How to avoid e-signature “gotchas”
By Mark Pfeifer
E-signature is a hot technology now in the industry; many community banks are adopting the technology to keep pace with consumer demographic preferences. If your community bank hasn’t already looked into using e-signatures, now is a good time to start. Community banks are in a good position to avoid compliance “gotchas” that early adopters learned the hard way when implementing e-signatures.
Of course, e-signatures are legally binding signatures made in a digital format by a person, including a borrower, on various desktop or mobile electronic devices. With e-signatures, it’s easy to be excited by slick user interfaces while underestimating the behind-the-scenes effort that’s required to keep one’s documents in compliance with myriad state and federal regulations. The question banks should be asking is, How do we implement the markup of the document at signature?
The signing system by itself doesn’t intuitively know where to put the signer’s name, initials, the date, etc., in the required locations. Although a bank could manually apply tags to every individual document, that option is too labor-intensive and open to error to be practical.
For the markup to be repeatable and automated, banks need templates. Many of the e-signature software options available today do provide this capability, but it’s a daunting task given how massive a bank’s forms library often is.
Delivery is also an important factor. As some early adopters learned, e-signature software doesn’t manage user identity and security well (or at all) and is designed to rely on another system, such as email or a portal. Yet banking always involves sensitive information with strict requirements about security in delivery. Some e-signature early adopters, therefore, were forced to make huge secondary investments in secure delivery systems to meet compliance requirements.
Although e-signature software might not be there yet, the answer is likely around the corner as compliance tech companies get in on the act. Increasingly, these vendors offer compliance content that has the appropriate e-signature fielding in place. Some offer an integrated e-signature engine in a delivery model that’s certified to CPI/NPI standards.
Mark Pfeifer (firstname.lastname@example.org) is enterprise product manager for Wolters Kluwer, an ICBA Preferred Service Provider in Minneapolis.