Those familiar with technology lingo have probably heard these three terms quite a bit in the last couple of years: blockchain, cryptocurrency and FinTech. And for good reason. The burgeoning technologies are changing the way practically every industry operates. Here in Arizona, the story is no different.
Earlier this summer, Arizona Attorney General Mark Brnovich spearheaded an initiative to bolster FinTech in the state with a FinTech sandbox, which attracts companies from multiple industries to test out their research here in the state and jump the hurdle of regulation. The sandbox, aimed at everything from software companies to tech startups, enables companies to develop and promote new products and test them out before needing to apply for a formal license.\
“We’ve had a lot of positive feedback and interest from both corporate and startup sectors since launching Arizona’s FinTech Sandbox on August 3rd. We’ve received several applications and expect several more before the end of the year,” notes Brnovich.
To highlight the positive state of the sandbox, Brnovich’s office just signed a Memorandum of Understanding (MOU) between his office and the Taiwan Financial Supervisory Commission (FSC) that would establish a cooperation structure between the Arizona FinTech Sandbox and the FSC’s similar program in Taiwan.
With this kind of momentum behind it, Arizona now has the pull to get more proactive about reaching out to would-be warriors in the industry or already-established players from not only outside of the state, but the country. In fact, just recently, representatives from the state headed across the pond to London with the sole goal of attracting British FinTechs weighing their options here in the U.S. Reps from Arizona made the case as to why the state is the land of opportunity and the wild west all rolled into one for the industry.
“Arizona is a great place for British-based FinTech companies and any FinTech company around the world. Companies benefit from our low business costs, minimal regulation, and the fact we have no corporate franchise tax,” says Brnovich. “We want to attract more venture capital investment into Arizona. This type of investment grows our economy organically by creating high-quality jobs and infrastructure.”
Arizona may not be Silicon Valley, the traditional North Star for tech startups in other countries or parts of the U.S., but the trend is moving southwest (or southeast of Silicon Valley) as new companies are sprouting up here or moving from other locations. The major pitch of those on the trip to London was to offer regulation-free access to the U.S. market through an Arizona lens. Everything from finding office space to talent would be in the deal, making it all the easier and attractive for British-based companies.
Major draws for companies looking to establish an American wing of their operations are lower overall cost and available, skilled labor. Arizona offers both in spades. Sky-high commercial costs in Silicon Valley and the overall market saturation of labor force in the area make it less desirable, on paper at least, compared to the wide open spaces of Arizona.
“One of the factors playing a role in making Arizona a desirable place to start a business is the 2.52 percent annual job growth, the second highest in the country,” WalletHub’s Jill Gonzalez told us earlier this summer. “Another thing the state has is 62.81 percent cluster strength, which translates to a very high degree of employment specialization in the region.
What’s more, Arizona’s minimal financial regulation allows financial technology innovation to roam free and be tested without red tape. The opportunity to experiment and see what works and what doesn’t within a two-year timeframe is like a head start compared to other locations.
Plus, Arizona is already a steady locomotion of opportunity in other industries. The startup culture is rising and cities like Tempe are being hailed as great cities to get your career off the ground, if not established. The number of FinTechs in the Greater Phoenix area alone have risen by 66 percent over the past seven years with more projected to come.
One thing Silicon Valley has over Arizona is the ease of finding funding. But Arizona has potential to see that change with continuous growth in the innovation economy.