The need for innovation spreads from state to federal regulators

AFSA this year has provided its members the opportunity to learn about the concept of a FinTech sandbox from speakers at both the state and federal levels.

The first state to create a FinTech sandbox was Arizona. The sandbox concept in Arizona, according to Attorney General Mark Brnovich, is a way to reduce regulations without stifling technology.

Addressing AFSA’s inaugural Law and Compliance Symposium last January, Brnovich said the initiative allows fintech companies “to come up with a better mousetrap to serve the citizens of Arizona.” This is against the backdrop of Arizona being among the states having the most stringent consumer protection laws in the nation.

Fast-forward to AFSA’s Annual Meeting last month. The topic of the FinTech sandbox on the federal level was addressed by Paul Watkins, Director of the Office of Innovation at the Bureau of Consumer Financial Protection (BCFP).

Ironically, the federal agency hired Watkins in July from the Arizona Attorney General’s office. There, Watkins was Chief Counsel for the Arizona AG’s 150-person civil litigation division. Additionally he led the office’s sandbox initiative with the aim of easing regulatory burdens for firms trying to launch new products.

“Innovation can protect consumers in ways regulations cannot,” Watkins said at the AFSA Annual Meeting. “Arizona now has seven applicants operating in the sandbox.”

“At the BCFP, we did not create the upside in customer service,” he said. “We rely on businesses to bring products to market. The bureau seeks to promote competition.”