E-Signed, Sealed and Delivered: How E-Signatures Help Financial Institutions With Regulatory Compliance

Representative from Scrive discusses the impact and opportunities of electronic signature in the BFSI industry

Written by Viktor Wrede, CEO at Scrive

Digital acceleration is often high up on the agenda in the banking, financial services, and insurance (BFSI) industries. The need for speed was no more apparent in the wake of the pandemic when in-person contact was prohibited, and it continues to have a lasting effect on the financial sector. There has been a significant reduction in high-street branches, with a Which? report revealing that over half of UK bank branches have closed since 2015.

Catering for this new wave of ‘convenience banking’ is very different from the traditional high street approach. Tellers and bank managers have transitioned from being behind a desk to the computer screen in remote locations. People no longer withdraw weekly spends, rather they use plastic bank cards for contactless payments.

With this move to digital now firmly cemented, how can BFSI businesses maintain their regulatory and contractual obligations?

Customer Onboarding and Efficiency

Customer onboarding in banking, financial services, and insurance typically requires lengthy and highly regulated legally binding agreements between businesses and their customers to stop financial crimes such as fraud or money laundering. However, this approach can often create a conflict between the customer and the teller.

From a prospective bank customer’s point of view, the question is: “How easy is it to open an account with this bank?” For the bank, the questions are: “How can I prove this person is who they say they are? What sort of funds will be deposited and withdrawn? Are they a reliable customer?”

That is why the demand for digital onboarding workflows that enable customers to sign documents and prove their identity online is increasing. Long waits, lost paperwork and ill-informed advisors leave a bad taste in a customer’s mouth. Replacing physical signatures with compliant electronic versions allows businesses to process more paperwork in less time, increasing efficiency overall. E-signatures are helping businesses to cut down document handling costs by at least 80%. This leads to faster, safer and more transparent transactions, helping to provide customers with a seamless online experience.

The John Hancock has gone digital

The global e-signature market has seen a boom over the last few years, driven in part by the expanding online documentation processes, supportive laws for the e-signature market, workflow efficiency, supply chain improvements, and the growing demand for compliant online security. The result of its popularity is accelerated growth, with the market projected to reach $35.03 Billion in 2029.

User Experience

One of the key drivers for digital transformation in BFSI is competition. Customer demand for digital services is rising continuously and there are expectations that they should be able to open a new bank account in the same amount of time it takes them to do their online grocery shop.

Challenger banks and digital-first FinTech and InsurTech companies are increasingly able to answer this demand by working with a partner who can meet the technical and regulatory requirements, with a fast time to market.

Traditional banks and insurance companies, who are often wedded to manual paper-based processes, need to catch up by providing a more dynamic, digital-first customer experience. Although online services have long been available to customers, it can still be necessary to download and print out paper forms, fill them out by hand and return them by post, or at best by scanning and emailing them. And verifying the customer’s identity can often mean an in-person visit.

Back-office operations are just as important. Manual, paper processes translate into substantial administrative burdens in terms of cost and efficiency, enabling the digital-first players to offer more convenience and lower fees. The quicker processing and completion of transactions using e-signatures within the financial sector helps customers gain access to services more quickly.

In addition to the speed and flexibility benefits, e-signatures also permit businesses to provide services to their international customers. According to a report by Forrester, the service has helped 47% of organisations gain new customers during the pandemic.

Businesses can now perform overseas trade without having to leave the country, and contracts can be shared with concerned parties through email.

Security, Risk and Compliance

In highly regulated industries like BFSI, one of the main challenges to implementing digital services, for traditional branches as well as challenger banks, FinTechs and insuretechs, is meeting regulatory compliance.

Laws around personal data protection (GDPR) and money-laundering (AML Directive) have gotten stricter and the fines higher. Non-compliance is not an option. Other challenges include security, managing business risk and the disruption of implementing new services into existing IT systems and business processes.

However, paper documents can be easily modified, and signatures can be forged. Even if documents are stored inside filing cabinets, there’s a chance of documents being lost or stolen. With the right service, signing electronically is more secure and makes compliance easier to manage in terms of storage, ID proofing of signing parties and demonstrating that the document has not been altered in any way after it was signed. E-signing software that offers signing party authentication ensures that agreements can only be accessed and signed by the intended parties. And when these digital identity checks are integrated into the e-signing service, it greatly improves the customer experience, enabling the signing party to authenticate their identity and sign the document within the same digital workflow.

Implementation

Adopting e-signature software can often be viewed as a complex technological integration process, leading to concerns about the impact on your business efficiency during the implementation phase. The right provider, however, knows how to minimise business disruption and costs, both now and down the road, by working together with the customer to plan integration projects according to the customer’s existing product roadmaps and IT development plans.

Businesses don’t always have to fully integrate e-signature software. For example, Scrive’s eSign GO is a plug-and-play solution that sits on top of existing systems, achieving digitalisation without integration. This is particularly well-suited for businesses with legacy IT systems that would otherwise be unable to communicate with modern digital tools.

When it comes to business processes, the right e-sign provider will also be able to offer change management guidance, challenging the customer’s existing processes and proposing smarter ways of working.

Eliminating paperwork bottlenecks

E-signature software offers a wide array of benefits, more than just the convenience of electronic signing itself. Along with document management software solutions, e-signature software can enable end-to-end digitalisation of agreement processes, which is far more efficient compared to the conventional pen-and-paper method.