How Sandboxes Jump-Started Innovation in Arizona
When thinking about states that lead in technological innovation, California likely comes top of mind. But another western state has been leading the way in financial technology innovation thanks to a new type of regulatory structure called sandboxes.
Sandboxes are alternative regulatory arrangements that help businesses with unique and new products or services navigate complex red tape. Arizona’s sandbox works by exempting admitted companies from some Arizona licensing requirements. The attorney general’s office then creates a custom regulatory environment for each admitted company that fits the need of their innovative product.
Not all companies need the flexibility sandboxes provide, but for many businesses innovating in the financial technology space, sandboxes are crucial to their success.
One example is BrightFi, a financial technology company that provides banks with products and services to quickly launch digital banking services at a low cost. BrightFi’s goal is to expand financial services to traditionally underserved communities by making it profitable to serve these customers. Since there are millions of Americans without access to traditional financial products, companies like BrightFi play an important role in expanding these opportunities.
But if not for Arizona’s sandbox, BrightFi may not be the successful company it is today. It originally started in Ohio, but the company moved to Arizona because their sandbox offered flexibility to help BrightFi to get started. BrightFi ultimately graduated from the sandbox in June 2020, and they still provide services to customers today.
BrightFi is just one example of a company successfully using Arizona’s sandbox to launch an innovative business. Other examples include income-based loan repayments (Align Income Share Funding), refinancing car loans (With Clutch LLC), and a company that helps banks integrate with blockchain technology (Cryptoenter).
A financial technology sandbox can do for Louisiana what it did for Arizona. The Pelican state is too often lagging in innovation even when its citizens might benefit the most from it. It’s time for Louisiana to get in the sandbox with states like Arizona.