In 1999, the Uniform Electronic Transactions Act (UETA) was signed into law in the United States. The UETA provided the first legal recognition and definitions for electronic signatures, also known as eSignatures. Later, in 2000, the Electronic Signatures in Global and National Commerce Act, (ESIGN), further defined the legal enforceability of eSignatures for U.S. contract law.

Today, eSignatures are widely used for eCommerce and commercial contracts, and the eSignature industry is expected by Markets and Markets to experience a compound annual growth rate of 32% between 2016 and 2021. Innovative banks and credit unions are now beginning to include eSignature capabilities in their mobile apps in order to improve the customer and member experience. In this article, we will detail several ways in which banks and credit unions can benefit from mobile eSignature technology.

1. Fewer Steps for Common Financial Services

Mobile eSignature allows fewer steps to be involved in common financial services. Fewer steps translates to less pain points in the customer experience and faster internal workflows. For example, in order to open an account without mobile eSignature, a customer would have to come into the bank, wait for a representative to be ready, wait for this representative to print their paperwork, wait for this representative to scan and verify the customer's identification, sign the documents, and finally wait for this representative to then copy the documents. After this, the representative would then have to file the documents and scan them into the financial institution’s back-end system. With mobile eSignature, the individual can simply sign the documents on their mobile device wherever they are located. Also, the individual's identity can be biometrically verified within the mobile app, and the document can be automatically and digitally sent to both parties after it is signed.

2. Enhanced Security and Authenticity

One of the initial concerns with eSignatures was that they would be more easily faked and less authentic than handwritten signatures. This concern could not be further from the truth; in fact, today, eSignatures are often considered more secure than handwritten signatures. Prior to an eSignature, a financial institutions’ mobile app can subject the user to dynamic knowledge-based authentication questions, two-factor SMS verification, and email-based session invitations. Additionally, biometric authentication such as fingerprint scanning, Face-ID, and even iris scanning can be performed using sensors in the customer’s mobile device. Additionally, features of the eSignature such as the force with which a user signs on their device, the time duration the user takes to sign, and the angle at which the user holds their device when signing can all be used to ensure the authenticity of the user signing the document.

3.  Increased Contract Enforceability

Related to the enhanced security and authenticity that eSignatures provide, eSignatures also allow enhanced enforceability for any eSigned contract or agreement. This is due to the digital “paper trail” and “audit trail” information that can be traced to each document. For example, details such as when the document was sent, when the document was opened, and when the document was signed can be traced for each involved party. Additionally, information regarding the device and location of the signature can also be tracked if required. In the event of a dispute regarding the validity of a contract, this digital paper trail can be used to prove the actions and intent of both parties. This data can help resolve contract disputes in the courtroom as well as help ensure that frivolous disputes are never brought to court in the first place.

Conclusion

Since 2000, eSignatures have become a vital pillar of eCommerce, online transactions, and contracts. Increasingly, eSignatures are becoming more common within financial institution’s native mobile applications, and financial institutions looking to stay on the forefront of fin-tech innovation will include such features in their mobile experience.  To read more about mobile trends in banking, check out our recent work with Belfius Bank here, or check out our article on the advantages of mobile video-banking here.