The digital age has meant an unprecedented technological and social revolution, causing at the same time disruptive changes in different sectors, including the financial sector. Within this, the Fintech companies occupy a leading place for their innovative proposal, whose success depends on effective tools in this new framework, among others the electronic signature.
As a user of the Internet, and perhaps also online financial services, this technological revolution will be familiar to you. In this article we will address the role of electronic signature in the Fintech Sector, a great technological ally to offer an agile and reliable service in response to the new needs posed by its services.
What is the Fintech Sector
But what do we mean by the Fintech Sector? We can define it as the financial services offered by companies of the same name, based on a set of information technologies.
These are the ones that have made possible the emergence of a new model of financial intermediation, thanks to which the Fintech sector, an acronym for the expression “financial technology”, presents a financial offer that competes with conventional banking.
The services or companies in this new financial sector rely on the latest modern technologies to create innovative products that are laying the foundation of financial practice. Some analysts say that these changes threaten to wipe out the banking system, as we know it. Or, as the Accenture study on “The Fintech Future and the Banking” already points out, in the future both could end up coexisting.
In fact, strategic collaborations are being made, since, among other reasons, banking is also being renewed. In this regard, the cost on information technology is increasing, according to BBVA Research. Not surprisingly, their digitization is unstoppable, demonstrating that there are more points in common between both sectors than they might at first appear.
Therefore, within this definition, we include both those banks exclusively online, characterized by their innovative profile, as well as the online platforms of conventional banking, which also offer their services in the Network in a complementary or alternative way.
The role of electronic signatures in the Fintech Sector
Whether it is in the Fintech Sector, from the new start ups, or in regards to the digitization of traditional banking, one of the great challenges within this new digital scenario is none other than offering quality services.
In this field, the digital signature becomes a key element to provide reliability in document identification and security, both for the client and for the bank or financial entity in question.
Let us not forget that one of the greatest challenges imposed by the digital framework is agility and openness. An objective that is part of the same reason of Fintech companies, while the bank must consider it as a necessity for obvious competitiveness issues.
In both cases, either by offering Fintech services by ad hoc companies or by doing so as a response by traditional banks to them, one of the most important concerns is opening.
Two of the practical reasons that have led to its rapid rise have been the accessibility and convenience of these services – you can access from anywhere and any device – imposed, both, by the digital revolution. However, there is a need to ensure security in transactions and to do so it requires specific mechanisms and tools that allow innovation without risk.
A huge challenge, there is no doubt. In fact, to create the bank of the future will be a long process, while technologies are moving fast and the demands for change are urgent in light of the digital drift that financial services have taken. On the other hand, they constitute a great business opportunity.
An unprecedented opportunity in the history of humanity, really unique, that can serve as a springboard to grow and gain in competitiveness, but only available through the adaptation to this new paradigm.
The digital signature is a key element to make a difference when it comes to an agile service and a safe time. Let us not lose sight here of the importance of being able to carry out any financial operation with the greatest speed.
Being able to provide a more agile service, which takes just a few minutes instead of days, on the other hand, also depends on being able to offer it at any time and place, accessing it through multi device systems and even multiplatform.
The electronic signature is a suitable tool in this context, since it contributes a high level of security in the transactions without losing agility, avoiding situations of fraud of different class that can cause great economic losses and not less headaches.
The new approach to electronic signatures in Europe
The scenarios, in which the companies of the Fintech Sector operate, as well as the bank that offers services of this type, constitute another key element in providing the necessary agility and openness. In the community environment, logically, the European rules of electronic signature must be complied with.
It is a high standard, which allows you to meet the requirements of any other country in the world. Specifically, it is necessary to talk about both the regulatory framework of the Digital Single Market and the new eIDAS Regulation, published in 2014, whose objective is to create a climate of trust that enhances electronic commerce and digital transactions at the community level.
A favorable scenario for the systems of identification and validity of electronic signatures, facilitating the execution of transactions in a much simpler way, with a lower cost, in addition to the aforementioned speed and security.
In sum, the recognition and validity of electronic signatures in the different EU states (legally binding and admissible as evidence before the courts) is a great step forward, achieving a greater efficiency added to that which in itself contributes to the use of themselves. In short, Digital Single Market and eIDAS greatly facilitate the use of electronic identification and trust services at the community level.
Advantages of eIDAS for the Fintech Sector
The technical implementation of eIDAS is what will ultimately make the development of a pan-European digital market possible, and that in itself is already a great advantage for the Fintech Sector.
Basically, it is about taking advantage pf the common ground provided by eIDAS in facilitating the security of electronic interactions between citizens, businesses and public administrations in order to increase the effectiveness of public and private online services, digital businesses and Electronic commerce.
In the case of banking, as recorded in the report “Digital Economic Situation” of June 2016 of BBVA Research, has electronic identification systems, in order to verify the real identity is a giant step.
As well as to “comply with the guarantees required by law”, to facilitate the process of registering customers and, in order to “offer customers a simpler and more convenient user experience,” the work concludes.
Similarly, alongside the cross-border recognition of national electronic identification schemes, eIDAS establishes a single legal framework for providers of trusted services, including electronic signatures. Again, a great advantage for the Fintech sector.
Apart from the legal restrictions established for the beginning of online business relationships, especially in relation to the financing of terrorism or money laundering, the Single Digital Market is an engine for the digital economy, and the Fintech sector finds in the European Digital regulation a great ally.
Not surprisingly, the reliability of its business model depends very much on it, and very likely its long-term viability. Since this is the only way to ensure the necessary guarantees in the digital contracting of financial services and, in general, to carry out banking operations through the Network.
Therefore, eIDAS and a series of platforms and related tools, such as electronic signatures or other systems for the identification and authentication of the signatory’s identity, have marked a before and after in fulfilling the obligation to identify the Customer in a reliable manner before performing certain operations.