Last Spring, Governor Ducey signed into law the first in the nation FinTech law which approved the launch of a financial technology sandbox, which allows smaller financial firms to more efficiently test new products and services.
The FinTech sandbox debuted in early August, and even in its youth, it has already begun to make a splash in the financial services industry. Because of the program’s design, financial tech companies can test innovative products without the countless regulatory obstacles that many states have.
FinTech sandbox counsel representative Evan Daniels explains that the goal of the sandbox is to provide new opportunities for businesses, consumers, and the state.
“Fostering innovation in our view is a benefit to the state in many ways: first, it’s a benefit to the consumer because it brings in new products and services that might not otherwise exist,” Daniels states. “Also, it brings businesses that are in a young state a place to develop their ideas in a safe environment. They’ll find that the Arizona economy is dynamic and they can grow quickly, and at some point, we hope they can bring jobs to the state.”
The sandbox’s most recent additions include Grain Technology and Sweetbridge, two firms that are dedicated to improving consumers’ financial experiences. First, Grain Technology is developing technology that allows consumers to build their credit score without a credit card; in turn, this can help people to obtain loans they might not otherwise have. Next, Sweetbridge is creating a method for consumers to receive title loans through blockchain technology.
Daniels notes that Arizona’s leadership is instrumental in the growth of these companies. “We have leadership in the state that values companies being leaders in innovation,” he explains. “They want to update laws so the state and its companies can keep up with innovation. This program creates an environment between regulator and company that can be a lot closer than what you might see in other environments.”
Although the state is lessening regulatory requirements for these companies, Daniels emphasizes that the state continues to focus on the protection of consumers. He notes that although the state wants to optimize the opportunities for firms in the sandbox, the protection of consumer rights holds the most importance for the Arizona Attorney General. “Arizona is a good place for the sandbox because we at the Arizona Attorney’s office are dedicated to adjusting regulatory laws to foster innovation while still maintaining consumer protection,” he states.