How to Use an Electronic Signature in Financial Institutions
Electronic signatures are a critical component of any corporate digitalization plan. There is a lot of interest among financial institutions (FIs) of all sizes in getting rid of paper and transitioning to digital technologies. Electronic signatures have been utilized for a range of use cases by retail and commercial banks, credit unions, lenders, and many other financial services firms. As digitization initiatives develop and financial institutions recognize the benefits in terms of customer experience, compliance, efficiency, and cost savings, they are seeking beyond early applications and ways to deploy fast. Those advantages apply to each commercial line, channel, and department inside the business.
Offering a fully digital account opening and onboarding procedure that can be accessed from any location and at any time has become a competitive advantage. The goal is to develop an end-to-end digital procedure that eliminates the requirement for the client to physically visit the branch to sign documents or produce a physical identity document. According to Aite Group senior analyst Tiffani Montez, account opening processes that are only partially automated result in significant churn rates ranging from 65 percent to 95 percent, depending on the product. This implies that the majority of applicants leave the online procedure in favor of another channel (such as a branch or contact center) or seek out another financial institution that permits them to finish the application process remotely.
The good news is that new and creative methods to digital compliance, such as electronic signature and identity verification technologies, provide the possibility of eliminating the requirement for verification and signature at the branch. And financial institutions are embracing these technologies at a rapid pace. Celent Research issued a report on the electronic signature deployment at BMO Bank of Montreal in 2017. Incorporation was the bank's first electronic signature use case.
According to the BMO Annual Report, the launch of a simplified contextual digital account integration is a unique service in Canada. BMO customers can quickly search, select and open an account on their smartphones in less than eight minutes. ”The BMO mobile client onboarding has been in production since 2016.
Even when online account openings require a handwritten signature for compliance reasons, remote mobile electronic signing is available. Major banks and financial services firms began testing mobile signature capture in the field in 2015. A multinational bank established a trial program to explore the creation of mobile accounts at airport kiosks. The bank created a customized iPad software with electronic signatures incorporated directly into the app, ensuring that the entire procedure is digital. The bank had used the same trusted deposit account creation procedure for many years, but when it came time to adapt the process to the iPad, the team took advantage of the chance to reduce needless processes and provide a simplified mobile experience.
Paperless account opening procedures, according to banks, significantly improve the first client experience by removing the need to wait while papers are produced or errors are addressed. When done remotely, the consumer has the extra benefit of being able to select when and where they transact with the bank.
The major approach for using electronic signatures in loans is with consumer and small company loans, as well as retail finance. Electronic signatures, electronic forms, and digital procedures are used to sign loan applications and financing agreements online, in the contact center, and in the branch, as well as to electronically send the numerous consumer disclosures at the heart of these processes. The value is straightforward. Keeping transactions completely digital and implementing workflow standards minimizes the possibility of document mistakes like missing signatures and data.
Electronic signatures also remove the time-consuming and inconvenient process of reworking documents, such as bringing a borrower back to re-sign paperwork that was not completed correctly the first time. By adding electronic signatures into its corporate and consumer loan processes, which was deployed in over 3,000 retail branches in 2011, US Bank has almost eradicated loan exceptions. As a consequence, the bank has cut the majority of its document processing expenses while exceeding compliance standards. and providing a better client experience.
We started at 70% of all loan account openings having e-signatures, and within a year we were up to 85%, which is where we stayed”, says Ron Eddy, an associate vice president for technology and operations at U.S. Bank.
However, the majority of electronic signature activity occurs in the internet channel, where the demand for immediacy is stronger to compensate for the high abandonment rates in loan applications owing to the paper's long processing periods. Customers typically use electronic signatures at a rate of about 100 percent through the online channel. For student loans, one lender used electronic signatures during the peak of the lean season, and it achieved a 99.9 percent adoption rate overnight, which has been constant since then.
Banks and retail loan providers throughout the world are experiencing comparable rewards. Offering electronic signature capabilities enables Secure Trust Bank in the United Kingdom, as well as global financial provider Hitachi Capital, to execute financing at the point of sale with the speed and ease of an online credit card transaction. The consumer signs their name on a tablet or other gadget at the store by pressing a few buttons, and the transaction is complete. This is a significant competitive advantage since it allows banks and financial services businesses to seal the deal while client interest is strong.
Business loans provide comparable advantages. Wright-Patt Credit Union (WPCU), one of the top 50 credit unions in the United States, turned to cloud computing to assist streamline its business lending process. The credit union used the electronic signature integration between OneSpan Sign and nCino, and as a result, its business loan team was able to fully exploit the efficiencies of an end-to-end digital process. WPCU quadrupled its business loan volume from 30 to 100 loans per month in less than a year utilizing the integrated solution, while improving the credit experience for its company members.“Our coordinators, the ones who prepare the document bundles and transmit them electronically, are more thrilled about this,” says Benjamin Miller, WPCU Business Portfolio Analyst.
Where WPCU’s Commercial Lending team used to spend 22 minutes preparing paperwork for signing by the member, they have now cut that time by 50% with the digital process. Their lenders have also seen significant time savings. On paper, lenders would spend on average 54 minutes conducting a loan closing “that now takes no time at all on their part.
Enabling remote electronic signature capabilities for mobile loan transactions is also becoming more important as financial institutions compete for the rising sector of mobile consumers first. Our clients often indicate that the change of their electronic signature lending procedures has:
- Reduce the application time from 8 days to 24 to 48 hours.
- Annual scanning and imaging expenditures for 26 million pages of loan paperwork were reduced by $1 million.
- 90 percent reduction in document errors.
- 80 percent of document handling expenditures were eliminated workflow optimization from 16 to 4 steps
- It enabled a bank to re-allocate 95,000 hours of bankers' work in order to sell additional loans.
- The necessity for manual administrative procedures has been eliminated.
Wealth management is another good technique for utilizing electronic signatures. The objective is to reduce the lengthy sales process (which frequently requires many meetings and high mistake rates) to a single session during which paperwork is completed face-to-face with the customer. Two topics arose from a recent CEB TowerGroup webinar on electronic signature developments in wealth management. For starters, clients want more simplified digital interactions. The second need is to provide advisers with the tools they need to provide the experience their customers expect. CEB claims that Consumer technology usage is high, but many advisors are not interacting with their clients in a digital manner.”
In a CEB poll of financial services and wealth management firms, 32% said that enhancing front-to-back client onboarding and using technology to increase multichannel customer interaction are the two most crucial topics. According to the poll, 34% of respondents prefer to utilize customer-facing portals or wealth management websites when acquiring new financial goods or services, while 62% of Gen X/Y customers feel technology helps them. to work more effectively with your financial adviser. RBC Royal Bank of Canada introduced electronic signature technology for their wealth management business line in 2012. According to Bank Systems & Technology, the bank's investment advisers spent more than 80,000 hours each year hunting for papers and rectifying mistakes such as missing signatures and data. The potential for human mistakes was high with hundreds of mobile investment advisors throughout the country handling millions of paper papers while on the road. To fix mistakes, the adviser would have to return to the client to gather missing signatures or rewrite the papers, for example. The solution was electronic signatures.
The ROI of the Bank's Electronic Signature Comprises the Following:
- Thousands of hours were saved in sales management, allowing consultants to concentrate on sales and relationship building.
- There are 75% fewer document mistakes.
- Annual administrative savings of $8,000,000
RBC has created the groundwork for further development of electronic signatures into other lines of business by automating its wealth management operations. In an interview with a former RBC Vice President of Digital Strategy and Customer Experience, According to James McGuire, Bank Systems & Technology, "the main difficulty for the product launch was building the solution architecture and processes for diverse sorts of transactions." However, bringing the solution to other aspects of the bank's business, such as branch retail transactions, will be considerably easier today. The bank has already begun testing the solution in certain of its branches and aims to roll it out throughout its whole branch network by the end of this year.
Another area of interest in wealth management is investment transfers. Tangerine, a Scotiabank business formerly known as ING Direct Canada, began providing electronic signature capabilities to clients at the busiest time of year for retirement investment. Their use case was a transfer permission form that consumers signed to transfer registered investments from another bank to Tangerine. During a 6-month period, the bank recorded over 1,500 electronic signature transfers. Tangerine consumers welcomed electronic signatures, with 65 percent preferring electronic signatures over paper ones. There was not a single mistake in any of those digital forms. The bank had a NIGO rate of 0%, which simply does not happen with paper.
Despite the complexity of the mortgage industry, digital mortgages are gaining traction. Electronic signatures are the appropriate way to bring the digital experience to the customer's house and make it simple, secure, and compatible as more mortgages and refinance migrate online for convenience and speed. Banks are integrating technology such as electronic papers, electronic signatures, and electronic disclosures, and are digitizing the numerous procedures involved in a mortgage transaction in stages. One of the first phases in the mortgage process that banks and lenders automate is the distribution of urgent disclosures via electronic means.
Wells Fargo, for example, has enhanced its digital mortgage process by allowing the electronic transmission of information for Home Equity Line of Credit (HELOC) applications. This was a good example of how to utilize electronic signatures since it allowed consumers to check disclosures through online or mobile browsers and keep the process moving without having to wait for a package to be sent in. paper. via mail. After that, Wells Fargo expanded electronic disclosure of information to all residential home mortgage applications. In addition, the bank made residential mortgage disclosures available via mobile phones. Then, in 2015, Wells Fargo introduced the opportunity to electronically sign a mortgage application for clients who preferred a paperless procedure.
Aside from legal concerns, client experience and competition from non-bank lenders are the two primary drivers of mortgage digitization. Non-bank lenders are rapidly implementing technology such as electronic signatures in order to become more nimble and acquire a competitive edge. Customers clearly prefer the ease of internet transactions. They reward financial service providers who allow them to connect with their loan officer, upload documents, accept disclosures online, and sign electronic forms using a mobile device.
Lenders have been able to reduce the time it takes to obtain a mortgage by more than half, from 45 to 55 days to less than 20. Signature Mortgage, for example, reduced the 7-10 day application procedure by having the application signed online and typically sent the same day. Almost all of your consumers (99 percent) prefer to sign their mortgage applications electronically. Signature Mortgage has experienced a 100% boost in income and an 85% drop in courier expenses since then, not to mention unsolicited comments and recommendations from clients who are amazed at how quick and easy it is to complete.
Commercial Banking & Treasury Management
Improving the customer experience for business loans and treasury management is prompting financial institutions to look for methods to make doing business with business clients outside of the branch more convenient. Signature Bank, situated in Chicago, is an excellent example. The electronic signature, according to American Banker, has decreased the time it takes for clients to enroll in treasury management services. “The bank sought to decrease the time and money necessary to include services for clients, a formerly time-consuming procedure in which clients had to apply their signatures in wet ink to paper papers sent through FedEx or print, sign, and return PDFs supplied via email.
The Treasury Management Services Framework Agreement was an excellent beginning point for another bank. This regional bank makes use of nCino, a cloud-based banking operating system based on the Salesforce.com platform. To get started with eSigning quickly, they used the pre-built OneSpan Sign for Salesforce connection, which allows a Salesforce admin within the bank to easily install the connector and bring eSigning capabilities to Salesforce in minutes. coding. As a result, bankers may begin delivering papers for signing right away, directly from their CRM platform.
ACH processing is another topic of interest. Businesses require an easy approach for the customer to sign the bank permission form from any place and device for operations such as an ACH withdrawal from a consumer's bank account. The issue with paper is that the consumer must be there to sign the form, have access to a fax machine, or have time to visit the post office. Businesses, on the other hand, may acquire signed authorizations faster by keeping the process digital and making it simple for customers to sign electronically on a smartphone, reducing losses and boosting cash flow.
There are several examples of how to utilize electronic signatures in the financial services business. Some financial institutions begin by using electronic signatures as part of a branch transformation effort. Others begin with high-volume self-service transactions online. A worldwide bank's wealth management business line was the first to use electronic signatures in its field sales channel. As part of a company digitalization plan, they continued to extend the technology to other areas of business for remote account creation, e-contracting, and other uses after demonstrating success and ROI.
Many institutions are introducing electronic signatures as a common service across the board. While a particular line of business may require an immediate solution, the company is likely to have a business requirement for digital business processes. Electronic signatures, like other capabilities such as centralized accounting or human resource services, are increasingly being provided as a service that can be used by any division. Internal silos are broken down, development time is saved, deployment is sped up, and a consistent user experience is created. No matter how diverse your company demands and objectives are, you may go digital and offer electronic signature capabilities as a shared service. Download this whitepaper for more information: Accelerate Your Business Digitization: Best Practices for Using Electronic Signatures as a Business Service.