The last two years have been anything but business as usual. When business veers toward unusual — for whatever extenuating circumstance — those that adapt quickly have a leg-up on the challenge. For banks and credit unions, digitizing core services is a smart way to do this.
In-person meetings have traditionally been the standard way of finalizing business from auto loans, to mortgages, to account openings and more. But you don’t need to slide paper contracts across a desk anymore with electronic signature (eSignature) technology. Here’s what you need to know about how eSignatures work and how they help financial institutions.
In 1999, the Uniform Electronic Transactions Act (UETA) established the legal equivalence of electronic records and signatures with paper writings and signatures at the state level. To date, New York is the only state that has not adopted a version of the UETA. New York instead has the New York Electronic Signatures and Records Act (NYESRA), which provides that “an electronic signature may be used by a person in lieu of a signature affixed by hand. The use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand.”
The E-Sign Act was passed in 2000 as a federal regulation to resolve disputes between different state laws regarding electronic signatures. It says that each state may accept or reject guidelines in the UETA, but it must have some laws that validate electronic signatures.
The net effect of these rules is that every jurisdiction in the United States has substantially the same rules for the use of electronic signatures.
Beyond familiarity with the law, it’s important for banks and credit unions to think about how electronic signatures affect their industry in particular. Here are three factors to consider:
These considerations might require technology upgrades, internal training, or hiring new talent to ensure that eSignatures are handled properly.
Don’t let legalese deter you: there are major upsides to eSignature technology. The right tools can help financial institutions improve the customer experience. But first, let’s talk about some more practical matters. Strictly on the business side, eSignatures reduce administrative costs. For banks and credit unions, this might look like:
Additionally, eSignatures are more secure than “wet” signatures. According to the American Bar Association, eSignature technology leaves digital trails — the ability to see who, when and where somebody signed a document. Additionally, many eSignature tools offer digital encryption and identity verification methods (e.g. biometrics, multi-factor authentication, etc.), which reduces the risk of signature fraud.
Going digital doesn’t have to be black and white. For example, offering the convenience of signing a document with eSignature while providing access to help from a real human (as opposed to a bot), can be the perfect mix of digitization and a human touch.
A thriving business relies on customer loyalty and having the solutions to support those customers. eSignatures help financial institutions to bring more offerings online, and offer security, transparency and a customer experience that was unimaginable just a short while ago. As technology continues to evolve, it’s important to keep pace with the solutions that are taking the industry — and customers — into the future.