January 18, 2020

The Impact of Electronic Signature Software In Businesses

For instance, when people are asked to sign a document sent via email, they print, sign, and scan it in to be sent. This is unnecessary with electronic signature technology, which enables us to use a pre-scanned image of our signature.

What Is Electronic Signature, or E-Signature, Technology?

The electronic signing process enables companies to obtain signatures quickly. Traditionally, when companies needed people to sign documents, they had to wait for the signer to take action. By the time they sent the document back or scanned it, there would be major delays. E-signature technology speeds up the workflow by allowing the signers to process the document immediately. They can sign the record as soon as they receive it via email. The software varies in implementation. However, it can be as simple as saving your signature, scanning it, and manipulating it in Photoshop (to remove backgrounds). Then, you can use the image whenever signatures are needed.

The Difference Between Electronic and Digital Signatures

One drawback of using electronic signatures is they can't be verified. If the image or technology gets into the wrong hands, your signature could be used to sign documents. Unfortunately, the documents are legally binding. In many instances, you won’t know your signature has been stolen until it’s too late. Digital signature technology can be verified, and this is the preferred mechanism for certain industries like healthcare and finance. A digital signature is an electronic signature that's cryptographically signed, making it much tougher for hackers to obtain the signature. The type of signature used depends on the use cases. If your documents are highly sensitive, you would probably choose digital signatures. However, smaller companies may not have the means to process these digital signatures. This makes using an e-signature a better choice. The Difference Between Electronic and Digital Signatures

Impact Of E-Signature Software On Industries

One of the best aspects of e-signature software or digital signature software is speed. Companies can expedite documents that would otherwise take days or weeks to process. Although electronic signatures aren't as safe as digital signatures, they are as safe as traditional means. This includes obtaining hard copies of signed documents. Electronic signatures are used in various industries that require signed documents. The following describes industries that will likely benefit from some form of electronic signature technology.

The Real Estate Industry

Real estate contracts require signatures to be legally binding. It’s unlikely that you’ll run into real estate transactions that don't require signatures, as they wouldn't be legally binding. Digital signatures can help speed up transactions and offer a secure legal mechanism to do so. The real estate industry is migrating towards smart contracts, which are contracts conducted on a blockchain (think Bitcoin).  However, recent events have shown that blockchain isn't as secure as when it first emerged. This constraint could cause the industry to continue its use of digital signatures.  The technology for cryptography is similar for both blockchain and digital signatures. The difference is in the implementation of these technologies. Blockchain is a distributed, decentralized infrastructure, whereas a digital signature is a standalone technology, albeit with standards. Digital signatures are acceptable to banks, real estate agents, and lawyers. However, county clerk offices may still require a hard copy signature, which subjects the buyer and seller to a traditional closing. It’s not known when county clerk offices will catch up with the technology, if ever. The Real Estate Industry

The Cybersecurity and IT Industry

If any industry should be early adopters of electronic signatures, let it be the cybersecurity and the IT industry. The players in this industry will likely be responsible for implementing e-signatures. They shouldn't only set the example but also will need to know how to provide implementations. They could implement internally or for external clients. IT consulting firms deal with contracts, and e-signatures could help streamline deals. It can also save money on all the components that hard copies require, like printers and ink, packaging and postage. Early adopters in the IT industry may add the technology as part of their product mix, opening the potential for a new business segment. As the need for this technology grows, these IT companies will be prepared for an influx of business.

Various Government Agencies

Due to the 21st Century Integrated Digital Experience Act, government agencies are required to make documents more accessible to the public. This includes electronic signatures. Several agencies have hesitated to implement the initiatives due to budget constraints. Further, legacy systems are not prepared to handle this new technology. This leaves the agencies scrambling to comply without the means to do so. Private industry is ready for the government to adopt the standards. Most e-signature companies, like SignNow, Docusign, and Adobe, all have solutions geared towards government documents, including tax forms and visas. Part of the problem for agencies is that many weren't sure of enforceability. However, SignNow states that e-signatures are legal and can be enforced in the courts. Some government entities are getting up to speed. For instance, Hawaii’s Office of Enterprise Technology Services has adopted Adobe Sign, which makes the process simple for most users.

The Financial Sector

Traditionally, banks required customers to physically sign documents to open an account. These signatures were matched whenever you signed checks to ensure the validity of account holders. With digital signatures, customers can open a bank account online. They need only sign the document electronically, and they are granted an account. Another benefit to digital signatures is that it serves as identification for customers. Bankers often ask for two forms of ID and your signature when you visit the branch. That isn’t necessary with a digital signature as it comes with verification baked into the process. When the complete account-opening process occurs online, potential customers have a greater chance of going through with opening the account. When banking customers learn that digital signature technology is difficult to break, it helps them trust the process. It uses multi-authentication factors which can detect even the slightest deviation and create alerts to the bank. Banking laws require banks to implement a concept called Know Your Customer (KYC). A banker must flag any transactions that aren't in line with the normal transactions its customers make. Digital signatures can streamline the process as the banks will know immediately when a transaction doesn’t make sense for a particular customer. The authentication process will likely fail before the transaction is attempted.

The Healthcare Industry

For most industries, companies must follow the law as defined by the Electronic Signature in Global and National Commerce (ESIGN) act. Where there are discrepancies at the state level, states will follow the provisions of the Uniform Electronic Transactions Act (UETA). With healthcare, however, the situation is further complicated by the implementation of the Health Insurance Portability and Accountability Act (HIPAA). This law aims to protect the privacy of patients. Medical practitioners are not usually required to obtain signatures for standard treatments, as this is a one-on-one agreement. HIPAA complications arise when patient information is being disclosed to other parties. This does require the signatures of patients. Unfortunately, the rules in HIPAA can be vague, which leaves both medical practitioners and patients confused about when signatures are required. Digital signatures are permitted under HIPAA, although there are no standards defined. In this case, both ESIGN and UETA would serve as the framework for medical practitioners to use electronic signatures from patients.

Our Final Take On Electronic Signatures

Technology continues to shape how we conduct business, and the increased use of electronic signatures is likely to continue. It’s crucial to understand that their use is legally binding. Some industries may require stricter standards, and digital signatures will meet that requirement. Currently, certain documents must be signed in the traditional manner. These include wills, repossession notices, and court orders, to name a few. Businesses and individuals will face challenges with e-signature technology. However, like anything else, the solutions will emerge from those challenges.  At Fora Financial, we are building a library of useful tips, guides, and resources to give business owners guidance. If you would like to be alerted whenever we publish new information, be sure to sign up for our newsletter. [cta-newsletter]