Apr 27, 2020
eIDAS Regulation: Changes in the financial industry
Here we will review what eIDAS regulation is and what it has meant for different economic sectors, in addition to its impact on online transactions and, specifically, in the financial and banking industries.
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What is eIDAS Regulation?
Regulation (EU) No 910/2014, eIDAS, entered into force on 1 July 2016 throughout the European Union.
It is a regulation that, in addition to regulating electronic identification, establishes guidelines for trust services in relation to electronic transactions and all types of electronic signature.
eIDAS regulation, together with the new AML5 directive, has led to the creation of the concept of the European Digital Single Market, which implies access to 508 million European users and a radical change for the financial and banking industries.
What is a trust service?
Qualified trust services are those that meet the eIDAS requirements and refer to services electronically provided that hold authenticity presumption.
According to article 3 of eIDAS regulation, trust service menas “an electronic service normally provided for remuneration which consists of:
- the creation, verification, and validation of electronic signatures, electronic seals or electronic time stamps, electronic registered delivery services and certificates related to those services
- the creation, verification and validation of certificates for website authentication
- the preservation of electronic signatures, seals or certificates related to those services”
According to sub-section 19 of the same article, a trust electronic service provider “means a natural or a legal person who provides one or more trust services either as a qualified or as a non-qualified trust service provider” And meets the requirements to operate at a high level of confidence and technical security.
eIDAS regulation: types of electronic signature
Three types of electronic signatures are established:
- Electronic signature. Data in an electronic format attached to other electronic data or logically associated with them that the signer uses to accept the contents of a document.
- Advanced electronic signature. An electronic signature that meets the following requirements:
- It is linked to the signer in a unique way and allows his/her identification.
- It has been created using electronic signature creation data that the signer can use with a high level of trust and under his exclusive control.
- It is linked and sealed with the signed data so that any subsequent modification of it is noticeable.
- Qualified electronic signature. Advanced electronic signature created by a qualified electronic signature creation device and based on a qualified electronic signature certificate.
eIDAS regulation reemphasises that simple, advanced and qualified signatures are legally binding and hold full legitimacy. The qualified firm will be recognized in all member states of the European Union, regardless of the state where it was carried out.
Chips and chip-readers vs. mobile devices
Creation of a signature device compared to the traditional handwritten signature was a step towards the digitalization of the process. However, this system failed due to its difficulty, friction in processes and excessive control and complexity in emission.
The new eIDAS regulation introduces a nuance in control: “a high level of trust” and gives way to the centralized management of electronic certificates, avoiding the need for physical devices such as chips or their readers.
New identity verification solutions in eIDAS framework hold the possibility of increasing security and, above all, usability. Citizens’ mobile becomes a useful and universal tool to access administration processes without difficulties in an online way and with high security.
Welcome to API world
Interoperability has always been a challenge in identification solutions and electronic signature.
Thanks to versatility introduced by the new interoperability methods in eIDAS regulation, based on APIs, complex industries such as the financial industries are being disruptively changed, facilitating all KYC (Know Your Customer) processes, contract signing and accessing services.
Not only easy access is granted to electronic administration processes, but also a radical change in the processes of every kind of organization, from signature in work processes or in the relationship with suppliers, with radical changes in the conception of alternatives to electronic invoicing.
Conclusions on eIDAS regulation
Changes introduced by eIDAS have meant a true digital revolution for companies and users, which not only affect electronic signatures or digital identifications to register users or customers remotely but also directly influences in cryptocurrencies, by ensuring their reliability.
Digital transformation changes the way in which we use services and products, within regulated security and trust ecosystem that is allowing the business to expand quickly and unprecedentedly.
eIDAS allows, together with the AML5 directive, companies to offer their services in a Digital Single Market with 508 million consumers.
This regulation has enhanced agility in time and processes, reduced costs and remove bureaucracy or document sending.
Discover how to use eIDAS in order to boost your business by downloading this simple guide.