The electronic contract market continues to
grow. But its rise has caused concern, as regulation fails to
keep up. The financial industry will also have to adapt if it
hopes to compete
The use of electronic contracts is growing worldwide and in
Peru. Transactions are being executed without the parties being
faces to face. The growth of cross-border transactions and
developments in technology is forcing this trend to develop
fast. One may think that electronic contracts through digital
means belong in the future; but this is not the case: they
belong in the present. Digital means are evolving very
In the financial world, we see the arrival of new players
that compete in an arena traditionally reserved for financial
entities. We can pay our debts, transfer money and even get
loans by using digital means, such as the internet, mobile
phones, and social networks, without the need for the
traditional services of a financial entity.
One of the consequences of globalisation is the need to
execute contracts in real time. Fortunately, innovation in
technology allows sellers and buyers, providers and consumers,
to do business in real time. This reduces some transaction
costs and allows economic growth. The business tendency to use
digital means is irreversible. Furthermore, we have a new
generation of consumers that have grown up digitally. In this
changing context, the Peruvian banking industry needs to think
seriously about electronic contracting.
We need to evaluate the usefulness of traditional procedures
for executing contracts, and rethink, along with the regulators
and the judiciary, the legal principles that govern the
regulation of civil, commercial and banking contracts. We
cannot forget that such principles were adopted in a very
different world, where, among other things, the world economies
were attached to the gold standard.
"We can pay our debts,
transfer money and even get loans by using digital
means, without the need for the traditional services of
a financial entity"
In Peru, congress has approved regulations that allow
contracting through digital means. In 2000, law 27269
established electronic signatures and digital certificates.
That same year, law 27291 amended the Civil Code, specifying
that an individual's will could be expressed through digital
means; while law 27309 introduced digital crimes to the Penal
Code. In 2013, resolution 212, issued by the National Identity
and Civil Status Registry, introduced the electronic ID.
Electronic signatures and identifications seem to be the
right tools for making the virtual world a safe place both for
providers and consumers. Unfortunately, obtaining electronic
signatures and digital certificates is too costly for the
average consumer, and, electronic IDs are only just being
In any case, obtaining electronic signatures, digital
certificates and electronic IDs alone will not be enough in
Peru. We have to find the ideal security mechanisms for
electronic contracting. In the banking world, public trust
means everything. By their nature, banks take deposits in order
to make loans, and risk analysis is a key element of the
business. Therefore, banks must take reasonable precautions to
reduce the risks that are associated with the financial world,
hence why banking activities are regulated and supervised.
Electronic contracting presents several types of risks to
banks, one of which is fraud. What happens if someone takes the
identity of another with the intention of executing a
transaction? How does the bank know that Mr. X is really Mr. X?
In the digital world, the bank neither sees Mr. X nor checks
his identity by reviewing his ID. The story would be different
if Mr. X had an electronic signature, a digital certificate or
an electronic ID, but this options are not yet used by
consumers in Peru due to their high costs.
"We need to evaluate the
usefulness of traditional procedures for executing
One may think that fraud is a common risk to all service
providers. This is true, however, banks, face some specific
risks. Banking regulation obliges banks to keep records of the
contractual conditions of the transactions executed with
consumers. A bank may be able to prove that an on-line
transaction was executed by Mr. X, but how does it prove the
agreed interest rate and other contractual conditions of the
transaction? The bank may have tools to prove those contractual
conditions, but there is no certainty that the regulator would
accept anything other than a printed document signed by Mr. X.
Similarly, there is no guarantee that the judiciary would
enforce the bank's rights in the absence of a physical document
stating the interest rate and other contractual conditions.
These are key issues to be resolved.
Another problem is that while both consumer and banking
regulations allow electronic contracts, certain contradictions
remain. Provision 47 of the Consumer Protection Code and
provision 41 of the Information Transparency Rule (ITR)
expressly permit the execution of consumer contracts through
electronic means. However, the latter provision obliges banks
to provide consumers with extensive physical documentation
regarding the electronic contracts and conditions. This
requirement contravenes the essence of electronic contracting
and fails to satisfy the needs of digital consumers who are
paperless and interested in saving time. If a bank must produce
and deliver physical documentation for digital consumers,
contracting through electronic means will lose its advantages
and increase transaction costs.
If we want to create a sound environment for electronic
contracting, we need to eliminate the requirement for banks to
provide digital consumers with supporting physical
documentation that could be provided virtually. Furthermore, if
we want to create a safe environment that allows banks to use
digital means for executing contracts with their customers, we
need to approve specific regulation that recognises the
possibility of proving the agreed contractual conditions
without the need to have records of the physical documents.
We have work to do in Peru. Our biggest challenge is to help
create flexible regulations that provide safe electronic
contracting while ensuring the necessary control elements are
in place; not only for security mechanisms, but also for the
protection of personal information and the prevention of money
Enriqueta González de
General counsel, BBVA Continental
T: +51 1 211 1046
Enriqueta González de Sáenz has a
Juris Doctor degree (JD) from Pontificia
Universidad Católica del Perú (PUCP), and
also holds a masters degree in international economic
law from PUCP.
González is a professor of banking law at
PUCP. Since 2000 she has been the general counsel and
secretary of the board of directors of BBVA
Continental; director of BBVA Continental
Securitisation Company; and director of BBVA
Continental Consumer Finance Edpyme.
She participated in the drafting of the prevailing
Banking and Insurance General Law.
She has been legal adviser and general secretary to
the Ministry of Justice; general counsel of COFIDE, a
second-tier bank owned by the Peruvian state; and
deputy superintendent of banking and insurance,
responsible for regulation and the legal
She has also held the following positions:
Director of the Insurance Deposit Fund
Member of the academic board of the Banking Studies
Institute (2006-20013); and,
Director of BBVA Asset Management (2011- 2014)