Electronic signatures – the key to unlocking digital transformation?

John Hunter, Head of Banking and Fiduciaries, Finance Isle of Man, spoke to Chris Corlett, Head of Business Development with MBS, an IT solutions provider based in the Isle of Man with over 300 clients in 39 countries and over 7 years of experience of implementing electronic signatures, on the importance of e-signatures and whether they are the key to unlocking digital transformation.

John:  I know you are a strong advocate of electronic signatures. Why are they so important?

Chris:  Digital transformation requires digital information, including signatures. Electronic signatures enable you to digitise a key element of many processes, including contracts with clients, suppliers and staff.

John:  What are some of the key benefits of e-signatures?

Chris:  This is my favourite question! Relative to pen and ink, leading electronic signature systems are:

• Faster– for example, over 60% of documents sent with the market-leading e-signature system DocuSign are signed within an hour of sending, over 90% in a day
• Cheaper– as they avoid substantial costs for post, couriers, paper, printing, storage and retrieval, plus the time and effort spent chasing paper signatures
• More secure– the leading systems have proven security and are far more secure than ink signatures which can be forged
• More transparent– the leading systems give you a full audit trail of all activities. For example, DocuSign notifies you immediately of when a document is opened and again when it is signed
• The clear preference of customers – 58% prefer digital options, only 12% prefer paper
  (based on surveys of 5,000 Europeans in 2017). It is older people who favour paper, so this 5:1 ratio will continue to grow.

The experience of MBS’s clients shows these benefits in action:

• Maitland Group is a Maitland is a leading family office firm providing services to wealthy individuals worldwide. As a result, securing ink signatures can take weeks and involve significant costs. Maitland has used DocuSign to speed up one of their client processes from what was typically three weeks to a day now – sometimes within an hour – greatly improving customer service.
• Glasgow Credit Union is the UK’s largest credit union. It implemented an IT solution integrating several systems including DocuSign. This reduced the new loan processing time from several days to typically under an hour. This delighted customers, resulting in the number of new loans doubling within a year with no additional staff needed.

I have worked in IT-enabled business change for 30 years. In that time I have seen countless IT systems that can raise productivity and save money – but very few that can help to grow revenues like this.

This is also backed up independent analysis, for example Forrester Research published analysis in 2018 showing DocuSign delivers:

• Payback period of less than 6 months
• Return On Investment of 120%.

As a result, the electronic signatures market is forecast to grow at 35% annually for the foreseeable future. If you have not already been asked for an electronic signature before, expect to be in 2019.

John:  Impressive. So why isn’t every business using e-signatures?

Chris:  In a word: trust. Ink and paper signatures have been the bedrock of life for hundreds of years, from securing a driver’s licence to getting a job to buying a house, as well as for any business to provide a service to its customers, our signature on a piece of paper has been essential. Until now. So moving to e-signatures feels scary to many people and businesses. They want to be absolutely certain it is legal, secure and works for their customers, suppliers and staff before they switch.

More and more people are seeing e-signatures in their lives – we are reaching critical mass. Almost all of the world’s largest companies now use e-signatures – indeed the majority use DocuSign. For example, anyone renting a property in the UK recently through a professional agency will almost certainly have been asked to sign the tenancy agreement with an e-signature. Awareness and experience are building knowledge and trust.

John:  So… are they legal?

Chris:  Yes. e-signatures are explicitly legal in 188 countries and many other countries recognise them as legally binding if both parties enter into them willingly. E-signature legislation came into force in the EU in 1999 and in the USA in 2000 with many other countries following shortly thereafter. The Isle of Man Electronic Transactions Act took effect in 2000. So they have been legal for some time and tested in Courts around the world.

Linklaters is one of the world’s largest law firms and uses DocuSign extensively, which I find comforting!

John:  But are they recognised and accepted by regulators?

Chris:  Yes. At first regulators were slow to recognise e-signatures, but most now do so. For example, the IOM Financial Services Authority has confirmed it accepts e-signatures subject to meeting its wider regulatory requirements.

E-signatures are not valid for all transactions – for example, UK law requires a contract for the sale of land in England and Wales to be in writing and signed in ink. But much of this is due to old law written before e-signatures existed and most countries are updating legislation to address this. For example, the EU is actively encouraging all Government bodies of Member states to utilise e-signatures. The European Court of Human Rights already uses DocuSign for half a million documents a year.

John:  Are e-signature systems secure?

Chris:  Yes, the leading systems are very secure. A good starting point is to ensure the systems you are considering meet international standards. For example, from 1 July 2016 the EU enforces its eIDAS (Electronic Identification and Trust Services) regulations; for an ‘EU Qualified Signature for legally regulated EU transactions’, eIDAS specifies 8 international standards that are acceptable. The best e-signature systems will meet most – if not all – of these standards. DocuSign meets all.

xDTM is the first standard of its kind to focus on Digital Transaction Management. It was developed to raise the bar on quality and promote more trust and confidence in conducting business transactions online. The standard ensures that digital transactions are protected yet accessible, regardless of where parties reside or the devices used. DocuSign is certified compliant with the xDTM standard.

The system provider’s wider information security standards are also important. ISO 27001:2013 is generally regarded as the highest level of global information security assurance available today. DocuSign is ISO27001:2013 certified.

Leading systems will include multi-factor authentication, so that a signatory must provide more than just his/her email address. SMS is a common second factor whereby the document can only be opened if a code is provided that has been sent to the signatory by SMS message separately from the emailed link to the document.

John:  For anyone new to e-signatures, where should they start?

Chris:  Switching all of your contracts to electronic signatures sounds scary – but it needn’t be.

The key is to take small steps. For example, I recommend you:

• Take up a demo with a leading e-signature system to see it for yourself
• Get an appropriate member of your management team to do the due diligence on e-signatures, including talking to others who are already using e-signatures. Share your findings with your Board to build knowledge and trust
• Take up a free trial and use for internal approvals to increase knowledge and trust
• Implement with a small number of trusted suppliers and/or customers to build your knowledge and experience
• Build the business cases for e-signatures for each use case and then prioritise based on benefits and risk management
• Roll out in a controlled, phased manner to all staff, suppliers and customers.

This is just a suggested action plan. MBS has worked with a range of clients over the past 7 years to implement DocuSign e-signatures in the right way for each organisation.

As I noted earlier, trust is key for you and your customers, suppliers and staff. Use a trusted and well-known brand with a proven track record to accelerate trust.

Whatever you do, don’t ignore e-signatures – they are here to stay.

If anyone would like to know more they are welcome to email me at sales@mbs.im

John – Thanks Chris, really interesting developments as we seek to grow the use of e-docs throughout the Island.

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