Pakistan’s fintech sector now has a formal pathway for testing new products before they go through full licensing: the State Bank of Pakistan’s Regulatory Sandbox. This piece walks through what the sandbox is, how it works, what the first cohort of participants actually tested, and what founders should know as applications for Cohort 2 open this year.
What the Regulatory Sandbox Is
The Regulatory Sandbox is a controlled, live testing environment in which selected companies can pilot new financial products with real users, under the direct supervision of SBP, before those products go through the standard licensing process. It is open to SBP-regulated entities, fintechs, and startups alike.
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. A high-level Steering Committee was also formed to oversee the process and ensure transparency in how applicants are evaluated and selected.
Once a company is shortlisted, it is given up to six months to test its solution in a live environment. That 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.
Cohort 1: Timeline and Themes
Applications for the first cohort opened in August 2025 and closed in October the same year. SBP announced its shortlisted participants in January 2026, following review by the Steering Committee.
Cohort 1 was built around three themes: technology-enabled solutions for inward remittances, open banking, and remote onboarding of merchants. Six companies were shortlisted across these three categories.
Cohort 1: Who Was Selected, and What They’re Testing
Under the open banking theme, three companies were shortlisted. Neem, a Banking-as-a-Service platform, 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. In the sandbox, Neem is testing open banking-led infrastructure focused on secure, consent-based access to financial data and payment rails. Digi Khata began as a free digital bookkeeping app, replacing the paper ledgers that small retailers such as kiryana stores and pharmacies have traditionally used across Pakistan, and has since expanded into broader SME finance tools. Its sandbox participation explores how the bookkeeping data it collects can be used to help small businesses access credit and other financial services. Switch Retail rounds out the open banking cohort, with its testing focused on retail-side payment and transaction infrastructure.
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.
Under the technology-enabled inward remittances theme, two applicants were shortlisted. Barq Fintech, part of Saudi Arabia’s barq wallet, which reported over seven million users in Saudi Arabia by mid-2025, holds an SBP in-principle approval to operate as an Electronic Money Institution in Pakistan and is testing technology-enabled remittance flows aimed at Pakistani expatriates sending money home. 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.
Taken together, Cohort 1’s three themes were all infrastructure-focused, centered 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.
Cohort 2: What to Know
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. While SBP has not yet confirmed what those themes will be, likely candidate areas include digital lending and alternative credit scoring, central bank digital currency pilots, Islamic fintech and Shariah-compliant digital products, cybersecurity and fraud detection, cross-border payments and trade finance digitization, financial inclusion for underserved segments such as women, gig workers, and rural populations, embedded finance and Buy-Now-Pay-Later products, and virtual asset-linked services now that Pakistan’s Virtual Assets Act is in place.
For founders considering applying, it’s worth noting that Cohort 1’s selections were narrow and product-specific pilots, such as a bookkeeping app, a remittance wallet, and a bank’s onboarding flow, rather than broad platform pitches. Once Cohort 2’s themes are confirmed, aligning an application closely with the stated theme is likely to matter for shortlisting, just as it did in the first round.
Startupdotpk will update this piece once SBP confirms Cohort 2’s themes and application window.
