The Internet has already helped several revolutions: it has allowed an almost universal access to unprecedented volume of information, it has led to the creation of new channels of communication between individuals and companies, and it has changed the way we buy goods and services.
And the changes continue: industries and companies are transforming their processes to adapt to the digital age; and the progress of the collaborative economy, although still nascent, is unstoppable. In this direction, the rise of the Internet has paved the way to a number of companies that are fostering the disintermediation of sectors. Companies like Airbnb, Uber, BlaBlaCar, to name some examples, are helping to eliminate the powerful position traditionally held by agents as the intermediary between the consumer and the service.
The financial sector is the latest one to encounter this new economy, because these so called Fintech companies offer a new way of doing things in finance.
This post is also available in Spanish.
The Fintech sector, a new chapter in the rise of the collaborative economy
The collaborative economy is already developing its innovative potential in the financial industry. The term Fintech comes from the words financial and technology, and includes all companies that offer any kind of financial services supported by technology. These companies are convinced that the finance industry is too slow, inefficient and behind the times than it should be.
Taking the inefficiency problem on one hand, and the fact that the recent economic crisis has increased the social demand for a new form of finance on the other, Fintech companies have emerged to solve both problems. They have started to compete directly with banks in different verticals - payment systems, lending, foreign exchange, etc - overcoming inefficiencies and satisfying the requirements of the new digital consumers.
Although the industry has taken some false steps, like the controversy that arose around bitcoins, other areas of activity are already offering solid value propositions. They have become a real alternative to banks: crowdlending, advanced payments or currency exchange platforms, to mention three instances in which Spain has such important players, like LoanBook, Novicap or Kantox respectively.
This maturity of Fintech is easily demonstrated: in 2013 financial technology companies received $4 billion in investment, and last year that figure tripled, reaching $12.210 billion.
In the online loans field, this alternative way of funding grew in Europe to 144% in 2014, from €1,211 million euros in loans in 2013 to €2,957 million last year. Spain is also the sixth largest market in the field, and crowdlending has grown from just €600K granted to companies in 2012 to €13.7 million in 2014.
Fintech value proposition
Some skeptics see in the fintech wave only a change of roles in the financial system, claiming that it will continue to operate under the same parameters. However, the value proposition of these new companies makes it clear that they propose a renewed financial practice, characterized by greater speed, ease of use, lower intermediation cost and the disappearance of the obligation to purchase other services to access, for example, a loan (the cross-selling practice).
But perhaps its most innovative quality is that they are proposing a much more transparent way for buying and selling finance products. As example, crowdlending platforms set the interest rate for a loan based on the claim that it arouses among the investment community. That is, they determine funding costs based on supply and demand, so that individuals and companies can wean the fluctuating policies of the banks to borrow.
Given this reality, many wonder if the banking system, as we know it so far, is destined to disappear. As noted by a recent study by Accenture, where banks and fintech companies were asked this question, 56% of respondents believe that the two industries will cohabit. Banks and Fintech will borrow elements from either side to reinforce their value propositions.
Electronic signatures and its use in Fintech companies
As discussed, one of the main differences between fintech companies and banks -and, simultaneously, one of the most popular features among fintech users- is the much faster and easier way of performing any financial transaction.
In this sense, competition between financial technology companies today mainly moves around who is able to give a more efficient service, anytime, anywhere, and adjusted to the needs and habits of the new digital customers.
For fintech companies, the ability to provide greater speed in transactions must be combined with providing also top security: the purchase of financial products is much more at stake than the acquisition of consumer goods online, because any bad practices may cause economic losses to any parties, and can lead to serious situations of fraud, money laundering and so on.
In this context, the electronic signature is a tool that allows to complete and sign any contracts or agreements in relation to a financial service in minutes rather than days. And the level of security offered certainly adds a very important value to any transactions.
At Signaturit we have developed an electronic signature solution using technical methods and processes that allow us to ensure the safety of our service. This has already led us to close agreements with several Fintech companies.
Our solution is the fastest in the market, because our Fintech customers invest less than 3 minutes (on average) in the request and receipt of a signature. And besides, we are the only platform that offers the possibility to request and perform advanced electronic signatures. These type of eSignatures meet the second level of security established by the severe European regulations. Thus, we also comply with the standards of any other country in the world.
So, if you are embarking on the Fintech adventure and would like us to help you streamline your processes in a safe and legal way, you are welcome to try Signaturit for free. If you need more information, you can also download the whitepaper below.
This post is also available in Spanish.
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