3 new companies added to the FinTech Sandbox

The Arizona Attorney General’s Office accepted three new companies into the FinTech Sandbox.

In Oct. 2018, the sandbox let in the first company, Omni Mobile, and accepted two more shortly after. Now, the Arizona Attorney General’s Office has granted access for Align Income Share Funding, Inc., ENIAN, Ltd., and Verdigris to play in the sandbox as well.

“We felt like these companies met the definition of innovative under our sandbox law by bringing potential new ideas or new products into the marketplace,” Evan Daniels, FinTech Sandbox Counsel at the Arizona Attorney General’s Office, said. “All three of them do different things and that’s exciting to us because it means that different parts of the FinTech sector are viewing this program and [thinking it] has value to them.”

House Bill 2434, signed into law by Governor Doug Ducey (R-AZ) in 2018, created a first of its kind FinTech “regulatory sandbox” in Arizona. While in the “sandbox” Arizona startups and existing companies have the opportunity to launch innovative financial products without being licensed or authorized to act under state laws on a limited scale of 24 months.

“I think for some of these companies that are in a pretty new stage… [the sandbox] helps them refine how they interact with consumers and gives them things to think about,” Daniels said. “It helps them to see why some of these things are important and how to refine things to make sure they’re always in compliance with the law.”

ENIAN, Ltd. is a United Kingdom company expanding into Arizona. According to the Attorney General’s Office, “the company will test an algorithm-based evaluation tool for potential solar and wind power projects looking for funding,” which will enable investors to compare potential investment opportunities.

“ENIAN is grateful for the opportunity to work alongside the Arizona FinTech Sandbox team on a revolutionary new machine learning algorithm that predicts investment returns for the fast-growing Arizona solar and wind energy sector with 98% accuracy,” ENIAN CEO Phillip Bruner said.

Align Income Share Funding, Inc. will be testing a business model offering income-sharing agreements that allow consumers to receive money in exchange for an agreed upon percentage of the consumer’s income for a set time period.

“The company is seeking to demonstrate the income-sharing arrangements are different from consumer loans,” the Arizona Attorney General’s Office said. “Participating in the Arizona sandbox will provide regulatory certainty to Align as it seeks to demonstrate that it is a different service than consumer lending and should be regulated as such.”

Verdigris aims to obtain a banking charter and provide additional services to unbanked and underbanked consumers by testing a custom payment platform designed to provide low cost, straightforward money transmission services for a small group of Arizona consumers.

“Over 63 million Americans are unbanked or underbanked and as a result, they have to overpay for standard banking services. At Verdigris we’re setting out to change that,” Michael Coughlan, chief executive officer for Verdigris Holdings, Inc. said. “Thanks to…the FinTech Sandbox program, we will be able to bring our platform to real customers – taking an important step to solve a significant problem for people not only in Arizona but across the United States.”  

According to Daniels, the Arizona Attorney General’s Office is hoping to prove to be an effective way to regulate new ideas in an otherwise complicated financial services regulatory space.

“We’re excited to see how some of these new ideas and business models, what sort of effect on the market that they have,” Daniels said. “Having six participants means that there’s a level of innovation coming into the state that is certainly very exciting and we’re looking forward to doing our job as best we can.”

For a list of Sandbox participants, click here.