The financial services sector has always been an early adopter of technology. This is not surprising considering the nature of the industry with high volumes, the need to complete transactions as quickly as possible, mountains of data, minimum tolerance for errors and multiple points of failure. A zero-tolerance compliance/regulatory environment, coupled with considerable inertia in the banking system further necessitates the need to use tech tools to their full potential. This reliance on technology by the financial services sector is perhaps why the FinTech start-ups are in so much demand.

FinTech ventures are mixing the traditional financial services products with a technology approach pioneered by the tech giants of today. This allows FinTech firms to offer innovative new products with a lot more insight and much faster execution than traditional financial services firms. Of course, banks can do the same, but they often lack the agility of these smaller challengers and their single-minded focus.  

New Call-to-actionHelping carry the load

eIDAS offers a variety of tools to help FinTech companies make the most of their inherent advantages:

  • The most obvious advantage of eIDAS is secure identification and authentication of users. Security is the number 1 concern for both users as well as financial service providers and eIDAS can go a long way in providing relevant safeguards.
  • eIDAS can also assist FinTech firms tackle one of the most laborious aspects of financial service delivery – regulatory compliance. From KYC (Know Your Customer) guidelines to AML (Anti Money Laundering) checks, it takes a lot of time and effort to ensure nothing fishy is happening. The penalties for being lax here can be enormous. However, eIDAS can go a long way here to ensure complete KYC and AML compliance, in a fully digital environment. Not only would eIDAS enabled checks be faster, they are likely to offer an even greater degree of security and certainty about the client.
  • Innovation is the name of the game with FinTech. The European Commission seems to be cognizant of this fact and eIDAS is the perfect tool for the job. The great thing about eIDAS is technological neutrality. This means that solutions can take a number of different paths and use different technologies as long as the end result and the level of assurance provided is the same. This unburdens FinTech firms and allows them to come up with their own innovative solutions using any number of different technologies or practices.
  • Having complete legal certainty about fully digital services has also been a tricky area for FinTech firms. The eIDAS directive provides legal clarity for electronic identification, authentication and trust services. This can go a long way in assuring customers of the services offered by FinTech firms and save some legal costs for the service providers.

Conclusion

eIDAS provides powerful tools not only to the existing financial services behemoths, but to new FinTech start-ups as well. In fact, it goes a long way to level the playing field by allowing start-ups to offer industry leading safeguards to their potential customers. eIDAS enabled tools can thus ensure than new FinTech firms can compete with the largest banks when it comes to security. And since security is the primary concern for most customers, this can be a game changer.

 

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References and Further Reading

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