In the past, experiments to streamline the paperwork and processing times in banking required a significant capital investment. Now it seems the biggest hurdle to developing new technology is simply the ability to think differently.
Luckily for banks, that's the kind of work that customers are starting to do for them. It's a "Bring Your Own Device" world, where consumers are dictating how and when and in what medium they want to interact with companies.
Against that backdrop, the electronic signatures movement is gathering momentum in the banking industry. At least that seemed to be the consensus in January at the E-Signature Summit for Bank Executives, where Craig Le Clair, a principal analyst with Forrester Research, noted that customers want everything more streamlined now-and businesses are starting to deliver.
It's easy to see how e-signatures can be an efficiency play for banks and their customers. Using a finger and mouse pad instead of a pen and paper can help banks deliver money to customers faster. There's no need to wait for signed papers to arrive in the mail, saving up to 10 days in processing time for an array of transactions.
The e-signature movement got a boost earlier this year, as the IRS began accepting electroni- cally signed 4506-T and 4506-EZ documents for requesting transcripts of tax returns-part of the income verification process for nearly every mortgage and loan modification. But acceptance isn't the only hurdle to making e-signatures ubiquitous. Banks still have plenty of good questions about the associated compliance issues, and choosing the right technology provider may not be so simple. There are 42 companies currently providing multifactor authentication solutions for e-signatures, including Silanis Technology, a co-sponsor of the summit along with IBM. (The event was produced by SourceMedia, parent company of American Banker Magazine.)
Given the hurdles to implementing e-signatures, RBC Royal Bank dipped a toe in with a considered approach. Offering up a case study at the event, James McGuire, RBC's vice president of digital strategy and experience, said that the Canadian bank certainly thought about the challenge from an enterprise standpoint, to lever the company's assets without reinventing the wheel. But it made very targeted decisions as to where and when to implement the technology, starting with a business line that has a particularly complex environment: investment retirement planning.
In this business, the salesforce isn't particularly tech savvy and client interactions often occur in the customer's home. RBC wanted a foolproof, paperless process that it could roll out by the time Canadians started making their annual contributions to their Registered Retirement Savings Plans. Missing the deadline would mean missing the busiest season of the year.
Leaders in the business line and in informationtechnology worked closely with colleagues in legal and compliance to address regulatory issues.
Effectively managing all of the internal factions is as important as having a narrow focus and starting simple, McGuire said. When it comes to building out an e-signature system, "don't let [legal and compliance] design it because it won't work for your customers," McGuire said, "but understand what you can and can't do."
When RBC introduced the e-signature technology, the salesforce was able to explain the new process to clients, who liked the paperless procedure, McGuire said. RBC's savings came from the time and money not spent processing paper.
But there also are compliance considerations to take into account. David Whitaker, a lawyer in the Washington office of BuckleySandler, said that banks must be able to demonstrate that customer documents are protected, and that they can't be changed after they're signed. They also need to be able to demonstrate the process, down to the specific screen shots the customer sees, for putting an electronic signature on a document.
"You want to be able to show at the courthouse what the customer experiences," Whitaker said.
Rules for where to locate certain disclosures, or how to deal with undelivered email, for example, may be different than the regulations governing paper-based processes. And rules for e-signatures themselves may vary depending on whether the customer is completing the signature over a desktop, tablet or mobile device.
"There is no forgiveness [for violating] any requirement for disclosure given on a mobile device," Whitaker said. "Regulators say, 'Figure it out or don't do it.'"
By 2016, there will be 126 million tablets and 257 million smartphones in circulation, according to Forrester Research.
In a mobile-driven market, banks diving into e-signatures will need to think about where data will be stored, said Alan Varrasso, JPMorgan Chase's senior vice president of consumer banking IT, sales and service.
"If a device leaves the network or is unplugged, there's no data," Varrasso said. "We have to manage data on the device and [manage] how the application is accessed."
He argued that when customers enter information into a tablet instead of telegraphing their answers to a representative, there is opportunity for an interactive sales process and a more personal product offering. "The next evolution," Varrasso said, "is to introduce simple care transactions away from the brick-and-mortar experience."
But that's the funny thing about e-signatures and the rise of mobile: although the trends suggest that nobody will need to be anywhere specific to sign important documents, banks will need systems that include a way to address whether the customer was there-wherever "there" may be-when the document was electronically signed.
"E-signatures will never prevent identity fraud," Michael Laurie, co-founder and vice president of strategic planning at Silanis, said during his session on best practices for banks. "The main goal is to capture the intent ... and to be able to tie that person to the signature."
On Silanis' system, the final document has a hand-drawn signature with an optional watermark behind it, along with a third-party time stamp, and the system captures a page-by-page replay of what the customer has seen. By supplying its own audit trail, e-signatures eliminate some of the errors that can arise in the manual paper process.
Andrea Murad is a freelance writer in New York.
The E-Signature Summit for Banking Executives
When: Jan. 17, 2013
Where: Crowne Plaza Times Square, New York
For: Senior-level bankexecutives responsible for digital strategy, customer experience, mobile or online channels, legal issues, or risk management and compliance
* Adoption strategies
* Legal and regulatory considerations
* The impact of mobile