FinTechs belonging to this category provide identification services, which are required for most banking services.
Attitude of the country towards identification services
Due to the increase in the number of cyberattacks, we expect, Spanish companies will take measures to bolster security and combat ID fraud, claiming for more technological solutions in the market.
Obligations and requirements to provide identification services
The relevant legal texts regarding this matter are: i) Law 10/2010, 28 April, of the prevention of money laundering and terrorist financing, together with the Royal Decree 304/2014, which sets the requirements for the non-face to face businesses; ii) General Data Protection Regulation, which has been applicable from 25 May, 2018; and Law 3/2018 of 5 December, on the Protection of Personal Data and the guarantee of Digital rights; iii) Regulation 910/2014 of the European Parliament and of the Council on electronic identification and trust services for electronic transactions in the internal market.
Particularly, Article 21 of the Royal Decree 304/2014 sets – for the major part of the financial activities – that the identification of the clients must be verified through the proceedings permitted by the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences. Just two mechanisms have been authorized by this entity: i) confirmation of the identity of the account holder among financial entities; and, ii) non-contact confirmation through videoconference.
In addition, the technological supplier must take into account the mentioned Regulation 910/2014, which sets a common standard of reliable identity verification for the secure electronic interaction between individuals, businesses and public authorities. These provisions are more flexible than the requirements set on the Royal Decree 304/2014; however it sets the obligation for the operator to notify to the public authority his business plan and the intention to operate, in order to be audited and authorized to perform in this market, when applicable.
Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area
Market size for identification services and biggest companies in this business area
No available data on how big the market is.
Nodalblock and Telefónica Digital España have the largest market shares. The most important Spanish company in this area is Nodalblock. Some big companies, such as Telefonica, Santander or BBVA, are developing new projects in these matters.
Additional comments regarding the economic situation for identification services or what FinTech’s must be aware of in this business area