Electronic signatures: 3 benefits for banks

Implementing new technology can often be met with skepticism. Why fix something that isn’t broken?

By Kylee Wooten, Sageworks

However — competition and customer expectations are pushing many in the financial services industry to realize that just because it isn’t broken, per se, doesn’t mean it’s perfect. Take signatures, for example. It’s hard to comprehend that something as seemingly quick and simple as a signature can present a major obstacle to a financial institution’s speed and growth. But when you consider how many times a loan document has to be held up to wait for a signature, faxed or mailed to acquire a signature or checked for a signature before being pushed along in the process, it’s easy to see how the inefficiencies can add up.

In recent years, digital signatures have been widely accepted as the most advanced, secured and effective way to obtain a signature. With the influx of online businesses and brick-and-mortar stores taking their products and services online, it’s no surprise that electronic signatures have boomed. In fact, the digital signature is forecasted to see a compound annual growth rate (CAGR) of 26.5 percent over the next 5 years, and the primary driver behind the growth is through increased adoption in the banking, financial services and insurance sector, according to P&S Market Research. Banks and financial institutions that adopt electronic signatures can expect an array of benefits such as:


The lending process can be a long, drawn out ordeal, which can be equally frustrating to the customer and the institution. Many loan applications filled out by a borrower will require signatures from multiple people and businesses. When agreements are sent out on paper or via fax, it can be challenging to know where customers are at in the signing process. Electronic signatures allow for greater transparency for institutions to see where customers are in the signing process, giving bankers the ability to take action to move it along the process by sending reminder emails or sending it to a different signer altogether. As an added benefit, electronic signatures help foster customer satisfaction. When borrowers can utilize digital signatures, they don’t have to take time out of their schedule to head down to a branch to sign anything or turn any paperwork.


As they say, time is money. Digitizing the lending process from end to end gives institutions the capacity to take on more loans and grow their portfolio. In addition to saving costly time, electronic signatures also save institutions valuable dollars that go toward the costs of materials tied to underwriting. Think: paper costs, printing costs, mailing costs, etc. Any issues with the document? No need to reprint it and start over again if the bank is using electronic signatures. According to Ombud Open Research, companies that utilize electronic signature solutions save an average of $20 per document and reduce turnaround times by 80 percent. Electronic signatures help institutions save money, while also giving them more time to find opportunities to grow.


Paper documentation can easily be tampered with and signatures can be forged. Even if papers are locked away in filing cabinets, there’s still a risk of documents being stolen, lost or misplaced. Electronic signatures offer more security for signature verification and for storage. To verify individuals by their electronic signature, companies like Adobe Sign use encryption verification technology known as Public Key Infrastructure (PKI) technology, which offers the highest verifiable standard for identifying an individual. Once a completed copy of any document is signed, it’s returned right back to the sender.

Financial institutions are at a unique crossroads of needing to accommodate the growing evolution toward self-service, while still being expected to create personal relationships with customers. Electronic signatures help prevent the headaches and hassles of getting documents signed, while giving financial institutions the time to focus on their customers and their growth.



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