Signatures – the Weak Link in the Chain

By Ronan Lavelle, ARX

Across the financial services sector – retail banking, investment banking, insurance, accounting and so on – the adoption of enterprise content management systems for handling electronic documents and records-keeping has been widespread.  Yet when a signature is needed – for example, by a customer for ‘Know Your Customer’ compliance, or internally for Sarbanes Oxley adherence – this automated approach typically breaks down, due to the simple fact that a document has to be printed out in order to be manually signed.  Recent research underlines this: according to YouGov, 80 per cent of businesses print out documents to be signed and the financial services sector is one of the worst culprits, with that figure rising to 94 per cent.

Ronan Lavelle ARX

Does it matter?  These issues should matter a lot to any organisation that cares about issues such as: creating seamless, automated end-to-end processes, ensuring the future traceability of signatures and reinforcing efforts to ‘go paperless’.  There’s also the equally important issue of efficiency: research by AIIM, the global association for information industry professionals found that organisations typically add one day to processes just to collect signatures.  YouGov’s research also found that 72 per cent of organisations experience delays due to the need to collect signatures.

The bottom-line is that for any financial services organisation that has invested heavily in workflow, BPM and document management systems, ‘wet ink’ signatures are the weak link in the chain.

So what’s the answer?  It’s possible to sign documents using electronic signatures (typically bit-map images) and these are sufficient in specific circumstances, but such signatures are not inherently secure or fraud-proof. This means that they are often not appropriate for the financial services industry, particularly considering the legislation and regulations with which such organisations must comply.

Introducing Digital Signatures
In recent years, another option has evolved: digital signatures. Their use is becoming more widespread to the point where industry experts including Forrester and Gartner predict that they will be a growth area in business technology. A fact that many people do not realise is that a wide variety of industry-specific regulations and country-specific legislation support digital signatures (a ‘wet ink’ signature is rarely the only option from the legal point of view).

In fact, it’s arguable that digital signatures are less prone to fraud and are inherently more secure than manual signatures using pen and paper.  Using authentication and PKI technology, the signature’s integrity remains intact regardless of where the document is sent or stored. Documents need never leave the organisation, remaining securely behind the firewall:  the only information that travels is a hash-code, which is created using encryption technology and is the only part that travels over the Internet.  In the event of this hash code being hacked, the information it contains is not usable by anyone other than the signature’s owner.

In the financial services market, example benefits include: the ability to demonstrate that financial trades have not been altered and to be able to ‘batch sign’ trades, which over the course of a year, could save a substantial amount of time.

Simon Reynolds is the Financial Services Business Development Director for Hewlett Packard.  He believes that digitisation of signatures is critical in the optimisation of paper based process.  “Financial services firms are facing challenging times with the growing demands of customers, new regulatory requirements, and strong industry competitors. The need for technology and automation in order to streamline processes is stronger than ever.  HP work with our financial services customers to optimize their flow of documents and information to help them reduce costs, improve efficiency, and deliver highly competitive, customer-centric services that help them retain and expand their customer base.

The signing process is the key to the execution of a legally binding agreement and is therefore central to the overall document or business process cycle.  Therefore, anything we can do to replace the traditional “wet” signature with a more efficient, more secure digital signature is vital to our efforts to replace paper-based processes with electronic ones and securely automating as many previously manual steps and procedures as possible”.

Signatures are used all over financial services organisations, including HR, finance, IT, sales and legal among other departments to eliminate the need to ‘break out’ of an automated process in order to print a document, sign it and then scan it back in (a process which obviously leaves a lot of room for error). In addition, they help companies establish a comprehensive repository of legally-binding signatures for future auditor and regulator inspections.

In fact, wherever workflow, BPM, CMS, records management, eDiscovery and document management systems have been implemented, digital signatures can improve their return-on-investment (ROI) by ensuring that processes remain seamless and automated from end to end.  AIIM’s research into the digital signatures market found that 81 per cent of survey respondents saw a 100 per cent pay-back within one 12-month budget cycle, with 25 per cent of those seeing a full ROI in just three months.

Implementing Digital Signatures
Having demonstrated the business case for digital signatures, what should buyers in the financial services market be looking for?

1. Does the document become tamper-proof following the signing process (the signature is invalidated if anyone changes the document)?
2. Does it support the systems and applications already being used in the organisation such as Microsoft Office, SharePoint, Oracle, OpenText, Alfresco, etc.?
3. Are the signers’ graphical signatures easily viewable so that readers can see at an instant if the document has been signed or not?
4. Can multiple signatures be added to the document and at different points in time?
5. How simple is the installation process, how much maintenance and training is required, and does the system support both server- & cloud-based implementations?
6. What about the user directory – does it integrate into the ones that are already in use in the organization (such as Microsoft Active Directory)?
7. What legislation and regulations does the system comply with – both industry and country-specific?
8. Can signatures be viewed and verified by any third party (in other words, recipients do not require access to the digital signature solution itself in order to validate)?
9. How easy is the system to use, especially for people who are not confident about using technology?  Can it be easily accessed on mobile devices such as tablets and smartphones?

What does implementation, total-cost-of-ownership and on-going overhead involve in terms of costs?  What is the likely return-on-investment timescale?

Regardless of any one specific solution, one thing is clear: digital signatures have a lot to offer financial services organisations, enhancing the efficiency and security of business processes and ensuring compliance with industry regulations and legislation, while reducing the paper mountain at the same time.

For further information, please download this free white paper: http://www.arx.com/resources/white-papers/10-Tips-for-Selecting-the-Best-digital-signature-solution.htm

About the Author
UK Country Manager is Ronan Lavelle, who brings 18 years’ experience in information, document, content, contract and workflow management technologies.  ARX is the provider of CoSign, the most widely-used digital signature solution in the world with millions of signers at security-minded businesses, governments and cloud services. CoSign was recognized by Forrester Research as the ‘Strongest Digital Signature Solution’ in the Forrester Wave: E-Signatures, Q2 2013 report.

By Ronan Lavelle, ARX

Across the financial services sector – retail banking, investment banking, insurance, accounting and so on – the adoption of enterprise content management systems for handling electronic documents and records-keeping has been widespread.  Yet when a signature is needed – for example, by a customer for ‘Know Your Customer’ compliance, or internally for Sarbanes Oxley adherence – this automated approach typically breaks down, due to the simple fact that a document has to be printed out in order to be manually signed.  Recent research underlines this: according to YouGov, 80 per cent of businesses print out documents to be signed and the financial services sector is one of the worst culprits, with that figure rising to 94 per cent.

Ronan Lavelle ARX

Does it matter?  These issues should matter a lot to any organisation that cares about issues such as: creating seamless, automated end-to-end processes, ensuring the future traceability of signatures and reinforcing efforts to ‘go paperless’.  There’s also the equally important issue of efficiency: research by AIIM, the global association for information industry professionals found that organisations typically add one day to processes just to collect signatures.  YouGov’s research also found that 72 per cent of organisations experience delays due to the need to collect signatures.

The bottom-line is that for any financial services organisation that has invested heavily in workflow, BPM and document management systems, ‘wet ink’ signatures are the weak link in the chain.

So what’s the answer?  It’s possible to sign documents using electronic signatures (typically bit-map images) and these are sufficient in specific circumstances, but such signatures are not inherently secure or fraud-proof. This means that they are often not appropriate for the financial services industry, particularly considering the legislation and regulations with which such organisations must comply.

Introducing Digital Signatures
In recent years, another option has evolved: digital signatures. Their use is becoming more widespread to the point where industry experts including Forrester and Gartner predict that they will be a growth area in business technology. A fact that many people do not realise is that a wide variety of industry-specific regulations and country-specific legislation support digital signatures (a ‘wet ink’ signature is rarely the only option from the legal point of view).

In fact, it’s arguable that digital signatures are less prone to fraud and are inherently more secure than manual signatures using pen and paper.  Using authentication and PKI technology, the signature’s integrity remains intact regardless of where the document is sent or stored. Documents need never leave the organisation, remaining securely behind the firewall:  the only information that travels is a hash-code, which is created using encryption technology and is the only part that travels over the Internet.  In the event of this hash code being hacked, the information it contains is not usable by anyone other than the signature’s owner.

In the financial services market, example benefits include: the ability to demonstrate that financial trades have not been altered and to be able to ‘batch sign’ trades, which over the course of a year, could save a substantial amount of time.

Simon Reynolds is the Financial Services Business Development Director for Hewlett Packard.  He believes that digitisation of signatures is critical in the optimisation of paper based process.  “Financial services firms are facing challenging times with the growing demands of customers, new regulatory requirements, and strong industry competitors. The need for technology and automation in order to streamline processes is stronger than ever.  HP work with our financial services customers to optimize their flow of documents and information to help them reduce costs, improve efficiency, and deliver highly competitive, customer-centric services that help them retain and expand their customer base.

The signing process is the key to the execution of a legally binding agreement and is therefore central to the overall document or business process cycle.  Therefore, anything we can do to replace the traditional “wet” signature with a more efficient, more secure digital signature is vital to our efforts to replace paper-based processes with electronic ones and securely automating as many previously manual steps and procedures as possible”.

Signatures are used all over financial services organisations, including HR, finance, IT, sales and legal among other departments to eliminate the need to ‘break out’ of an automated process in order to print a document, sign it and then scan it back in (a process which obviously leaves a lot of room for error). In addition, they help companies establish a comprehensive repository of legally-binding signatures for future auditor and regulator inspections.

In fact, wherever workflow, BPM, CMS, records management, eDiscovery and document management systems have been implemented, digital signatures can improve their return-on-investment (ROI) by ensuring that processes remain seamless and automated from end to end.  AIIM’s research into the digital signatures market found that 81 per cent of survey respondents saw a 100 per cent pay-back within one 12-month budget cycle, with 25 per cent of those seeing a full ROI in just three months.

Implementing Digital Signatures
Having demonstrated the business case for digital signatures, what should buyers in the financial services market be looking for?

1. Does the document become tamper-proof following the signing process (the signature is invalidated if anyone changes the document)?
2. Does it support the systems and applications already being used in the organisation such as Microsoft Office, SharePoint, Oracle, OpenText, Alfresco, etc.?
3. Are the signers’ graphical signatures easily viewable so that readers can see at an instant if the document has been signed or not?
4. Can multiple signatures be added to the document and at different points in time?
5. How simple is the installation process, how much maintenance and training is required, and does the system support both server- & cloud-based implementations?
6. What about the user directory – does it integrate into the ones that are already in use in the organization (such as Microsoft Active Directory)?
7. What legislation and regulations does the system comply with – both industry and country-specific?
8. Can signatures be viewed and verified by any third party (in other words, recipients do not require access to the digital signature solution itself in order to validate)?
9. How easy is the system to use, especially for people who are not confident about using technology?  Can it be easily accessed on mobile devices such as tablets and smartphones?

What does implementation, total-cost-of-ownership and on-going overhead involve in terms of costs?  What is the likely return-on-investment timescale?

Regardless of any one specific solution, one thing is clear: digital signatures have a lot to offer financial services organisations, enhancing the efficiency and security of business processes and ensuring compliance with industry regulations and legislation, while reducing the paper mountain at the same time.

For further information, please download this free white paper: http://www.arx.com/resources/white-papers/10-Tips-for-Selecting-the-Best-digital-signature-solution.htm

About the Author
UK Country Manager is Ronan Lavelle, who brings 18 years’ experience in information, document, content, contract and workflow management technologies.  ARX is the provider of CoSign, the most widely-used digital signature solution in the world with millions of signers at security-minded businesses, governments and cloud services. CoSign was recognized by Forrester Research as the ‘Strongest Digital Signature Solution’ in the Forrester Wave: E-Signatures, Q2 2013 report.