The State Bank of Pakistan (SBP) has invited applications for the second cohort of its Regulatory Sandbox, focusing on the use of artificial intelligence (AI) in financial services. Applications will be accepted until November 30, 2026, giving eligible financial institutions, fintech companies and other innovators an opportunity to propose solutions that could improve financial operations, credit assessment, fraud detection and transaction security. The initiative is intended to facilitate the testing of innovative financial technologies within a supervised regulatory environment before their potential wider introduction into the market. Further details and application information are available through the SBP Regulatory Sandbox portal.
The second cohort places particular emphasis on AI applications that can improve efficiency across financial services. Potential areas include automating routine processes, analysing financial information, supporting credit decisions and identifying suspicious activities. Financial institutions increasingly handle large volumes of customer information and digital transactions, creating opportunities for AI-based systems to identify patterns and assist with operational decision-making. In credit assessment, these technologies may help financial service providers evaluate relevant information more efficiently, while fraud detection applications can identify unusual transaction behaviour for further investigation. AI-based automation may also reduce the time required for certain administrative and service-related processes. However, the effectiveness of such solutions will depend on the quality of the underlying data, the reliability of the technology and the controls established to manage operational and consumer risks.
Through its Regulatory Sandbox, SBP provides a controlled environment in which eligible participants can test innovative financial products, services, business models and technologies under an agreed testing plan and appropriate safeguards. According to the central bank’s programme information, the initiative also aims to improve regulatory clarity, identify risks associated with emerging solutions and support evidence-based regulatory development. Participants can receive guidance on relevant regulatory requirements and engage with regulators and industry experts while evaluating their proposed solutions. The programme is relevant to established financial institutions as well as eligible technology providers and fintech businesses seeking to develop new financial services. Entities licensed by other regulators, non-licensed local startups and individual applicants with innovative fintech solutions may also qualify under the applicable eligibility conditions. Depending on their status, applicants may need to partner with an SBP-regulated institution or meet other requirements before participating.
For Pakistan’s fintech sector, the AI-focused cohort provides an opportunity to evaluate how emerging technologies can be applied to practical financial-sector challenges while accounting for regulatory obligations and consumer protection. Successful testing could help participating organisations assess the feasibility of their solutions, identify implementation risks and determine what changes may be necessary before broader deployment. AI applications in finance also require attention to data privacy, cybersecurity, model accuracy, fairness in credit decisions and appropriate human oversight, particularly when automated systems influence access to financial products or the handling of transactions. Participation in a regulatory sandbox does not automatically guarantee commercial approval or unrestricted market deployment; any subsequent launch remains subject to applicable regulatory requirements. Interested organisations should review the eligibility criteria, cohort themes, testing requirements and application procedures on the official SBP website and submit their applications by November 30, 2026.
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