Smart money movement
FinTech — present and future
End-to-end digitalization as a top priority underscores the need for digital access to the full range of financial services and seamless and paperless service as the new standard for the financial industry.
Key participants in the financial market identify the primary tasks:
• ensuring the availability of a full range of financial services and transactions in digital format (via online, mobile and voice channels);
• seamless and fully digital service as the default standard for the financial industry;
• elimination of barriers to digitalization of internal processes (paperlessness, digital interaction with contractors and partners, digitalization of reporting)
To achieve maximum performance results, it is necessary to eliminate some of the barriers and challenges of the current market environment. The introduction of blockchain into the industry will help bypass obstacles with a minimum investment of resources and time.
First, it is worth noting the limited capabilities of remote identification of individuals and legal entities. Biometric identification through a single databank is not widespread enough and is not used for the full range of operations; it is difficult to use alternative biometric systems.
The next nuance is the lack of a convenient digital signature mechanism for individuals and legal entities. At the moment, there is no practice of using a cloud-based qualified electronic signature. There is also a need to describe the principles for applying cloud-based enhanced qualified signatures.
For many market players, the lack of standardization of electronic forms of documents creates difficulties. Regulatory restrictions on paperless business need to be lifted.
And finally, the main stop factor is the lack of a data-centric approach in interaction with the regulator and authorities, including the lack of general market technological solutions aimed at optimizing the reporting of market participants.
Effort direction vectors
Consider the initiatives aimed at end-to-end digitalization of the financial market at the current stage of time.
The comprehensive implementation of biometric identification and the creation of a single register will provide an impetus for the development of the entire industry.
It is worth directing efforts to the development of methods for collecting biometrics in a single data bank, expanding the possibilities of use for all financial and public services. Competent subjects should be involved in promoting the delivery of biometric impressions.
The creation of opportunities for the use of additional identification methods using biometrics (for example, via video conferencing) remains an urgent issue. Blockchain will remove regulatory barriers associated with the need to identify a customer representative in person.
All parties are interested in finalizing the system of inter-level electronic interaction or the development of state APIs for interaction with the authorities. This includes the development and implementation of standards and infrastructure for government APIs or interaction services for obtaining data from government sources (in addition to data from individuals and legal entities within the Digital Profile).
There are also problems in the implementation of mechanisms and initiatives to improve data quality and data synchronization between geographic information systems. Smart contracts will provide technological solutions aimed at optimizing the reporting of market participants.
The launch of the cloud electronic signature mechanism (expanding the possibilities of using the cloud electronic signature for obtaining financial services) will provide the development of common mechanisms for the issuance and cloud storage of electronic signatures by market participants (for example, remote issuance of a signature using a remote identification mechanism).
Market participants identify several areas of business that require development at the industry level:
• digitalization of utility bills, that is, the creation of a general market infrastructure for invoicing and settlements for any service services with the connection of all utility providers and equal access to financial market participants
• digital mortgage provides for the digitalization of the entire mortgage lending process from filing an application to registering a transaction and a mortgage in the registry, including services for scoring and assessing the borrower. Blockchain will allow transactions to be concluded using cloud-based electronic signatures in smart contracts.
• digitalization of trade finance implies the virtualization of the cycle of interaction between participants in trade finance, including the consolidation of obligations between the buyer and the seller, the transfer of accompanying documents for goods and services, the conduct of monetary settlements and the automation of the fulfillment of the terms of transactions using smart contracts. In parallel, a trusted environment is being created to ensure information security and reduce the risks of fraudulent transactions.
• digital factoring as an online platform for financing supplies of small and medium-sized enterprises
• digital construction will ensure the improvement of interaction between participants in the construction industry and financial organizations (including escrow accounts)
Examples of successful implementation
Large projects for end-to-end digitalization of the financial industry are already being implemented in many countries. In some states, an industry-specific infrastructure for remote identification and authentication has been created.
For example, BankID, the Swedish industry infrastructure for identification and authorization, was created by a consortium of banks and approved by the Swedish government.
Another example is NemID, a Danish infrastructure for identification and authentication, developed by banks and used by the public sector, operated by the private company Nets DansID.
Estonia, Norway, Denmark and Sweden have implemented a cloud-based qualified signature within a digital profile, does not require an external device with an electronic signature certificate, and can be obtained without personal presence.
The European Central Bank continues to develop regulation of new identification methods, which should ensure risk reduction and interoperability in the use of different remote identification methods.
Singapore National Digital Identity has been supporting biometric face authentication since September 2020 and allows you to remotely access more than 500 services from government agencies, banks and other organizations.
Keep for updates.