The State Bank of Pakistan (SBP) has launched the second cohort of its Regulatory Sandbox, inviting individuals and firms to submit innovative financial solutions for testing within a controlled regulatory environment. The latest cohort will focus on four areas covering artificial intelligence in financial services, payment innovations, technology-enabled inward remittances and next-generation financial services. Applications for participation will remain open until November 30, 2026, giving applicants an opportunity to present solutions that could contribute to the development of Pakistan’s digital financial services ecosystem.
Under the second cohort, selected applicants will be able to test new financial products, services and solutions while the central bank assesses their practical and regulatory implications. The controlled environment allows innovative ideas to be examined before they are introduced more broadly into the market, giving both applicants and the regulator an opportunity to understand how new technologies and business models operate within the financial sector. The sandbox also enables SBP to assess how emerging solutions interact with existing regulations and identify areas where additional regulatory consideration may be required.
SBP has defined four specific themes for the latest cohort, and only proposals falling within these areas will be considered. The first theme is artificial intelligence in financial services, covering solutions that apply AI to financial sector activities. The second focuses on innovations in payments, including technologies and business models designed to develop or improve payment services. The third theme covers technology-enabled inward remittances, while the fourth is an open category for next-generation financial services that fall within the scope of the Regulatory Sandbox. Applicants will therefore need to ensure that their proposed solutions correspond with at least one of the areas identified by the central bank.
Artificial intelligence has become an increasingly important area of development for financial institutions and technology companies, with new applications being explored across different parts of the financial services industry. Through the sandbox, SBP will have an opportunity to observe how proposed AI-based solutions operate in practice and assess their implications within a controlled setting. Payment innovation remains another key area, as financial technology firms and other participants continue to develop new ways of delivering payment services. Technology-enabled inward remittances represent a separate focus, while the open category provides room for other emerging financial services solutions that meet the programme’s defined requirements.
The Regulatory Sandbox forms part of SBP’s broader efforts under Vision 2028 to encourage innovation across Pakistan’s digital financial services ecosystem while maintaining consumer protection and financial stability. Rather than allowing emerging products and technologies to immediately enter the wider market without structured assessment, the sandbox provides a framework through which the central bank can monitor their operation, examine potential risks and understand their regulatory implications. This approach allows innovation to be tested alongside regulatory oversight, helping SBP assess whether existing rules remain suitable for new financial technologies and business models.
SBP initially introduced its Regulatory Sandbox in August 2025, with the first cohort concluding in June 2026. The experience gained during the initial round provides a foundation for the second cohort, which will follow the same broad principle of allowing innovative solutions to be tested under defined conditions. For participating applicants, the programme provides a structured opportunity to evaluate their proposed products or services, while for SBP it creates a mechanism to study emerging technologies and determine whether the regulatory framework needs to be adjusted as the financial sector develops.
A regulatory sandbox generally provides a controlled testing environment where innovative financial products, services and business models can be assessed under regulatory supervision. The model allows regulators to observe how a solution performs in practice, identify possible consumer or financial risks and examine its interaction with existing rules before considering wider implementation. For financial technology companies and other innovators, this can provide an opportunity to develop and test solutions without immediately moving into full-scale market deployment, while regulators gain practical information about technologies that may require new or updated regulatory approaches.
For the second cohort, interested individuals and firms must submit their applications to SBP by email by November 30, 2026. The central bank has issued guidelines covering the application form and step-by-step participation process, along with a separate overview outlining the four themes included in the latest cohort. Through the new round, SBP will continue examining developments in digital finance while giving eligible applicants a defined framework in which to test their proposed solutions. The initiative also provides the central bank with further practical insight into the technologies, services and business models that could shape Pakistan’s financial services sector.
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