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Digital Contracting Processes as Robust as Physical Ones

Juan Miguel Carreño - Logalty
Country Head

STORY INLINE POST

Cinthya Alaniz Salazar By Cinthya Alaniz Salazar | Journalist & Industry Analyst - Wed, 10/05/2022 - 10:00

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Q: It has been a little over a year since Logalty’s parent company MCH Private Equity acquired RegTech Solutions. How did the acquisition transform Logalty’s services?

A: The capital inflow has allowed us to expand and complement the service catalog with a new Regtech service catalog based on the GRC model, with a focus on compliance. Not only that, it is allowing us to expand the customer base giving us access to the Portuguese and Brazilian markets as leaders in electronic signature services through the purchase of Digitalsign. Finally, it is helping to incorporate new elements aimed to strengthen our capabilities on legal security when providing robust electronic contracting, communication and notification services. Thus, allowing Logalty to differentiate from our competitors while getting closer to our DNA, which is providing legal certainty and all the processes that this involves. We need to consider that legal acts must provide the same guarantees in the digital world as in the physical world, despite existing in an entirely different environment. 

 

Q: What differentiators is Logalty counting on to make the company a benchmark in Mexico’s legal and compliance solution sector? 

A: We focus on providing legal certainty in a digital environment, so clients can be sure that the contracts they manage through our platform comply with all the requirements of the legislation. When someone makes use of our service, they engage in an end-to-end procedure in which we incorporate critical elements, such as the NOM 151, full process integrity from origin (the issuers service petition), generation of evidence in case it is required in court, public notary registration of documents Hashes or acknowledgement of receipt, among others. 

What for the rest of the market is a bundled application or solution, for us is a process that can be adapted to customer needs. We offer numerous elements to provide legal certainty, going much further than our competitors. This is important because in digital environments the burden of proof is usually on the issuing party, which is the one that generates the process, in this case our clients. 

 

Q: What are Logalty’s market capture priorities and challenges in sectors like legaltech, proptech, fintech and others?

A: We operate in multiple sectors. The characteristics and maturity of the Mexican market helps us to become more innovative, flexible and adaptable to our clients’ needs. For example, traditional banking lacks the agility to fully innovate due its operative, security, risks and legal constraints. So, we are working with other financial entities like Sofomes or Sofipos, as well as fintech, insurtech and proptech companies, and have generated new business lines and opportunities in the hospitality/health, environmental or distribution sectors. All of it forces us to adapt to their specificities. Thus, we are now doing things that we could have not imagined when we first started in Mexico. For example, we have launched an accreditation procedure with real-time QR verification by third parties that were used to communicate COVID-19 test results between clinical labs and their patients, making sure nobody could forge those tests.

 

Q: How much of Logalty’s observed growth is tied with the economic boost generated by COVID-19 restrictions? 

A: Our growth was accelerated by the needs generated by the COVID-19 pandemic among traditional businesses. Not only that, but the COVID-19 pandemic made us evolve and rethink our business model. It made us lean more toward innovation and open to new business propositions. Technology is still incipient in the Mexican market, so part of our job is to help companies and organizations through the digitalization process. Many businesses do not want to incorporate new technology until they do not internalize the possibilities associated with innovation and its impact in the income statement, and COVID-19 pandemic gave a big push to it. Logalty has gained more influence helping companies that require technical tools to grow. 

 

Q: Has entering the Mexican market and seeing its maturity helped the company discover new business opportunities in the country?

A: Without a doubt. Being in the EU, where we are a reference with millions of transactions, is not the same as being in a new market that is not fully mature. The change forced us to adapt to the demands and restrictions of the region. We faced a lot of questions that made us more flexible to meet the cultural and proceeding challenges. 

Part of our job is to help clients understand that the digital environment is structurally different. A procedure that seems perfect from an operational point of view because it meets business needs and security expectations, can be troublesome from a legal standpoint. Helping our clients to understand this has allowed us to grow as a business, forcing us to evolve to better adjust to client needs and processes. 

 

Q: How are emerging technologies and digital solutions like digital identity and blockchain likely to influence Logalty’s business model and processes?

A: Lawyers require the assurance that procedures in the physical and digital environments offer the same degree of legal certainty. It is critical that they and their clients understand and have access to these tools; that is why we provide these technologies and solutions as part of our services. These tools can help legal professionals to do their jobs while in digital environments. In the digital world, signing a legal contract is not as easy as signing it as a physical document, which is why we always state the difference between signing an electronic document versus the execution of a contracting procedure to provide legal perfection. In the EU, if the signed documentation is not delivered to the signatories, or if proof of disposal prior to the signature is not available, a contract can be considered null and void. Therefore, nobody disputes signatures. Instead, lawyers focus on the process to make sure it is well constructed, so that nobody will break it (on legal basis). 

Referring specifically to blockchain, it is a good and practical tool, with high potential, but, in my point of view, it does not have enough legal strength since there is still not sufficient legal basis on this technology. Furthermore, in order for the information kept in a blockchain to be true and accurate (the same truth for all parts involved in a legal act), there must be certainty on the origin of the information and the quality of the data, as well as the robustness of the process involved, including who, when and where the parties agreed on what, in relation to the data prior to be saved inside the blockchain. Else, a blockchain can be used to launder a lie. There is still a road ahead to be able to achieve this, especially at a legal level. 

 

Q: What market or regulatory inhibitors are standing in the way of the widespread adoption of e-contracting in Mexico?

A: Mexico has a powerful legal and regulatory structure. As is common with technology, cultural change is the most difficult aspect to manage and, in my opinion, the main inhibitor. 

Some companies are concerned that these documents might not be as strong as physical documents in court. A similar phenomenon happened in the EU eight or 10 years ago. At the end of the day, these changes are here to stay because in the digital environment, if procedures are properly implemented, it is possible to obtain full traceability and certainty, even more than in the physical environment. We want to give customers a tool that will provide them with certainty in their transactions.

 

Q: Since expanding its catalog of technological solutions, what are the main opportunities that the Mexican market offers?

A: Our challenge is to remove the fear of using electronic means to make businesses more efficient and innovative. The digital transformation is not automation; it goes beyond that. Under a legal point of view, it implies the use of technology to provide legal assurance and certainty in a (digital) environment that defines a relationship model between absentees (physical or legal persons). To do so, Logalty offers a complete set of services to certify information and generate enough evidence either to have proof of perfection of a legal act, as well as to allow for the evidence to be interpreted in court if necessary. With this premise, we have a wide range of opportunities in any organization willing to incorporate legal security as a model.   

 

Q: What are the main operational guidelines for Logalty in 2023?

A: Logalty is going beyond contracting procedures. Our guidelines for 2023 imply a new set of products and services like: i) the possibility to certify video conference session with identity onboarding procedures, capture of documents and contracting procedures, between the participants; ii) a new Contract Lifecycle Management software; iii) a new B2C partner program; and iv) document accreditation with QR validation. With them, we are certain to expand our operations to new use cases and sectors.  

It is important to state that in everything we do, it is essential for us to provide top security measures at all levels because we cannot fail in the thousands of transactions that we make every day. Having these security systems in place makes all the difference for us. For example, we are recognized as Banking Security Grade Service Provider subject to supervision by the Bank of Spain in our electronic contracting service, giving our customers peace of mind. Our clients can be assured that we comply with top security standards. 


Finally, we have a strong line of action helping our clients to meet sustainability, environmental and social criteria by participating in CO2 compensating projects, offering a 100 percent CO2 neutral service, and taking a strong stand by being a member of the UN Global Compact to implement universal sustainability principles.

 

 

Logalty specializes in the generation of electronic evidence, electronic contracting and communications services. Created in Spain in 2005, Logalty expanded to Mexico in 2018.

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