Sam Crook -Solution Sales, SigningHub by Ascertia
Technology'srapid rise is driving every company to search out new business models based on digitisation and automation.
Despite the banking industry's reputation for being resistant to change and slow in embracing new technologies due to regulatory requirements, nowadays the industry is keeping pace with new trends.
For example, an increasing number of financial organisations are testing robo-advisors for automating repetitive, complex tasks that until recently would have required significant resources and human input.
Paperless processes are another important part of digital transformation and something financial institutions are deploying to provide a better customer experience, cut costs and increase efficiency and productivity.
In fact, e-signatures – one crucial element of a successful transition to paperless banking–are gaining momentum in all industries and according to research the market could reach £2,590m by 2022.
But why are e-signatures so important for the financial industry in particular?
Because they help organisations reduce costs for one!
Even though an electronic signature solution sometimes requires a substantial initial investment, long-term cost savings far outweigh the initial cost.
Paper may seem affordable but when all its associated costs are added up, paper is actually extremely expensive.
Take a study that interviewedU.S. companies as an example. It found they typically print 1.5 trillion pages per year — that's a 95,000 mile-high stack of paper, the equivalent of nearly 20 million trees.
Companies also need to add printing and photocopying costs into their assessments, which within a large organisation can be significant, especially one as heavily regulated as banking with the need for full audit trails.
Another important cost saving that going paperless brings is storage. Companies that aren't using digital archives retain paper copies of signed documents in secure areas. This means the organisation has to invest significant resources and time into filing, storing, auditing and securely disposing of documents. Of course, if there are several parties involved the costs multiply exponentially.
Withe-signature solutions, documents can be stored in robust on-premise servers or in secure private cloud systems, eliminating the need for physical files, large document repositories and even security guard costs.
Next are the financial penalties relating to fraud and non-compliance. These are important to keep in mind.
Paper records can lead to gaps in compliance because it's so easy to alter signed documents as well as the fact that handwritten signatures can be easily forged.
Furthermore paper documents are easily lost or can be destroyed intentionally. This would lead to significant financial losses through fraudulent activity, expensive lawsuits or hefty regulatory fines.
Electronic signatures instead protect a document's integrity. With advanced electronic signatures designed to be secure and traceable, a change to even one character of the document's content would render the signature as invalid. The identity of the signer is bound to the document and cannot be disputed due to timestamp and identity verification measures.
Lastly from a cost perspective are the significant costs from having to circulate and deliver documents to various parties. Considering the volume of projects and customers a financial institution manages every day, paper delivery costs can be a significant burden on the company's bottom line while in contrast the cost of electronically transferring a document is nominal.
Another area that's improved by e-signatures is how people work together.
Paper documents need sending from one party to another and back again, resulting in days or even weeks before the documents have been circulated to all parties.
Electronic signatures cut document workflow cycles from weeks to days or even minutes by enabling all parties to sign the documents simultaneously no matter their location.
In this way financial advisors and staff can accelerate long, complicated processes and gain more time to focus on building customer relationships, trust and loyalty.
Stronger security and compliance
Both retail and institutional banks must provide customers and investors with the utmost confidence that their personal information will not end up in the wrong hands. This includes customer statements, investment authorisations, legal records and the swathe of other documents that underpin modern banking.
Qualified electronic signatures provide the highest level of trust and assurance because these use unique signing keys for every signer. This directly links the user's identity to the signed document and verifies their action, as well as being compliant with the EU eIDAS regulation
In addition to the evidence provided by the signature itself, solutions can also provide additional evidence in the form of detailed audit information on user actions (including precise dates and times of signing), IP addresses, authentication mechanisms, legal notices and signatures applied.
With the banking industry requiring the utmost security it is important to understand the difference between types of e-signatures and their validity. Basic, Advanced and Qualified Electronic Signatures can be used to address a variety of different use cases depending on whether user experience, trust or cost is the priority.
Reduced environmental impact
In the last 40 years paper use has skyrocketed by 400% with companies using about 4 billion trees every year to satisfy their paper needs.
The use of electronic signatures reduces the amount of paper generated from printing and mailing the documents, helping banks to reduce their carbon footprints and companies to achieve their environmental and CSR targets.
With these benefits in mind, amongst many others, it's easy to see why financial institutions are adopting e-signatures and positioning themselves strategically as paperless institutions.