As Electronic Signatures Cut Your Paperwork Costs, Members are Better Served
The credit union industry is facing a transition - from paper-driven processes to an electronically enabled world, where paper is available where desired, but not necessary. Innovative firms are finding new ways to capitalize on the ability to capture and process their business electronically to reduce the costs and errors associated with doing things "the way they've always been done." We in the financial services industry are beginning to adopt electronic processing to capture the benefits of reductions in time, processing and storage costs, and increases in accuracy, convenience, information access and profitability. An increasingly technology savvy public is already using electronic signatures in various consumer and commercial situations. Extension into the credit union marketplace is not only inevitable, but necessary to maintain viability in the marketplace. This includes usage for everything from teller transactions to sales, loans documents, and back-office processing. Traditionally a pen and paper function, paperwork is shuffled from person to person, then off to the archives for storage. Even with today's imaging systems in place, many firms do not destroy the original document, choosing instead to pay for some form of long-term storage. This thinking is often influenced by conservative compliance or legal departments who are reluctant to embrace technology or are waiting for the "other guy" to go first. That's changing. In 2000, Congress passed the Electronic Signature In Global and National Commerce Act (ESIGN). This law greatly expanded the possibilities for leveraging electronic signature technology. The proliferation of companies specializing in electronic signatures and industry organizations like the Standards and Procedures for Electronic Records and Signatures is proof that we're beginning to see attitudes shifting. Paperwork begins and ends with the issuer and somewhere in-between is the consumer. Herein lies the dilemma: Without an ESIGN capability we find ourselves handling paper at the point of signature. We must provide the consumer with copies of everything they sign, but for those who first generate and subsequently collect and process signed documents, it is highly desirable to avoid the pen and ink, or "wet," signature step. True elimination of the wet signature brings significant savings opportunities. Besides the obvious savings in time and dollars spent at the copier, fax machine, or postage, opportunities exist in many other areas. Paperless processes can also facilitate use and collection of member marketing data. Leveraging this data for the mutual benefit of the credit union, trusted partners, and members saves time and money as it's linked into Customer Relationship Management (CRM) software, loan software, teller screens, etc. A common database can be used by all systems, eliminating the need for synchronization and reducing maintenance and privacy concerns. Feeds into ancillary systems like an electronic blotter, correspondence logs, etc. can also greatly leverage technology and make employees jobs easier and more productive. Employing "smart" paperless forms that are automatically pre-populated saves time for everyone. Pre-populated information merely needs to be confirmed before signing. Again, changes can be fed back so all systems are automatically updated. Use of dual monitors allows the member to review the data prior to signing, without the need for paper copies. Here's where an electronic signature device (ESD or signature pad) pulls it all together. ESIGN legislation is intentionally vague on what can be considered, or used, to secure a legally binding signature. It was written to allow for future technological advances and so no one methodology is favored over another. Private Key Encryption, click through online acceptance, signature pads, voice and other "signature" technologies are successfully deployed today. One key to implementation is following Patriot Act legislation and know-your-client rules. Adherence to this is, by nature, easier in a face-to-face transaction environment, such as commonly found in your lobby. Here, signature devices are a logical choice to use and are familiar to your members. Caution must be exercised so that signatures captured electronically are either associated exclusively to, or bound electronically with, a particular document and cannot be separated and used elsewhere. Storing signatures separately from the document requires limited access, encryption, and a documented chain-of-control process. Built-in date and time stamping encrypted with the signature is a common product feature. Depending upon your risk tolerance, a single signature might be allowed for multiple documents, saving time and effort, or the member may be required to sign electronically for each individual document. Appropriate up-front disclosures are recommended when one signature is applied to multiple documents. Once signed, the document can be submitted electronically for processing. The data fields on the document can directly feed the system(s) being interacted with, thereby saving labor, time and errors in having to re-enter the data, or just an image of the document can be submitted for manual processing. A combination of both methods ensures an image of the documents, with signatures, is available while reducing entry errors and labor. Further, when access to imaged documents is made available to authorized personnel, the need to print and store paper copies can be eliminated, saving valuable storage space and costs, while maintaining instant accessibility. Electronic work queue processing is also becoming popular. Submitted documents are electronically fed directly into the company's imaging system with no actual paper handling. While some firms tout a paperless process, it's here they often fall short by requiring electronically signed documents to be printed and then faxed for processing, defeating much of the advantage gained via electronic signatures. Management or oversight review can be accomplished without the need for paper. A clear unalterable indication that only the authorized individual completed the process is all that is needed to meet ESIGN requirements. Finding a solution that meets your credit union's individual needs and is compatible with your systems is very important, whether you attempt to develop it yourself or buy a vendor's program. Use caution in selecting partners. In this new frontier, you want someone who is going to be here for the long term, and who has expertise and value to add to your unique situation.