Ohio Launches Program to Test Financial Products, Services
COLUMBUS, Ohio – The Ohio Department of Commerce’s Division of Financial Institutions has officially launched the state’s Regulatory Sandbox program.
Entrepreneurs in the banking space will have an opportunity to test products such as consumer loan products or money transmission services before further expansion.
These types of products incorporate new or emerging technology, or reimagine the use of existing technologies, to address a problem, provide a benefit or otherwise offer a product, service, business model or delivery mechanism that is not widely available to consumers.
A financial product or service cannot be a securities product or an insurance product. Existing regulatory requirements are adjusted to provide applicants the opportunity to offer and test new products and services in a “live” environment for a trial period of up to 24 months, without the usual licensing process.
As part of the application review process, the Division of Financial Institutions plans to take into consideration a variety of factors, including the consumer protection measures proposed by the applicant. Additionally, for successful applicants, DFI has the authority to impose restrictions or limits on the testing, which can include dollar limits, number of customers, etc.
“DFI has the authority to monitor the performance of Sandbox participants,” said Superintendent Kevin Allard. “These measures are all designed to minimize, as much as possible, the risk to any customer. However, with any financial product or service – especially one that is novel and untested – there are going to be potential risks.”
Participants do not have to live in Ohio but must agree to be subject to the jurisdiction of Ohio courts. Participants also must have a location in the United States, whether physical or virtual, from which testing will be developed and performed and where all required records, documents and data will be maintained.
Prospective applicants are encouraged to submit a request for a Sandbox Pre-Filing Conference before applying so the DFI can learn about the business model of the prospective applicant and determine whether the innovative financial product or service is appropriate for the Sandbox. The application form, fees and instructions for applying to Ohio’s Regulatory Sandbox can be found HERE.
Published by The Business Journal, Youngstown, Ohio.
