Innovation labs in banking and finance

An internal lab is a team inside the institution that tests one technology on one business problem before a business line commits a budget to it. The Sparkassen Innovation Hub (in German) builds prototype solutions for digital banking in the Sparkassen-Finanzgruppe through what it calls product discovery, Female Finance among them, and runs the Symbioticon hackathon. The WM InnoLab of WM Datenservice tests AI-assisted data extraction and blockchain-based methods for securities data.

A venture studio founds new companies together with partners from its own group, and a venture client unit buys a pilot from a startup without taking a stake in it. The venturing studio amberra (in German) works for the cooperative financial group of the Volksbanken and Raiffeisenbanken and combines venture building and venture clienting with venture capital for startups inside and outside the group.

Institutions without a lab of their own often work through hubs that several of them share. TechQuartier in Frankfurt connects startups with banks and other companies through programs and coworking space, and InsurLab Germany in Cologne brings insurers and startups together, with venture clienting among its focus topics.

Banks in the euro area tested tokenized settlement together with the Eurosystem: between May and November 2024, 64 participants ran more than 40 trials and experiments and settled over 200 transactions worth EUR 1.59 billion in central bank money on distributed ledgers. Pontes, the Eurosystem service that grew out of these tests, started on 21 September 2026 with banks such as DZ BANK, Deutsche Bank and KfW and with DLT operators such as Cashlink and Clearstream. German banks also work on a shared Commercial Bank Money Token, a form of tokenized deposits that moves commercial bank money on a ledger.

AI tests in banks and their labs cover tasks such as extracting data from documents, detecting fraud and letting software agents act for a customer. Swiss Fintech Innovations, an association of Swiss banks, published a white paper on how AI agents can access the bank interfaces that its members specify together.

Supervisors offer firms with a new business model two kinds of contact, which the European Supervisory Authorities call innovation facilitators. At an innovation hub, a firm asks how existing rules apply to its product and receives non-binding guidance from the supervisor. In a regulatory sandbox, the firm tests its product under a plan that the supervisor agrees and monitors, and EU law continues to apply in full.

The EU AI Act obliges every member state to set up at least one AI regulatory sandbox at national level, which matters for banks that develop credit scoring and other high-risk AI systems. For distributed ledgers, the European Commission runs the European Blockchain Sandbox, in which companies and public bodies discuss the legal questions of their projects with regulators.

The BIS Innovation Hub develops and tests prototypes and proofs of concept for central banks, and the Bank for International Settlements calls these projects experimental in nature. Its centers are in Hong Kong, Singapore, London, Stockholm, Toronto and Switzerland, with offices in Basel and Zurich, and since March 2023 a Eurosystem center has worked from Frankfurt and Paris. The hub currently focuses its work on artificial intelligence, tokenization and cyber security.

Project Agorá tests tokenized commercial bank deposits and central bank reserves on one programmable platform for cross-border payments, with eight central banks and more than 40 private financial institutions. Project mBridge has left the lab stage, because the BIS handed the multi-CBDC platform over to its partner central banks in October 2024.

A lab depends on the budget of its parent company and ends when the parent changes its strategy. Commerzbank announced in June 2026 that it would close neosfer, its incubator and venture unit of 13 years, and kept only its corporate venture capital team CommerzVentures. PayPal closed its own venture team in the same month, and Global Venturing links both decisions to the end of the era of zero interest rates.

A test that works in the lab can still stall before it reaches production. Participants in the Eurosystem trials acknowledged the limited scale of the tests, named the complexity of atomic settlement and had to handle some error cases manually. They asked for one Eurosystem solution with a short time to market, and the Eurosystem launched Pontes as that single service in September 2026.

Pilots with startups fall under the same supervisory rules as any other service that a bank buys. Under DORA, a bank records every contract on ICT services from a third-party provider in its register of information and assesses the provider before signing, and a short pilot is no exception. A token that a lab issues to clients falls under MiCA or, for crypto securities in Germany, under the Electronic Securities Act.

An innovation lab is a team or unit that tests new technology on a concrete problem, apart from the daily business of its organization. In banking and finance, labs build prototypes for tokenized assets, payments and AI, and a business line decides afterwards whether a result becomes a product.

An innovation lab fails when its tests never reach a business line that runs and pays for them, or when its parent stops the budget. Commerzbank closed neosfer after 13 years, and the host of the Frankfurt meetup series Between the Towers disappeared with it. The Eurosystem trials showed the other path, because working settlement tests led to Pontes, a service that banks now use.

The FINMA sandbox is an exemption in Swiss banking law that lets a firm accept public deposits of up to CHF 1 million without a banking license. The exemption has applied since August 2017, and the firm still has to comply with the anti-money laundering rules and join a self-regulatory organization. Above that amount, a firm that neither invests the deposits nor pays interest on them can apply for the FinTech license, which covers up to CHF 100 million.

BaFin offers no regulatory sandbox for fintechs, and the joint report of the European Supervisory Authorities lists Germany among the member states with an innovation hub. Through its fintech service, BaFin assigns a contact person who answers questions on the supervisory consequences of a business model and on the license application. BaFin may not give legal advice, and a conversation with the authority is no promise that an application will succeed.

A venture client buys the product of a startup and tests it in its own operations, and a corporate venture capital unit buys shares in the startup. The venture client gets a solution for a concrete problem without an equity stake, and the investor gets a holding whose value depends on the growth of the company. Some financial groups do both, for example the venturing studio amberra of the cooperative banks in Germany.