Arizona’s recently launched Fintech Sandbox has added two new participants, the Attorney General’s Office announced this week.
The program, which launched in August, has added New York-based Grain Technology Inc. and Scottsdale-based Sweetbridge NFP Ltd. Both companies will test credit and lending products as part of the sandbox, which allows businesses the opportunity to pilot new financial products with a lighter regulatory touch while also maintaining consumer protections.
Sweetbridge, an international nonprofit building blockchain protocols for supply chains, will launch a title lending product using proprietary blockchain tech. It will cap annual percentage rates (APR) at 20 percent for loans, which will allow customers to obtain credit at up to one-tenth of the cost allowed under Arizona law. Traditional title lenders charge interest rates in the triple digits.
“Far too many title lenders and consumer lenders have in some ways created a product that’s too expensive and laden with pitfalls,” said Will Munsil, who focuses on legal and strategy with Sweetbridge.. “We think with blockchain we can cut some of the physical overhead out of the title lending process and think we can lower the cost of that capital substantially along with more customer friendly payment terms and loan terms.”
The product is targeted at traditional title lending consumers as well as others who may need access to capital to either start a business or make home improvements, Munsil said.
Grain Technology’s sandbox product will use proprietary technology to offer consumers customized savings plans and credit opportunities. Participants will receive a line of credit aimed at providing overdraft protection for their bank accounts. Participants will be able to obtain loans with APRs as low as 12 percent if they agree to repayment plans created using the company’s technology. Rates would be higher for those who opt for alternative repayment plans.
Grain and Sweetbridge join Omni Mobile Inc., which was the first sandbox participant announced earlier this month. Omni’s pilot product is a payment processing product used at Westward Look Wyndham Grand Resort and Spa in Tucson.
Arizona’s Fintech Sandbox bill was signed into law by Gov. Doug Ducey in March. Arizona is the first state in the U.S. to establish a proving ground for the financial technology sector with the sandbox program.
Startups and entrepreneurs in the fintech space can apply online to test out new financial products without dealing with regulatory burdens that might otherwise hamper their creativity and innovation.