The financial sector is also jumping on the new technology bandwagon, and in Spain it is doing so in a big way. Fintech companies, although recently created, are showing spectacular growth figures. Below, we are going to study their current situation, their promising future and we are going to see why electronic signatures are key to their success.
Little by little, digitalization is reaching even the most everyday activities. Until not too long ago, to perform any financial transaction we had to go to our bank’s office and wait patiently for our turn to be attended, spending a lot of our time for any management.
Today, fintech companies have greatly streamlined all these processes. They offer financial services based on a set of information technologies. Thanks to them, we can now carry out a wide variety of operations comfortably from any place with an Internet connection, from the sofa at home to your vacation spot.
But the fintech sector not only covers everything related to banking, but, for example, also touches aspects of the insurance sector. For example, by developing comparators that allow us to choose the policy that suits us best.
Fintech companies make use of technologies such as Big Data, Cloud Computing, Machine Learning or Artificial Intelligence to shape their products or services.
We can divide fintech companies into two main groups: on the one hand, we would have those that are 100% digital and, on the other hand, digital services provided by traditional banks.
Depending on the activity they perform, we can broadly classify the different types of fintechs into the following groups:
- Crowdfunding: consists of seeking funding for projects, depending on the type of project, a reward can be sought when making a donation or not.
- Lending: for loans to companies or individuals, some of which are alternatives to traditional procedures.
- Financial services for individuals and companies: such as smartphone payment apps, banking or insurance product comparators or agencies.
- Investment tools: for advice or trading, among others.
- Oriented to services related to cryptocurrencies.
The convenience and the geographical and time availability of these services are some of the main reasons that have led them to the growth rates they are showing, setting a clear trend for the future.
Current situation of fintech companies in Spain
To get an overview of where fintech companies are in Spain, we can turn to the report Innovación al Servicio del Cliente, prepared by the Observatorio de la Digitalización Financiera (Financial Digitalization Observatory). According to this report, there are already some 300 fintech companies in Spain.
According to this study, most of them are dedicated to loans (28%), payments (19%) and investments (16%). The rest is distributed among financial infrastructure, foreign exchange, management and financial products companies, among others.
As for their target customers, 52% of the companies’ activities are aimed at other companies (Business to Business or B2B) and 34% at the end user (Business to Client or B2C). It should be noted that 75% of these companies consider that traditional banking can be a powerful ally for their purposes.
In addition, this report shows data that confirms that we are talking about young companies. In fact, the vast majority of them were born after 2010.
As we have mentioned, despite its youth, the fintech sector is growing by leaps and bounds. According to data from INFORMA’s DBK Sector Observatory, the business of fintech companies grew by more than 61.3% throughout 2018, with some 430.5 million euros in total operations carried out.
In terms of consumer use of fintech services, Spain is in a privileged position, with 37% of banking and insurance users enjoying the benefits of this type of tool. Above them are:
- China (69 %).
- India (52 %).
- United Kingdom (42 %).
- Brazil (40 %).
This new scenario has led to the need to establish a regulation that adjusts to it. In fact, since 2018 banks operating in the European Union must provide their customers’ information to those fintech companies that accredit the appropriate permits from official regulatory entities.
Trends in fintech companies
A sector as promising as this one opens up many interesting prospects for the future. For this reason, it is worthwhile to analyze what will be the way forward for these companies in the short term, let’s take a look at some of them.
Neobanks are banks that are 100% digital, do not have physical offices, usually offer services at lower prices and enjoy as much security as traditional banks. Unlike traditional banks, neobanks do not trade with the funds they hold.
Wealthtech can be defined as digital tools that help users to invest their money and wealth in an intelligent way, so that this type of operations are more accessible to everyone, and not only to the wealthy.
Few sectors are as subject to laws and regulations as the banking sector, hence the development of regtech applications, which ensure that banks comply with established laws, is one of the main fintech trends.
Soon there will be more and more talk about proptech solutions, which apply technology to everything related to the real estate sector.
Special mention in this section deserves the well-known blockchain, whose participation in fintech actions is growing rapidly, since it is responsible for the validation and registration of operations, so both go hand in hand in their development.
Role of electronic signatures in fintech
When it comes to making a transaction related to our finances we are, logically, especially careful when it comes to issues related to privacy and security, especially if we execute it online. The cultural adaptation to this type of services together with the increase of computer attacks lead us to take all the necessary precautions.
At this juncture, the electronic signature comes into play as a guarantor of the provision of a quality and secure service. It is essential for both the provider of this service and its users that the process of identifying the participants in the transaction be 100% reliable.
As we have already mentioned, one of the competitive advantages enjoyed by the fintech sector is that of speeding up processes that until then were tedious from a geographical and time point of view, completing in a few hours a process that until then could take days.
The electronic signature is a perfect solution to complement this agility in a secure way, avoiding theft and/or identity theft, with the obvious detriment to customers.
From the legality side, the European Regulation number 910/2014 or eIDAS, deals with electronic identification and trust services for electronic transactions within the countries of the Union. It regulates the recognition of electronic signatures and their approval on European territory.
Little by little, even those who are most reluctant to use new technologies are adapting their lives to them, appreciating the advantages and conveniences they bring. Financial institutions, among which banks stand out for their popularity, know this and are offering more and more electronic services, from web portals for asset management to mobile applications.
All these developments give rise to needs, especially to ensure the security of these movements, which are more sensitive to security attacks. These needs are covered by tools such as electronic signatures, combined with legislation that covers all aspects of this new reality.