The sign revolution is now

When John Hancock signed the Declaration of Independence in 1776, he wrote his signature large-so large, the saying goes, "that King George would be able to read it without his spectacles." Under the new E-sign legislation (The Electronic Signatures in Global and National Commerce Act) passed by Congress, John Hancock could have signed it electronically ensuring that there would be no doubt in King George's mind that not only was it signed by John Hancock but also the copy of the Declaration of Independence was unaltered and genuine. We are in a Revolution. E-sign is here and it's getting fair play in the popular press. Financial service companies everywhere are gearing up to offer a complete electronic experience for those consumers ready to try it. Vendors of services have already started their ad campaigns and conferences. Some lawyers are already wringing their hands about how vague the law is, while others are applauding the flexibility this law bestows. One thing is for certain; there is no going back. Credit unions need to make this electronic revolution work for their members. It has the potential of lowering expenses, providing better member services and faster introduction of new products and services. But like any revolution if you don't execute your plans well you lose. Where do you begin? You need to make an honest assessment of your credit union's overall eCommerce capability. E-sign, while a crucial and necessary component of an overall member-focused remote delivery strategy will only be useful if all the other pieces are in place and working. Thus, before you start talking to vendors about their latest and greatest eCommerce offerings, or signing up for conferences on how this new authority will finally set you free, review and update your technology plan. If your plan doesn't have components for: * online sign-up of new members, * opening of various accounts, * an interactive set of loan applications (for all your loan types), * basic home banking functionality (account inquiries, downloads, and transfers), * automated loan decisioning on at least one type of loan account, * delivery of members' statements electronically, * electronic storage of documents, then now is the time to make plans to add these components and integrate the E-sign capability. With your plan revised, it's time to start reviewing all the information you'll be receiving from your trade associations, lawyers, examiners, CUMIS Risk Management, your data processor, your Internet/homebanking software provider, your forms and ancillary systems providers. Will it be clear and lead you, with absolute certainty to an elegant solution. not a chance! But that's OK, we have been asking Congress and our regulators to give us more freedom and not dictate how we solve our business and technology problems. We did not want Congress to dictate a specific type of technology to be use in retaining, disclosing or signing documents electronically. E-sign provides no safe harbor by specifying the type of hardware or software to be used. It also forbids any regulator from requiring that a certain technology be used. Congress correctly recognized that technology will change must faster than it can react. Congress also believes there are sufficient market forces in place to "regulate" behavior. Nevertheless, Congress has put in some very minor safeguards for consumers such as verifying that the member can receive the disclosures electronically and the consumer does agree to receive these disclosures electronically. Since there is no requirement to use a specific technology your criteria will include: * ease of use by your members, * cost acceptable to implement, * ensures member privacy, * works across all your product and service offerings (e.g. credit card, mortgage), * renders the contracts signed irrefutable. Challenges and Opportunities The prospect of fully implementing digital signatures in the credit union system presents both benefits and costs. The costs consist mainly of: * Institutional overhead: The cost of establishing and utilizing certification authorities, repositories, and other important services, as well as assuring quality in the performance of their functions. (It's not clear who will come forward as the leading Certificate Authority for credit unions). * Subscriber and Relying Party Costs: A digital signer will require software, and will probably have to pay a Certification Authority some price to issue a certificate. Hardware to secure the subscriber's private key may also be advisable. Persons relying on digital signatures will incur expenses for verification software and perhaps for access to certificates and certificate revocation lists (CR.) in a repository. On the plus side, the principal advantage to be gained is reliable authentication of documents and disclosures. Digital signatures, if properly implemented and utilized offer promising solutions to the problems of: * Imposters, by minimizing the risk of dealing with imposters or persons who attempt to escape responsibility by claiming to have been impersonated; * Contract integrity, by minimizing the risk of undetected document tampering and forgery, and of false claims that a document was altered after it was sent; * Total Remote Delivery, by adding the ability for your members to sign documents and receive disclosures digitally members will no longer be delayed in joining, opening new accounts or getting a loan by a requirement of a wet signature. Here are a few questions you need to ask yourself as you review your plan of attack: Can I wait and see what my competitors are going to do? Will the members want it? Do I have all the information I need to make the decisions? How will my examiner react? How will I promote its use to the members? Do I have the right kind of insurance coverage to protect the credit union when something goes wrong? Can the credit union afford it? In the next few months you'll be offered a lot of answers to these questions. Don't delay in answering them.