COVID-19 puts spotlight on e-signatures: 20 years in the making
By Michael Magrath, Director, Global Regulations & Standards, OneSpan
June 30th marked the 20th anniversary of the Electronic Signatures in Global and National Commerce (ESIGN) Act becoming law, making it legal to use electronic signatures to sign and store digital documents.
This move opened the door to a whole new era of digital business. As well as providing the convenience of being able to sign legally binding contracts from anywhere, it enabled businesses to significantly increase productivity, improve the customer experience, ensure security and lower transaction costs.
This has been demonstrated in the US, where the ESIGN Act and the state Uniform Electronic Transactions Act (UETA) give legal recognition for electronic signatures and records to satisfy the “in writing” legal requirements for transactions. These Acts enable organizations to adopt a uniform e-signature process across nearly every state, future-proofing the way they interact with customers.
Although a lack of education over the legality of electronic signatures has historically caused some hesitation around the adoption of the technology, the COVID-19 pandemic has moved e-signatures to the top of business agendas in 2020, propelling digital transformation particularly among banks and financial institutions.
Indeed, e-signatures have proven essential at a time when people have been largely unable to leave their homes. The technology has played a key role in maintaining business continuity while reducing exposure to the virus and adhering to the social distancing guidance put in place by public health officials.
In short: the importance of e-signatures as a foundational technology can’t be underestimated. Digital transformation efforts, the race to deliver the ultimate customer experience, and more recently the global pandemic have all accelerated the technology’s adoption. COVID-19 specifically has changed the way government agencies and businesses interact with customers virtually overnight, meaning the supremacy of the traditional handwritten signature could finally be at an end.
Questions regarding the legal requirements and implications of e-signing have long accompanied discussions around electronic signatures. But this is quickly changing as laws catch up with the technology’s growing adoption. In many countries, electronic records and signatures are now treated as any other type of electronic data and are as admissible as if they were paper-based records. This has laid the foundation for the future of digital business around the world.
In Canada for example, provincial e-signature laws give electronic signatures the same legal status as handwritten signatures. Also, similar to the provincial laws, part 2 of the Personal Information Protection and Electronic Documents Act (PIPEDA) provides a regime that establishes electronic equivalents to paper-based documents and signatures at the federal level. And the country’s COVID-19 Economic Response Plan has recently taken this one step further, with electronic signatures now meeting the signature requirements of the Income Tax Act.
In Europe, e-signature adoption took a significant step forward in 2016 thanks to the Electronic ID and Trust Services (eIDAS) regulation. eIDAS applies equally to all EU member states and has served to accelerate digital transformation in countries across Europe by establishing legal recognition of all types of e-signatures for cross-border commerce. At this time, the EU is in the early stages of refreshing eIDAS – eIDAS 2.0 if you will. It is unknown at this time what that will entail.
Enabling digital transformation
So, why should businesses be embracing electronic signatures? The simple answer is that they enable fully digital processes and eliminate the need for costly and time-consuming manual activities, while improving the customer experience.
E-signatures are also safer and more secure than traditional paper documents and ink signatures. E-signing platforms are designed to reduce the risk of fraud and ensure compliance by capturing comprehensive audit trails, providing visibility into exactly who has signed the document – as well as when and where. This can be supplemented by digital encryption technology to prevent tampering, along with identity verification tools such as biometric authentication or ID document capture.
From a customer perspective, one of the key benefits of e-signatures is that they enhance the customer experience. Customers are increasingly expecting to have access to sophisticated digital services when interacting with businesses, which includes being able to sign documents from anywhere, at any time and on any device. Providing e-signature capabilities will help businesses both retain customers and attract new ones to increase the bottom line.
Ultimately, what has become clear during the COVID-19 pandemic is that e-signature technology is no longer a ‘nice to have.’ It has become a must-have component of digital transformation initiatives for organizations around the world, providing a level of transparency, security and efficiency simply not possible with traditional ink signatures.
And the importance of e-signatures will only grow over the coming years as global legislation continues to develop and more businesses realize the benefits. It might have taken slightly longer than expected, but e-signatures have undoubtably come of age. Here’s to the next 20 years.
Global Banking & Finance Review
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