By Michael Lakhal, Director Product Management Agreement Automation, OneSpan
The last decade has seen banks digitize a robust selection of products and services to meet growing customer expectations and stave off the threat from emerging challenger banks. Products and services like online and mobile payments, digital account opening and digital lending have helped update services, keeping customers out of the branch while providing them with a modern and overall enjoyable experience. But it hasn’t been easy – delivering on that wow factor and keeping up with the competition have had to come without expense to security or regulatory compliance.
Part of what has made that possible has been the grandchildren of the digital revolution – electronic signature technology. Particularly now more than ever, during these unprecedented times electronic signatures and other digital banking services have become crucial for millions sheltering at home. E-signatures combined with other digital identity verification technologies such as ID verification, facial biometrics and AI, e-signatures can be used to ensure someone is who they say they are without ever having to present an ID in person. As a result, banks can offer customers remote banking possibilities that enhance their experience, but don’t compromise on security.
Crucially, e-signatures can also help banks remain compliant with the General Data Protection Regulation (GDPR) requirement of capturing, recording and managing user consent by capturing a comprehensive visual audit trail detailing what the customer has agreed to, when, and how they signed.
All these factors are helping to boost adoption, but the recent Coronavirus pandemic has exacerbated existing trends. The need to provide remote banking services has heightened dramatically.
So, here are the top ways banks and FIs can enhance existing processes, or add new capabilities with e-signatures:
Strengthening identity verification
Verifying the identity of a customer remotely is essential to digital transactions being completed. By incorporating e-signatures into their existing identity verification process, banks and FIs can authenticate a customer and confirm that they are who they say they are.
Currently, even with an interaction that begins remotely, the most common methods of customer identity verification still involve visiting a branch and presenting a physical ID document, or using legacy knowledge-based authentication (KBA) methods that cross-reference the fixed identity information the customer provides against a database from third-party sources.
However, both methods have flaws that impact both security and customer experience. KBA relies on information that’s become widely available thanks to the number of data breaches exposing personal identifiable information in recent years. As such, it’s no longer a secure means of verifying identities. At the same time, with the current shelter-in-place orders across the world that are spurring an enormous shift to digital banking channels, it’s getting more difficult for legacy banks to justify asking customers to come in-branch to verify their identity.
By enhancing their existing identity verification process with e-signatures, banks and FIs can offer a more secure, user-friendly experience to customers banking remotely.
Enabling remote account opening
Using e-signatures to enable secure identity verification opens a wave of possibilities for banks and FIs, including remote account opening. Indeed, more than half of UK consumers have already opened a digital-only bank account, with Monzo, Starling and Revolut topping the list of contenders.
As a result, it’s unsurprising to see that in a recent study exploring the state of remote account opening, more than two-thirds of respondents from banking institutions stated that improving the remote account opening process will be an active initiative at their institution. In the same study, 34% said they expected electronic signatures to be a significant investment priority in order to enable secure remote account opening.
When combined with other identity verification tools, e-signatures ensure that users can remotely open a bank account without compromising on security. Furthermore, e-signatures remove the pain points of manual signatures, allowing customers to sign a contract without having to leave their homes.
For banks and FIs, being able to offer a remote account opening service allows them to increase application conversion rates and achieve regulatory compliance, all while becoming more operationally efficient.
Enhancing the customer journey with remote contract signing
If a consumer can open a bank account remotely, they will also expect to carry out other interactions the same way. Therefore, banks and FIs need to ensure that they integrate e-signatures throughout their product offering, so they can offer the same standards of remote experience and security throughout the customer journey.
The mortgage industry has been greatly impacted by stay-at-home orders. In many regions, homebuyers, surveyors, and inspectors are unable to visit properties, either putting mortgage approvals and closings on hold. At present, taking out a mortgage or loan often still introduces paper agreements or manual identity verification checks further down the line, resulting in a semi-automated or siloed process that negatively impacts the overall customer experience.
Once the crisis recedes, we can expect to see greater adoption of digital mortgage closings and remote online notarization. Like account opening, e-signatures can play a major role in digitizing these processes by removing the paper element and verifying identities, without compromising on compliance or security.
Moving to mobile banking
E-signatures can also be integrated into mobile applications to digitize that still require paper signatures.
For example, the Business Development Bank of Canada wanted to reduce the amount of time for an account representative to close secured and unsecured loans. By deploying an app with e-signatures included they were able to digitize loan applications, and significantly reduce or remove the need for in-person visits by 75-100%. As a result, the bank was able to offer a more innovative service, increase customer satisfaction and reduce the time it takes to close deals.
Accompanying financial services and banking customers during the COVID-19 outbreak and beyond requires that service providers rapidly adjust to enable remote operations. E-signatures do not only bring speed and simplicity to the process of opening accounts of signing contracts – they also bring transparency, a greater level of security and an improved customer experience. In combination with other technologies, they allow banks to fully digitize existing processes or add new capabilities, both of which will help them retain customers and stay ahead of competitors in an increasingly digital world.