Digitalization has produced important changes in relation to money and payment processes and mechanisms. In the financial services sector, security is a key and irreplaceable element and the Fintech industry is meaning an important revolution in it, establishing a new regulatory framework.

The Fintech sector is one of the fastest growing internationally, but not only that, its growth projection is exponential over the next few years. One of the main reasons for its success is that Fintechs bring certain financial services closer to the consumer through the use of technology.

Next, we will see what Fintechs are, what are the standards that allow their regulation in our country and why HSMs are so necessary to establish secure payments and transactions.

What are the Fintechs?

The term Fintech comes from Finance and Technology and refers to all activities involving the use of innovation and technology for the design, offerings and delivery of financial services.

Types of Fintech:

• Wealth advice and management.
• Personal finance.
• Alternative financing.
• Payment services.
• Big Data.
• Online customer identification.
• Cryptoassets.

Law regulating Fintechs

In Europe:

Within the European framework, the PSD (Payment Service Providers), a regulation that established a single market for payments within the EEA, was established in 2007. Through this regulation, it was urged to reinforce the security of transactions, where for the first time, payment service agents were established independently of traditional banks.

This was followed by PSD2, a new regulation whose main objective is to boost competition, transparency and innovation in the financial sector. It allows third party companies to facilitate the customer’s experience and guarantee their security in the system.

As the main novelty, the PSD2 allows third party companies to access their customers’ accounts, as long as the customer requests it, so that payments can be established or information can be consulted through the services of Fintech companies.

In Spain:

In Spain, PSD2 was implemented through Royal Decree-Law 19/2018 of November 23 on payment services and other urgent measures.  Despite this, in our country the regulation is not facilitating the creation of this type of companies; in fact, the emergence of Spanish Fintech is in a premature situation if we compare it with other countries in Europe, such as, for example, United Kingdom.

To improve the current situation, the Spanish Fintech Association (AEFI) has prepared “The Fintech White Paper” with the aim of providing initiatives to speed up the creation and improve the Fintech sector in Spain.

HSM for Fintech: Why is it so important?

Double authentication is characterized by the fact that the user identifies oneself by something s/he knows (such as a password) and, in addition, her/his identity is verified through other mechanisms that provide additional security.

To achieve this guarantee, the use of a Hardware Security Module (HSM) is established as the most secure model to meet all the premises established by PSD2.

The HSM is a key element to achieve a robust, transparent and 100% secure authentication, as it acts as a “safe” that stores, safeguards and protects the data and digital certificates.

Thanks to it, users can carry out transactions securely and with complete confidence, knowing that identity theft and other risks are greatly minimized. In other words, the use of HSM for Fintech guarantees practically inviolable security and protection of our identity.

CryptosecBanking: REALSEC’s Fintech HSM:

CrypsotecBanking is a Fintech HSM that enables network payments in a totally secure way. It has a very high performance, which provides the whole operation with the necessary cryptographic functionality.

It is designed to protect any transaction in the different payment channels and complies with all the requirements and standards defined by the PCI Consortium.