The SBP regulatory sandbox has named its first six shortlisted participants, giving Pakistan’s fintech sector a clear picture of which innovations the central bank is willing to stress-test in a live environment. The announcement, made in January 2026, marks the first concrete output of a framework that the State Bank of Pakistan formally launched with detailed guidelines in May 2025.
What Is the SBP Regulatory Sandbox?
A regulatory sandbox is, in simple terms, a safe testing room. It is a controlled, live testing environment in which selected companies can pilot new financial products with real users, under the direct supervision of the SBP, before those products go through the standard licensing process. Think of it as a trial run with training wheels: the rules are temporarily relaxed just enough to let a new product breathe, but the central bank watches every move.
It provides temporary regulatory relief to encourage innovation while minimizing risks to consumers and the financial system. For Pakistani startups, this removes the old problem where you had to get fully licensed before you could even prove your product worked.
The initiative grew out of SBP’s Vision 2028 strategic plan. Draft guidelines were released for public consultation in December 2023, and final guidelines were issued in May 2025, formally launching the sandbox. It is open to both SBP-regulated banks and unlicensed fintech startups alike.
How Cohort 1 Was Selected
Applications for the first cohort were invited between August 25 and October 5, 2025, focusing on open banking interfaces, technology-enabled remittance solutions, and remote merchant onboarding mechanisms.
According to the SBP, the initiative attracted strong interest from regulated financial institutions as well as local and international fintech companies. To ensure transparency and effective oversight, the central bank constituted a high-level steering committee to supervise the entire process.
After the committee’s review, the State Bank of Pakistan announced the short-listing of six successful applicants for testing their proposed solutions under the regulatory sandbox.
The Six Shortlisted Firms and What They Are Testing
Open Banking: Three Firms
Under the open banking theme, Neem Exponential Financial Services Private Limited, Digi Khata (SMC Private) Limited, and Swich Retail Private Limited have been shortlisted.
- Neem Exponential Financial Services is a Banking-as-a-Service platform. Neem allows other businesses to embed financial services such as payments, payouts, wallets, and card issuance directly into their own platforms, and already powers financial flows for companies including Leopards Courier, LAAM, and EFU Life. Inside the sandbox it is testing open banking-led infrastructure for secure, consent-based data access.
- Digi Khata is a digital bookkeeping app for small businesses. Its sandbox participation explores how the bookkeeping data it collects can be used to help small businesses access credit and other financial services. This is a big deal for the millions of shopkeepers across Pakistan who still have no credit history.
- Swich Retail is focusing on the retail side. Switch Retail rounds out the open banking cohort, with its testing focused on retail-side payment and transaction infrastructure.
Remote Merchant Onboarding: Bank of Punjab
Under the remote onboarding of merchants theme, the Bank of Punjab was the sole participant selected. Its pilot is testing how merchants, particularly smaller and informal ones, can be onboarded into the formal financial system remotely, without the in-person paperwork or branch visits that have traditionally been required. This matters enormously for Pakistan’s informal economy, where millions of small traders still sit outside the banking system.
Inward Remittances: Two International-Linked Firms
Two firms are testing better ways to bring money home to Pakistan.
- Barq Fintech has an international pedigree. Barq Fintech is part of Saudi Arabia’s barq wallet, which reported over seven million users in Saudi Arabia by mid-2025, and holds an SBP in-principle approval to operate as an Electronic Money Institution in Pakistan. It is testing technology-enabled remittance flows aimed at Pakistani expatriates sending money home.
- Taptap Send and United Bank Limited is a cross-border team-up. Taptap Send, a UK-based remittance fintech, was shortlisted in partnership with United Bank Limited, pairing its cross-border transfer technology with a domestic bank’s local infrastructure and licensing.
The fact that both remittance applicants have strong international ties, one from Saudi Arabia and one from the UK, signals that foreign fintech players see Pakistan’s overseas worker community as a high-value market worth entering through the formal regulatory channel.
What Happens During Testing
Testing happens within a limited user base and a capped transaction volume, and certain regulations are temporarily relaxed for the duration of the pilot so the product can be tested realistically. At the end of the testing period, SBP evaluates the results to decide whether the solution is ready for broader market rollout and full licensing.
Participants must maintain clear disclosure, data-security standards, and complaint-handling mechanisms. The central bank monitors all trials through a specialised Fintech Supervision Unit that reports directly to senior management.
The Gap This Cohort Does Not Yet Fill
One thing worth noting: Cohort 1’s three themes were all infrastructure-focused, centred on payment rails, merchant onboarding processes, and cross-border transfer systems, rather than on any specific underserved user segment such as women, gig workers, or rural populations. That is not a criticism; building the pipes first makes sense. But it does mean the real test of financial inclusion will come in later cohorts.
Encouragingly, applications for the next cohort of SBP’s Regulatory Sandbox are opening this year, and a new set of themes is expected to be announced alongside the application window. Founders working on AI credit scoring, insurance tech, or rural digital wallets should start watching the SBP notice board now.
Pakistan’s fintech sector is growing fast. You can read more about the broader landscape in our coverage of the Pakistan startup ecosystem hitting $4 billion as the FinTech Summit opened earlier this year.
Lessons drawn from the first cohort will feed into updates of Pakistan’s payment system rules and cybersecurity protocols. So even firms that are not in Cohort 1 will benefit from what these six companies learn during testing.
Frequently Asked Questions
What is the SBP regulatory sandbox?
The SBP regulatory sandbox is a controlled environment where banks and fintech firms can test new financial products with real users under central bank supervision. Rules are temporarily relaxed to allow real-world testing before the firm applies for a full licence. It was formally launched in May 2025 under SBP’s Vision 2028 strategy.
Which firms were shortlisted for Cohort 1?
Six firms were shortlisted in January 2026: Neem Exponential Financial Services, Digi Khata, and Swich Retail (open banking); the Bank of Punjab (remote merchant onboarding); and Barq Fintech plus Taptap Send in partnership with United Bank Limited (inward remittances).
How long does sandbox testing last?
Each shortlisted firm gets up to six months to test its solution in a live but controlled environment. SBP then reviews the results and decides whether the product is ready for full market launch and formal licensing.
When does Cohort 2 open?
According to current information, applications for the next cohort are expected to open in 2026, with a new set of themes to be announced. Startups interested in entering should monitor official SBP press releases for the exact dates and eligibility rules.
