Defining Your E-Signature Requirements
Electronic signatures, or e-signatures, have become a firm part of everyday business. Tax returns, work documents (insurance, employment applications etc.) invoicing, and encrypting data in emails has all become much easier thanks to the advances in technology and the growing use in e-signatures. However, it is the financial services sector that is among those benefiting the most.
If you’re working in the financial services sector, an e-signature might be something you’ve already introduced. And if you aren’t using e-signatures, you could be considering using them soon to keep up with your competitors, who are already making wide use of e-signatures to give their customers a wider choice.
Differences Between Digital & Electronic Signatures
Often, the terms electronic signatures and digital signatures are used interchangeably. However, there are some differences between the two. Both electronic signatures and digital signatures allows you to authenticate and sign documents electronically, but there are few things that set them apart.
The main difference is the added security that digital signatures offer. Digital signatures use cryptography to give them additional security, which means that they can’t be tampered with. Digital signatures also have greater regulation.
Electronic signatures are defined by law as an “electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” They first became law in 2000 when the ESIGN Act came into force. However, they are less regulated overall and are considered less secure than digital signatures.
Growth of Electronic Signatures
Although many businesses were slow to pick up on the use of e-signatures when they first became law, their popularity has since soared. In 2017, it is estimated they’ll be 754 million transactions, compared with just 210 million in 2014, according to Statista.
There have been many driving factors behind the growth of electronic signatures, and changes in the way we bank, shop and in technology are largely behind this.
As an example of their growth, in 2015, statistics from P&S Market Research show that the North American market had the biggest share; this was attributed to the increase in e-commerce, and the demand from the financial and insurance industries. In the future, a greater need for security and risk management is likely to further fuel the need for electronic signatures in North America.
P&S Market Research also predict that Australia is will experience a strong demand for e-signatures.
Another strong growth area in the coming years is likely to be Europe. Laws governing electronic signatures are due to be standardized, and this will lead to a strong uptake of e-signatures in the EU.
In addition, as banks deliver more digital services, the demand for e-signatures will naturally grow. As the EBF digital banking report states:
“Banks have a widespread experience in establishing digital identities, which places them in an ideal position to deliver digital identity services for business purposes and for the wider context such as partnerships with public authorities.”
Fintech companies and financial services companies in general realize the part they must play in offering consumers new digital services. 20% of fintech’s have already teamed up with Internet companies, 10%, have acquired a fintech company, while 7% have launched a fintech subsidiary. As the financial services sector naturally evolves, this will mean the creation of more digital financial products and further enhance the growth in e-signatures.
Increase of E-Signatures & Digital Signatures in Banking
Changes in technology have led to the banks and the financial services sector having to look at the way it offers financial services to its customers. In the recent past, mobile devices have transformed the way we bank, and there has been a distinct shift away from consumers depending on physical visits to branches. This trend is only going to continue in the future
Then there has been a change in our lifestyles overall. Consumers in general are no longer prepared to wait if they don’t have to. They don’t want to wait for application forms to arrive if they can just fill one out online and submit it, and they want the option of accessing other financial services on demand too.
If the traditional financial services industry didn’t radically change the way it offered its products and let customers access them online and via mobile apps, it would struggle to compete against its newer, digital-only rivals. This has led to an increase of e-signatures and digital signatures being used in the payments industry.
By 2020, Forrester Research predicts that most e-signatures will be used by mobile phone users. In addition, as banking apps become more popular, it is expected that 38 percent of adults – or 2 billion people – will be using mobile banking by 2018.
Also, banks are having to face up to the demands of younger customers – or millennials– who are used to a new world of smart technology. They are familiar with doing everything on the go, and they want to use apps for their banking as well.
According to today’s research, most millennials choose mobile banking for basic tasks like making deposits and transferring money. Meaning, if banks were to capitalize and invest in this, they will see decades of gains ahead. By realizing the need to conform to modern times and take innovative strides, mobile services offered through the financial sector will greatly expanded.
However, even with these efforts from the financial services industry, Business Insider has predicted the end of the traditional bank branch at some point. While that might not come to pass, some companies in the sector will undoubtedly find themselves having to do more to improve their digital offerings to customers, and this will further fuel the uptake of e-signatures and digital signatures in the financial sector. If your business isn’t already prepared to offer these services to customers, perhaps it’s time to start thinking about it.
Why E-Signatures Are Important to Your Company
E-signatures offer particular benefits to the financial services sector with the main advantages being the improvement in efficiency and reduced paperwork. But let’s look at the benefits in more detail. They are:
- Improved efficiency. An e-signature is the automation of payments solution, resulting in a quicker transaction process for consumers. For instance, a new client might need to sign a time sensitive document; an e-signature means this can be done quickly and independently of their location.
- Reduced paperwork. Many companies are trying to reduce their dependence on paperwork and are offering customers the opportunity to go paperless. The financial services sector depends heavily on printed forms for new account openings, loans, credits etc., and between them, U.S.- based companies as a whole spend over $120 billion on printed forms, according to statistics from the Paperless Project. However, the ability to sign electronically greatly reduces paper waste and costs. The reduced paperwork make audits easier to manage, and significantly improves productivity by lowering the amount of time searching for documents.
- Lower risk of mistakes. Using e-signatures can reduce human error. For instance, if a form has not been filled out correctly, this will be highlighted to the customer who is applying for a financial product online. This saves time on rejected applications that need to be resubmitted.
Financial services institutes and their customers can also benefit from the added security that e-signatures offer over traditional methods.
Choosing an E-Signature for Your Financial Services Company
Now you understand the benefits of e-signatures and what the can do for your business, how do you decide which e-signature software company to work with and which software is right for your financial services company?
First, begin with the fundamentals. Some companies will offer a trial, which will enable you to understand the basics of the software and establish how well it fits into your company. Use this time to evaluate the software. Assess its ease-of-use, how easily it interacts with your other software, it’s time saving potential and how it could possibly improve the productivity of your company generally.
Next, take a look at the templates that are offered. Do they meet your company’s needs? Templates will be one of the key factors in boosting your company’s productivity, so they must be easy-to-use and they must also fit in with the overall look of your company or be easily customizable. However, as well as being able to customize them, the templates need to be able to stand up legal scrutiny too.
Branding and customization is another key area that you’ll want to assess. Branding is what makes your company stand out from others. In competitive industries like financial services, where there are numerous new start-ups in the digital sector, the ability to brand and customize where you can is imperative.
Now you’ve considered the basics, concentrate on the complexities of introducing this type of software into your business.
One of the most important factors to consider is the protection levels of such software. As explained earlier on in this article, and in greater detail by GlobalSign, not all e-signatures are equal; digital signatures will offer you more protection against preventing unauthorized payments going out as they can’t be tampered with. Think carefully about the level of protection you want and whether an e-signature on its own would be enough for you and your customers, or whether a digital signature might be better suited to your company’s needs.
Look for compliant software. If you want to ensure that your software is legally valid, check that it is compliant with ESIGN and UETA laws in the United States. Other regulations apply in other countries so make sure that the software you purchase is compliant with the relevant laws.
Costs will obviously be a factor. Monthly and annual subscriptions are common and these are usually the most cost-effective solution for volume. Another way is per document, which might be better if you only need the occasional electronic signature but its often more expensive per document.
You can find a checklist of other essential features to look for in your e-signature software here.
E-Signature Software Companies for Financial Service Companies
There are numerous companies that offer e-signature software. Here are some of the current ones that are available for the financial services sector, however, none of these should be considered as personal recommendations.
- eSignLive is compatible with any device and can be used for a wide variety of applications including opening accounts, investment products, e-mortgages and loans. There are several different products available, and it comes with white label branding.
- DocuSign allows you to set a digital signature for use in banking; it helps to streamline the process for loans, opening accounts etc. DocuSign is also available as a mobile app, and free trials are available. E-signature software is available for approving transactions and agreements too.
- Evolis provides digital signature pads for banks and the finance industry to help reduce waste, centralize documents and improve security.
- Ascertia provides digital signatures for the banking, finance and insurance industries. They have a full range of products including mobile signatures, cloud-based digital signatures, e-invoice and e-statement software.
Although e-signatures and digital signatures have been around for some time, the ever-rising rates of smartphone usage as well as the growing need for mobile technology solutions has led to a change in customers’ expectations. This has generated and accelerated a need for the financial services sector to adapt to these changes by offering consumers new and innovative ways to bank, set up accounts, and manage their finances.
Although many in the financial sector have been quick to adapt to this change, some financial services companies are still lagging behind. And, if they do not adopt e-signatures or digital signatures, they risk losing customers who want faster ways to access financial products, without having to step inside a bank.
This increase in demand for e-signatures is expected to remain strong into the foreseeable future. Banks and other financial services who haven’t already made the move are being advised to start looking at their digital offerings, and the part e-signatures/digital signatures can play, so that they can satisfy today’s consumer, and remain competitive.