One such technological disruption has been the introduction of fintech companies. Today, fintech is the hottest area for venture capitalists. The companies make use of technology to offer value-added financial and banking services to the customers.
Here we will shed light on the importance of digital signatures for fintech companies.
Digital signatures are used to sign documents digitally. They are created authenticate electronic documents. Electronic signatures to be enforceable must conform to the requirements of ESIGN Act 2000 in the US. In the Europe, electronic signatures have to comply with the requirements of eIDAS.
Businesses use electronic signatures to validate the identity of the signatory. An electronically signed document contains public and private keys conforming to Public Key Infrastructure (PKI). The keys are used to establish the ownership and authenticity of an electronic document. Every time a user makes changes to the document, a hash key is generated. Each hash value is unique that identifies a particular user.
The main benefit of digital signatures is that it helps in improving integrity and authenticity of a digital document. Moreover, it helps save time and cost involved in getting signatures from multiple parties. Also, it saves from the inconvenience of manually scanning signatures and embedding them in the digital documents.
Financial technology, or fintech, companies can leverage from adopting the electronic signature technology. They can compete better and operate more efficiently by switching from pen and ink signatures to digital signatures. The benefits will encompass different services including asset management and personal and corporate financial management services.
Financial companies have been slow to pick up the e-signature technology. Having said that, increasing number of companies today are making the switch to the digital signature. According to Statista, electronic signatures have increased from 210 million to more than half a billion in 2017.
The digital signature can become a key element of security and authentication of a digital document both for the financial company and the client. A great challenge of digital services is security and integrity. There is a high risk of signature fraud in case of manually signed documents. Anyone can forge a manual signature.
Forging electronic document is not that easy. The public key of the digital signature that authenticates a user is stored in a secure remote server. This makes it near impossible for a swindler to modify the signatures for carrying out financial crime. The high security, accessibility, and convenience of electronic signatures make it a mandatory service for fintech companies.