The financial services industry rests on a foundation of trust and tradition. However, fintech — the merging of finance and technology — has revolutionized how we conduct financial transactions. Digital signatures are one element of fintech that’s made it easier for financial institutions to do business with customers worldwide while offering a better client experience and enhanced security.
The Importance of Digital Signatures for Financial Services
Although mortgages, auto loans, and other financial transactions have historically been conducted in person, new technology allows people to handle most aspects of these transactions online, including signing finance documents. What is a digital signature? Digital signatures allow your customers to finalize business from anywhere at any time, making transactions faster and more convenient. Read on to learn more about how to create a digital signature and the benefits of a digital signature for financial services.
5 Benefits Of Digital Signatures in the Finance Industry
With advanced cryptography measures, digital signatures provide unparalleled security and authenticity, making them a game-changer in financial services. The 1999 Uniform Electronic Transmissions Act (UETA) gave online signatures the same weight and legality as “wet signatures” — physical signatures on paper contracts. Here are some of the biggest benefits of digital signature solutions on financial documents:
1. Enhanced Security and Fraud Prevention
Using online signatures for financial services offers a high level of security. Each signature is unique, encrypted, and securely linked to the signer, which makes it difficult to forge or alter. Some of the security measures implemented with electronic signatures include:
- Unique signatures: Every signer in a digital platform has a unique signature securely linked to them via unique personal data, such as a specific pattern of mouse movements or a signature drawn on a touchscreen.
- Encryption: Electronic signatures use sophisticated encryption techniques, often using blockchain technology that makes them tamper-proof. If you’re wondering how to insert a digital signature in a PDF, this is how it’s done securely.
- Identity verification: Before signing the document, signers may need to verify their identity by answering personal questions, entering a unique code sent to a verified phone number or email address, or using a digital certificate.
- Access control: Online signature platforms usually offer features that allow you to control who has access to the documents, such as password-protecting the document or only allowing specific email addresses to view it.
- Two-factor authentication: Many platforms incorporate multifactor authentication (MFA), which requires users to verify their identity using a second factor, such as a phone or email, in addition to their regular login credentials.
2. Automated Workflow and Approval Processes
With an electronic signature solution, you can automate the process of sending, signing, and managing documents, greatly simplifying your workflow. Once you’ve created a document and included all of the relevant information, such as name, email, and address forms, a link will be automatically emailed to everyone who needs to sign it. You can set up automated email reminders in case anyone forgets to sign. After the document — whether it’s a loan application or another sensitive document — is signed, you’ll be notified.
Some platforms also offer automatic review and approval for documents that need reviewing before they’re sent out for a signature. Once approved, the document will be forwarded to the appropriate people to sign.
You can store and access signed documents on your platform. You don’t have to worry about losing paper documents or keeping track of them on your computer since they’re securely stored in the cloud.
3. Tamper-Evident Audit Trails and Document Integrity
An audit trail is a date and time-stamped record of all activity relating to your contract. Audit trails verify and track many types of financial transactions. Some industries require audit trails for regulatory compliance, but even if they aren’t required, they’re always a good idea.
An audit trail contains specific information about each step of the signing process, including:
- When a document was created or modified and by whom
- When a document was signed, who signed it, and where they signed it, based on their IP address
- When the document was delivered to each person who signed it and when it was viewed
- Identify verification protocols
Document integrity ensures a document’s content hasn’t been altered or accessed without authorization. When you create a digital signature, it’s linked to the document and the signer. If the document is altered after it’s signed, the electronic signature is invalid. Electronic signature platforms also encrypt data so it can’t be read in transit and can store contracts securely in the cloud.
4. Adherence to Industry Regulations (e.g., eIDAS, SEC, FINRA)
Although electronic signatures are legally valid and binding, they do have to adhere to certain requirements. Most online signature providers comply with federal and industry regulations. These regulations govern the security and encryption measures used with electronic signatures to ensure they aren’t tampered with or exposed after signing.
5. Accelerated Transaction Cycles and Reduced Turnaround Time
The traditional signing process requires you to print, sign, and deliver paper documents, which can take days or weeks. You can handle online signatures almost instantly. Some other ways digital documents reduce turnaround time include:
- Instant delivery from anywhere with internet access
- Multiple people can sign simultaneously
- Documents are available 24/7
- Automated processes reduce document errors
Use Cases of Digital Signatures in the Financial Industry
Electronic signatures are used in almost all areas of financial services. Some of the most common use cases include:
- Loan and mortgage applications: Mortgages and loans typically involve a considerable amount of paperwork and require multiple signatures, which can be time-consuming and cumbersome. Electronic signatures improve efficiency as applicants can sign documents remotely from any device, eliminating the need to visit a physical branch. Documents are more secure and trackable, reducing the risk of fraud or errors.
- Account opening and onboarding: Online signatures improve the customer experience by allowing customers to fill out and sign account-opening forms from the comfort of their homes or offices. An efficient and seamless onboarding process enhances the customer’s first impression and relationship with the financial institution.
- Investment and wealth management agreements: Investment advisors must maintain a high degree of trust with their clients. In addition to being convenient, online signatures make investing and wealth management contracts more transparent and trackable, increasing customers’ confidence that their sensitive data and assets are well-protected.
Simplify Transactions With Seamlessly Connected Digital Agreements
With jSign, you’ll get immediate access to a dependable, industry-compliant e-signing platform for all of your financial services needs. You can automate the signing process to increase the efficiency of your workflow and provide your customers with a convenient, flexible option for all aspects of the document signing process. Sign up today to get started.