When businesses divert from the usual – for whatever mitigating circumstances – those that adapt quickly have an advantage over the competition. For players in the financial industry, digitizing core services is a perfect way to do this. In-person meetings have conventionally been the usual way of transacting business from account openings, to mortgages, to auto loans, and more. However, with the benefits of digital signatures, you don’t have to slide paper agreements across a desk anymore.
The Legality of eSignatures for the Financial Industry
The Uniform Electronic Transaction Act (UETA) was created in 1999 to establish the legal framework for the uniformity of electronic records and signatures in commerce transactions at the state level. The Act states that individuals may eSign instead of utilizing wet-ink signatures for document execution. In other words, an eSignature will have the same value and effect as a pen-and-paper signature.
The UETA is closely associated with the Electronic Signatures in Global and National Commerce Act (ESIGN). The ESIGN Act was established in 2000 as a federal law to settle disputes arising between different states over the use of eSignatures. The Act confirmed that eSignatures have the same legal status as hand-stamped signatures, and a record or contract might not be ruled unenforceable just because it is in electronic format. Many years have passed since the Act was enacted, and with various court decisions that have fully supported the legitimacy of eSignatures, this form of signing is considered fully legally binding.
Benefits of Electronic Signatures in The Financial Sector
Electronic signatures are broadly recognized as an effective and modern way of obtaining signatures most industries. With the number of businesses bringing their services online, electronic signatures continue to grow in popularity.
Below, we will highlight the benefits of digital signatures in the financial industry:
1. Reduced Transaction Time
When you depend on manual signatures, transactions and processes slow down. A case in point is Know Your Customer (KYC) requirements in the banking industry, which requires detailed and next-level identity verification. You might not realize how protracted this process is as you are already used to the traditional way of doing things, however, the process can be significantly streamlined if you switch to electronic signatures.
With digital signing, you no longer have to wait for documents to be signed by customers the traditional way and you can verify signer identity in seconds to ensure KYC compliance. Customers can even use their smartphones and tablets to sign from anywhere, anytime. No need to visit the bank. All these processes can be completed within a few minutes, instead of hours or days, as is the case with the manual process.
2. Streamlined Operations
The time it takes to obtain signatures from multiple departments – one of the financial industry’s most laborious and time-consuming tasks – is minimized via the automation and digitization of signing operations. No contracts, loan application forms, credit card applications, or other paperwork will have to be printed, photocopied, scanned, and sent using a digital process. The benefits of digital signatures allow signing multiple contracts with a single click, minimizing paperwork and enhancing overall organization productivity. It also allows you to send reminders and notifications to involved parties in case they haven’t signed a document yet, thus increasing collaboration.
3. Improved Customer Experience
Providing flexible, efficient, and speedy customer service in the financial industry is essential. The way financial services customers do business is changing, and thus businesses are increasingly demanding improvements in the way of:
- Retaining new customers
- Maintaining a competitive edge
- Improving methods of customer communication and collaboration
- Transforming customers into ambassadors
- Ensuring steady new client growth and repeat business
So, for any organization that depends on signing contracts and documents as part of their daily operations, embracing electronic signatures makes life easier not just for businesses but also for customers. If paperwork and agreements are too complex or time-consuming, customers may not be interested in utilizing services or establishing new relationships. Additionally, any challenge experienced in the signing process is a massive opportunity for contract abandonment.
With the benefits of digital signatures, your customers will not have to endure more lengthy processes; everything is completed online in a few minutes and at their convenience. Gone are the days where customers were required to set meetings or come into the office simply to begin processes or complete paperwork. This portrays an innovative and modern image of an organization that cares about not wasting its clients’ time.
4. Greater Transparency
Transparency is a crucial requirement for any financial institution. Fortunately, with electronic signature implementation, the lending process might be complicated and lengthy, irritating both the lender and its clients. Many loan applications will require signatures from several people. When contracts are sent out via fax or paper, it can be overwhelming to know where clients are at in the document signing process. eSignatures allow for greater transparency for financial institutions to see where clients are in the signing process. This helps you to know when to take action, like sending reminders and notifications to ensure a smooth transaction.
5. Improved Document Security
Paper contracts and wet-ink signatures can be forged easily, plus copies can be easily misplaced or stolen. With the usage of digital documents and electronic signatures, financial institutions don’t have to lose sleep about the security of the contracts sent between systems.
The encryption technology associated with electronic signatures makes them impossible to be altered. Additionally, tamper evident and detailed auditing features provided by electronic signature solutions like Foxit eSign enable financial institutions to detect any modification made to an electronic contract after it has been signed or executed. Additionally, features like two-factor authentication (2FA) and knowledge-based authentication (KBA) enable businesses to require further steps to be completed prior to access, ensuring documents remain secure and confidential at all times.
6. Industry Compliance
Any organization that transacts business in a highly regulated sector, such as financial services, must adhere to stringent industry and legal. Electronic signatures are fully compliant with leading certification bodies such as PCI DSS, Soc 2 Type II, 21 CFR part 11, eIDAS, ESIGN, and UETA. Additionally, by providing tools for fast and easy identification, utilizing detailed audit trails that show all movement of any document, ensuring a tamper-proof and secure process, and by enabling fast, easy, and organized document access, industry-specific compliances have never been easier to meet.
7. Reduced Human Error
When you are handling thousands of documents, it is inevitable to make mistakes here and there. People may sign in the wrong place or on the wrong page, information may be missing, or possibly not all required signatures have been obtained. Organizations in the financial industry spend millions of dollars annually fixing document errors, not to mention the time wasted spent chasing corrections. By using eSignatures, financial organizations can nearly eradicate errors in paper-based transactions through features like mandatory field completion, leading signers through the signing and completion process, providing customized detailed instructions on documents, and more. Plus, when mistakes happen, they’re easier than ever to fix by simply correcting and re-sending for completion in a matter of minutes, not hours or days.
8. Increased Productivity
A lot of time is spent inputting data, printing forms, photocopying, and scanning change files into digital format.
Electronic signatures ease back-office tasks by reducing processing time significantly. It reduce inefficiencies in document preparation, signing, encryption, tracking, storage, and retrieval, thus boosting staff productivity. By digitizing document processes and utilizing premade templates and workflow-based eSigning processes, businesses of all kinds within the financial industry have the unique opportunity to boost collaboration, streamline productivity, and save time.
9. Cost Saving
One of the most remarkable benefits of digital signature software in the financial industry is reducing dependence on paper and related overhead paper, printing, and mailing costs. By investing in electronic signatures, organizations significantly save on document-related costs, thus allowing this money to be repurposed elsewhere and towards achieving other company goals.
Examples of Organizations In the Financial Industry that Use eSignatures
Electronic signatures make it easy for commercial banks to optimize the loan process, automate new account openings, and offer better customer service. Additionally, eSigning helps cut operational costs, as well as improve compliance standards.
Wealth Management Firms
Digital signature software helps wealth management businesses automate procedures, streamline account creation, get more assets under control, and move money faster. Within wealth management firms, eSignatures also improve client and employee experiences.
Countless credit unions throughout the country utilize and accept electronic signatures. Account openings, internal approvals, employee agreements, consumer loans, and more are all handled with electronic signatures.
Credit Card Companies
In the credit card business, landing the right client is one aspect; however, when this is done, getting regulatory permissions and signatures from credit bureaus call for endless signatures. With an eSignature solution such as Foxit eSign, the issue and reissue of credit cards becomes an easier process for everyone involved.