Technology is a driving force in almost every aspect of commerce today. This is doubly so in the financial services industry, and West Virginia is establishing itself as a center for new, groundbreaking financial technology (fintech) companies to grow and prosper.
In the second half of 2020, West Virginia created a regulatory sandbox that enables organizations to test innovative financial products and services for two years without the need to obtain the required licenses or pay regulatory costs. Then, should the trial prove to be successful, the company can continue to operate in West Virginia under the normal licensing requirements.
The “sandbox” concept is a familiar one in the technology sector. Tech companies establish these testing environments, so computer code can be deployed and tested without risking live production environments or consumer information and data. A regulatory sandbox operates in a similar way, allowing a company to offer, test and refine its products and services without state laws or regulations inhibiting its ability to operate. That’s not to say, of course, that companies can operate with impunity. Process, procedures, transparency and reporting requirements must still be adhered to, which will protect consumers and their information.
West Virginia is among a handful of states (Arizona, Wyoming, Nevada, and Utah) to pass this kind of legislation and back programs designed to specifically attract fintech entrepreneurs and startups. In April of this year, West Virginia extended the Fintech Sandbox concept to the insurance industry – becoming one of just two states to clear the path of regulatory hurdles for new insurance technology (insurtech) businesses.
This is an important part of West Virginia’s goal to become a hub for technology startups to develop, grow and prosper, which will lead to more new jobs and a thriving economy based on industries for the digital age.
A thriving support infrastructure
Organizations around the state are working to help new startups and entrepreneurs make the most of the opportunity. Vantage Ventures, for example, brings together a collaborative network of talent, mentors, industry partners and investors with the goal of building scalable companies. An initiative of WVU’s John Chambers College of Business and Economics, Vantage Ventures provides space and partnerships to find teams, connect with customers and raise capital. Vantage links students, researchers and community members, as well as entrepreneurs at different stages of their journeys with some of the world’s most impactful entrepreneurs and industry experts.
"West Virginia provides exciting opportunities for fintech innovators seeking to strengthen Main Street through the introduction and expansion of financial services capabilities, including lending, insurance, and traditional banking," said Sarah Biller, executive director of Vantage Ventures. "We are focused on creatively and responsibly utilizing fintech to tackle economic mobility, healthcare, energy, and other challenges that confront rural populations along the sustainable finance continuum."
In fact, just this month, DataRobot, the leader in Augmented Intelligence, announced that the company is opening an office in Vantage Ventures’ Morgantown headquarters. The initiative will bring more new jobs in technology to West Virginia as the company looks to hire software engineers, and professional services and customer support specialists.
“The company’s decision to open an office in Morgantown is a testament to the progress West Virginia is making in becoming a Start Up State. Companies, entrepreneurs, investors, academia, and government officials are all working together to support transformative innovations in the state,” said John Chambers, former Executive Chairman and CEO of Cisco Systems, current Founder and CEO of JC2 Ventures, and a West Virginia native.
State Auditor McCuskey, DataRobot CEO Dan Wright, and WVU President Gee at the DataRobot announcement
The financial and insurance industries are fully embracing the digital age via big data, artificial intelligence, machine learning, and other new disruptive technologies. In response, West Virginia is positioning itself to be the natural home of this new breed of entrepreneurs and companies by providing a “sandbox” for them to innovate and grow. Powered by the state’s Mountaineer spirit, we can only imagine the opportunities yet to be explored and technology challenges still to be scaled.