5 Benefits of Electronic Signatures for Banking
The digital signature market is a rapidly growing segment of fintech expected to reach $25.2 billion by 2027. Given the massive amount of paperwork required in the banking industry, electronic signatures represent a significant opportunity for time and cost savings.
The Importance of Digital Signatures for Banking
In 1999, Congress passed the Uniform Electronic Transactions Act (UETA), making online signatures as legally binding as physical signatures (also called “wet signatures”). A digital signature for banking can greatly simplify opening accounts, borrowing money, and managing investments. Unlike paper documents, which can be difficult to track and rely on the people who handle them, digital documents are safe, accessible, and organized.
5 Benefits of Digital Signatures in the Banking Industry
If you’re wondering how to create a digital signature, it’s not the unintelligible scrawl you create with the mousepad.
While using a mousepad to “write” your signature is one method for electronic signing, the digital signature is a mathematical technique used to validate the authenticity and integrity of a digital document.
Electronic documents with online signatures let you conduct business with customers worldwide. At the same time, it provides a better customer experience with enhanced security.
Using online signatures for commercial banks and financial services institutions has several advantages.
1. Enhanced Security and Fraud Prevention in Banking Transactions
Electronic signatures are an ideal solution for financial transactions because they implement the following measures:
- Authentication and verification: Electronic signatures may require the person signing to verify their identity using email, SMS (text), or another form of personal identification. Some systems use biometric data or behavior-based authentication to verify identity, such as how a person moves the mouse or types on a keyboard.
- Electronic signature technology: Online signatures use cryptographic techniques for added security, such as blockchain technology or digital certificates issued by a trusted certificate authority (CA) to authenticate the signer’s identity. Any alteration to the document after signing invalidates the digital signature, providing tamper-evident security.
- Encryption: Encryption converts information or data into a code to prevent unauthorized access. Encryption also prevents your data from being read in transit.
2. Streamlined Customer Onboarding and Account Opening Processes
E-signatures simplify and speed up the account opening and customer onboarding process through remote operations. When signing electronically, your customers can set up accounts and onboard your services without visiting a bank branch.
Digitized paperwork also eliminates the need for paper documents, minimizing the chances of document errors, lost original documents, or delays due to postal services. Finally, electronic signature solutions notify you as soon as a document is signed and keep customers updated on the status of their application, improving communication and transparency.
3. Efficient Document Management and Workflow Automation
With electronic signatures, you can automate signature collection and track the progress of documents in real time with the following features:
- Digital storage, which facilitates quick retrieval and efficient document management
- Workflow automation through preprogrammed sequences
- Real-time tracking for timely follow-ups and automated reminders for forgetful customers
- Integration with other systems, such as customer relations and document management systems
- Version control to track modifications and guarantee you’re working with the most updated forms and agreements
- Reduced turnaround times and costs through more efficient use of labor hours and lower operational expenses
4. Regulatory Compliance and Auditability in Banking Operations
Electronic signatures are legally recognized and enforceable, provided they meet specific requirements. E-signature technology makes it easy to maintain regulatory compliance with the following features:
- Non-repudiation: Electronic signers can’t deny their endorsement of the information because they’re uniquely linked to their digital approval, providing strong evidence in legal disputes.
- Data integrity: Electronic signatures ensure the data remains constant during transmission by invalidating the signature if the document is altered.
- Audit trails: Every action associated with a document, including viewing, signing, or altering, is tracked and recorded when using electronic signatures. This audit trail includes timestamps, IP addresses, and device information. Altogether, this provides a comprehensive history compliant with financial regulations like the Sarbanes–Oxley (SOX) Act.
- Document control: You can combine electronic signature platforms with digital rights management to restrict what users can do with a document, such as printing or copying.
- Data protection compliance: Many electronic signature solutions include features helping users comply with data protection regulations, including the safe storage, deletion, and prevention of unauthorized access to personal data.
5. Improved Customer Experience and Convenience in Banking Services
Today’s tech-savvy customers are accustomed to the ease and simplicity of fintech products. 88% of U.S. consumers currently use digital technology to manage their finances. E-signatures improve the customer experience through several means:
- Convenience: Customers can sign documents anywhere, anytime, and on any device.
- Speed: By providing instant access to financial documents, you can eliminate the delays associated with posting, faxing, or hand-delivering paper documents.
- Transparency: With electronic signatures, banks can provide real-time updates to business customers about the status of their applications or transactions. This level of transparency can improve customer trust and satisfaction.
- Reduced paperwork: Digital paperwork is environmentally friendly — a motivating force for 72% of customers.
Use Cases of Digital Signatures in the Banking Industry
Online transactions are more the norm than the exception in today’s digital banking landscape. Some of the most common use cases for digital signature solutions include:
- Streamlining loan applications and agreements: The loan application process traditionally involves extensive paperwork, multiple in-person visits, and a significant amount of time. Digital signatures transformed this process by allowing customers to submit and sign loan documents online whenever it suits them.
- Facilitating account management and transactions: Digital signatures can authenticate online transactions and provide non-repudiation. A person can’t dispute the transaction once you have the signature. Customers can make change requests (like updating contact details or modifying account features) online with electronic signatures, guaranteeing the legitimate account holder makes the changes.
- Enhancing compliance processes and regulatory reporting: Digital signatures provide a detailed audit trail, mandatory for many transactions. Digital signatures can also authenticate reports submitted to regulatory bodies, satisfying legal requirements.
- Ensuring customer identification: As part of Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, banks must verify their customers’ identities. Digital signatures, especially those using certificates issued by a trusted certificate authority, can be part of the identity verification process.
Dependable, Industry-Compliant E-Signing for Banking
Electronic signatures are no longer a fringe offering but a standard part of doing business for banks. With jSign, you can meet regulatory requirements, improve customer satisfaction, and create a more efficient workflow.
Sign up today to enjoy the benefits of worry-free electronic signing.
