What are e-signatures and how do they work?
The COVID-19 pandemic has catalyzed digital transformation across the enterprise. Face-to-face transactions were no longer feasible and organizations needed solutions to move forward with digital activities.
With this rapid digitalization of workflows within enterprises, eSignature adoption has increased dramatically. In 2020, P&S Intelligence found that the estimated growth rate of the eSignature market was 39%, while research from Deloitte found that the impact of the pandemic on the way of doing business made the eSignature market one of the fastest growing in the world.
But what exactly qualifies as an e-signature and how do they work? There’s been some confusion on this topic lately, especially about what constitutes an e-signature and what the signing process entails – so let’s dive in.
Senior Vice President and General Manager for Digital Agreements at OneSpan.
What is an e-signature?
At the most basic level, e-signatures are legally binding and work the same as traditional handwritten signatures. The main difference between the two lies in the medium through which the document is signed. Both forms of signature provide lasting evidence of the signer’s intent, usually expressed as an intention to abide by the terms of the agreement. For example, when you buy a car, loans and contracts need to be signed; these documents can be signed in person with a handwritten signature or remotely via eSignatures.
With all this in mind, it is important to understand the difference between eSignatures and digital signatures, as these terms are not interchangeable. As mentioned earlier, an electronic signature, like its paper equivalent, is a legal concept. However, digital signatures are a type of e-signature that is based on encryption/decryption technology. Digital signature encryption secures the data associated with a signed document and helps verify the authenticity of a signed document.
The digitalization of our world is driving the adoption of e-signatures. They are inherently more convenient compared to handwritten signatures, given the time and resources it saves for everyone involved in a transaction. For example, a leading P&C provider struggled with a traditional process that was operationally inefficient and costly. After implementing eSignatures, they streamlined the paper application process from 52 days to 10 minutes. Additionally, they saved $10 per transaction, $200,000 in hard cost savings (in just 5 months), and $500,000 in labor costs.
How do e-signatures work? What do they offer?
eSignature offerings vary depending on the provider, but most solutions include everything from document creation to ID verification to transaction reporting. An eSignature solution can also improve compliance and reduce costs associated with paper documents (including paper, sometimes postage, ink, toner, physical storage lockers, etc.).
Depending on the eSignature provider, benefits may vary, but most organizations have similar offers, including:
Identity guarantee of the signer: Access a wide range of identity verification and authentication options to ensure signers are who they say they are before granting access to documents.
Simple integrations: E-signing integrations and workflow capabilities in the app or website with open API and fully supported SDKs.
Security: Protecting users and electronic documents against fraud with digital signature encryption. This manipulation seals documents after each signature and visibly invalidates documents if changes are made. Improved compliance: verification of the validity of the signed document and comprehensive end-to-end audit trails in the market.
Process efficiency: Digital transactions to streamline processes and eliminate risks associated with document errors, such as missing signatures and data.
Secure digital storage: E-safe that can maintain the integrity of signed documents throughout the term of the agreement.
Consider secure digital transactions
With more transactions taking place online than ever before, organizations need to be aware of the changing threat landscape. Since May 2020 alone, phishing attacks have tripled and increased 65% from the previous annual survey period. In addition, deepfakes and other forms of synthetic media are becoming increasingly sophisticated. Even though eSignatures have streamlined operations, without proper security the document, the signing workflow, and the signer are all at risk. Securing online transactions has never been more crucial. Therefore, organizations should focus on investing in reliable eSignature solutions. But what should they look for in a provider?
The bottom line is that when looking for a solution to manage your signing processes, it is important to ensure that it is based on digital signature technology to ensure the integrity of the document and underlying signatures. White labeling is also something you should look for in a provider. This term refers to adding an organization’s logo and customizing the email content/sender domain to reflect the organization’s brand. A fully branded transaction strengthens customer confidence and ensures you achieve the highest acceptance rates.
Conclusion
Signatures have come a long way since the in-person signing of documents and will only continue to evolve and become more unconventional – only time will tell. However, one thing is certain: the eSignature market embraces secure experiences that ensure the integrity behind digital transactions and agreements. They have already started to develop into a strategic asset to support organizations’ digital processes.
That said, it is possible to perform these secure transactions without sacrificing the customer experience. When it comes to choosing an eSignature vendor, identity verification and authentication should be integrated into the solution to protect the parties involved in a transaction.
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