulatory sandbox is a trial ecosystem for policy adjustments and innovations in the payment system. The goal is to make room for ensuring that products, services, technologies, and/or business models meet the criteria.

In April 2021, Bank Indonesia officially released its update, Sandbox 2.0. As an update, it has three new functions, which are:  

  1. Innovation Hub. Sandbox as a means of developing innovations that have or have not been used in the payment system industry on a limited basis.
  2. Regulatory Sandbox. Sandbox as a means for innovation of policies or provisions in the payment system.
  3. Industrial Sandbox. Sandbox as an innovation tool that has been used in the payments industry, but needs more encouragement to be widely used.

One of the products that has been developed by using Sandbox 2.0 is Customer Presented Mode (CPM) QRIS. It is the update version of Merchant Presented Mode (MPM) QRIS that only covered merchants. 

In Merchant Presented Mode, QRIS will appear at the merchant's side to be scanned by consumers. Meanwhile, the Customer Presented Mode is the opposite. QRIS appears on the consumer's side, then the merchant will scan the QRIS.

With this update, about 6.07 million merchants have used CPM QRIS and MPM QRIS, of which 85 percent are micro and small businesses. In addition, QRIS CPM has also been tested on 1,041 users with a transaction value of IDR 47.83 billion.

Read also: BRIAPI Helps PT USSI Build a Digital Ecosystem for Microfinance Institutions in Indonesia
 

How Sandbox Works

Before using sandbox, you need to know why you need sandbox. Ivo Jenik and Schan Duff, two financial consultants at the Consultative Group to Assist the Poor (CGAP), provide three steps to find out why you need a sandbox, which are:

1. Define objectives

Defining objectives from the start will make it easier to focus on the end result and impact of the trials. Generally, there are three purposes for using a sandbox:

  1. Promote innovation and/or competition
  2. Address regulatory barriers to innovation obstacles due to strict rules
  3. Learn about developments in the marketplace

2. Identify barriers

The use of sandbox can address some type of barriers, such as costly compliance, regulatory uncertainty, and prohibitive regulation.

3. Assess solutions

After successfully identifying the barriers, sandbox allows users to try various possible solutions which can be implemented.

If you have set the three things above, the next step is to start using the sandbox. There are four steps in performing a simulation in the sandbox: 

  1. Draft case studies, identifying real examples or case studies of the to-be-tested innovation. 
  2. Organize a simulation, invite stakeholders to participate in the simulation with the sandbox team.
  3. Run the simulation, present the case studies to the participants and ask them to each case study in accordance to the objectives of the sandbox.
  4. Evaluation, use the simulation results to draft and/or adapt the sandbox framework.

Read also: Trends in Online Payment System to e-Wallet for Business Development
 

Benefits of Sandbox

Businesses benefit from using a sandbox

As an ecosystem of simulation and testing of unreleased products, sandbox has several benefits, especially for product development. Here are various benefits of sandbox:

1. Ensure the security system  

Sandbox is used to check software or files suspected of containing viruses or malicious code. To carry out early detection, a safe place is needed to ensure the document is safe from any security risks, and sandbox is the place.

2. Adjust the product to a real ecosystem

Sandbox also serves to adjust the technology with the real ecosystem and gather information needed before actually implementing it.

3. Reduce integration failure risks

Simulation is important to find discrepancies within product development processes. Thus, the use of sandbox helps in finding gaps when the product is being developed.

 

4. Allow potential users to explore 

Sandbox allows potential users to explore the dummy features that meet their needs and ensure the quality of the final product.

 

These benefits can be seen in the development of banking and fintech products, such as electronic money, integration of tax payments, to QRIS. In fact, for the latter, there will be more services such as QRIS on Delivery, cross-border transactions to Malaysia and Thailand, transaction and deposit rates, as well as QRIS in traditional markets and tourist destinations. 

Indeed, these developments first need to be run in the sandbox so that the innovator team can optimize the product before its release. It also allows the provision of digital workplace facilities and infrastructure that carries the digital archipelago theme. Thus, sandbox can support an integrated interface between banking and all industries involved in the payment system.

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