
Traditional signature meetings in person were the best way to close business deals and financial services. Electronic signature solutions, however, mean that you no longer need to sign electronic contracts.
This is what you need to learn about E-signatures in the financial industry.
The legality of electronic signatures in banks

The Uniform Electronic Transactions Act (UETA), which was passed in 1999, established the legal standing equivalence between electronic records and signatures.
New York is currently the only state to not have adopted the UETA. New York has instead the New York Electronic Signatures and Records Act, which allows for qualified signatures to be used in place of handwritten signatures.
An electronic sign has the same validity as a hand-signed signature.
In 2000, the E-Sign Act was adopted by Congress as a federal regulation in order to settle disputes between state laws concerning electronic signatures.
The UETA guidelines can be accepted or rejected by any state, but each state must have electronic signature-validating laws.
These rules have the net effect that all jurisdictions in the United States have substantially the same rules regarding electronic signature software.
Bank electronic signatures: What are the considerations?
Banks and credit unions need to be familiar with the law in order to understand how electronic signature technology will affect their industry.
These are the three things to keep in mind:
- Risk: It is important to balance state and federal mandates with your organization's appetites for risk.
Many banks offer collateralized loans or sell them.
What happens if an electronic loan signed in New Jersey under UETA was sold in New York? Think about your products and other lines of business processes.
Hybrid models might be attractive.
A bank may accept E-signatures solutions for loan electronic documents it holds separately but will need physical signatures for other lines of business operations that cross state boundaries or involve separate entities.
- Authentication: Financial institutions may require identity verification to ensure that E-signatures are authentic. A Certificate Authority (CA) can do this. They can independently verify the identity of customers before they sign and then produce digital certificates as proof. While community banks and credit unions may be able to become CAs, third-party solutions can often be a better choice at scale.
- Storage: Compliance goes beyond federal and state law. It is important to have technology in place that protects digital documents. These are some questions to think about:
- What will the storage of E-signatures documents look like?
- What security standards are used to protect these documents?
- How will these documents be shared or managed internally?
- What disaster recovery plans do we have in place for this? They are located where?
These considerations may require technology upgrades, training, or the hiring of new talent to ensure that E-signatures can be handled correctly.
The benefits of electronic signatures
Do not let the legalese stop you from using eSignature technology. Financial institutions can improve customer experience with the right tools.
Let's start with some practical details. eSignatures are a business-oriented solution that reduces administrative costs. This might be what E-signatures look like for banks and credit unions.
- Reduction in signing process time for loan applications and account openings
- Reduced document errors
- This reduces administrative burden and allows you to spend more time building customer relationships.
- Scanner, imaging, and storage of paper documents at lower operational costs
ESignatures are also more secure than "wet-ink signatures". Digital trails are left by eSignature technology, which allows you to track who, when, and where someone signed a legal document.
Many eSignature tools also offer digital transformation encryption and identity verification e.g. biometrics, multi-factor authentication, etc. This reduces the chance of wet signature fraud.
Digital doesn't always have to be all black and white. The perfect combination of digitization and a human touch can be found in the ease of signing documents with eSignature.
Customer loyalty is key to successful business growth. Having the right solutions for customer satisfaction is crucial.
eSignatures allow financial institutions to offer more products online and provide transparency, security, and a customer experience that is unimaginable just a few short years ago. It's crucial to stay on top of the technology that is changing the way the industry and its customers interact with it.