Businesses worldwide have had to adapt to changing circumstances, from the ongoing pandemic to the war-induced energy crisis to the crypto market crash.
It is expected that the world will experience further changes in how people interact and live together.
These past two years have seen a marked shift in business practices. For whatever reason, business tends to move towards the unusual. Those who can adapt quickly are better prepared for the challenge. Banks and credit unions can smartly digitize core services.
Traditional in-person meetings were the best way to close business deals, including auto loans, mortgages, account openings, and other financial transactions. However, an electronic signature (eSignature) means you no longer need to sign paper contracts. This is what you need to learn about eSignatures and how they can help financial institutions.
What is an eSignature?
An electronic signature uses computers to verify the integrity and identity of a document. It allows signatories to accept or consent to the contents of a copy the same way wet signatures do.
You can sign legally binding contracts electronically with them without the need to print anything or use a pen. Businesses can save 70 to 80% on efficiency by switching to technology solutions such as e-signature.
Because you can sign papers remotely with electronic signatures, they are more convenient than traditional signatures. They are not dependent on the recipient's physical location. They can produce results in a matter of minutes, which saves time and money.
These are the steps required to provide an electronic signature for a document.
Secure Key Generation
E-signature technology uses secure private and public keys to verify validity. The keys used for electronic signatures are highly secure and unique. Only the owner has access to private keys.
Digital Signature of the Content
The private key is obtained immediately. Documents and other content can be signed digitally right away. Online tools are available to enable you to create a digital signature.
Confirmation of Authenticity
The public key and signature of the owner are used to authenticate electronic signatures. Electronic signatures are equal in importance to traditional signatures once the owner has been identified.
An organization must integrate e-signature software in its operations to do this effectively. The eSignature software allows users to create and use legally valid eSignatures for documents, web forms, contracts, and other purposes.
E-signature software allows documents, contracts, and web forms to be signed electronically. The platform allows users to use over 100 no-code robots to automate the process. An authorized head can also assign different tasks through the platform.
You can also enable the notification feature to let users with access to the program know when files are signed and ready for the next phase.
Legality of eSignatures for the Financial Industry
1999 saw the creation of the Uniform Electronic Transactions Act (UETA), which established the legal framework to ensure uniformity in electronic records and signatures for commerce transactions at the state level. Individuals can eSign to execute documents instead of using wet-ink signatures, according to the Act. An eSignature, in other words, will have the same effect and value as a pen-and-paper signature.
The UETA is closely linked to the Electronic Signatures in Global & National Commerce Act (ESIGN). The ESIGN Act, a federal law that settles disputes between states regarding eSignatures, was created in 2000. The Act established that electronic signatures have the same legal status and consequences as hand-stamped signatures. This means an electronic record or contract may not be invalidated just because it is electronic. This form of signature is legally binding even though it has existed for many years. There have been numerous court rulings supporting the validity of eSignatures.
7 Trends for Financial Services to Watch Out in 2023
Fintech is an industry that is rapidly expanding. Banks and other financial institutions can respond to customer needs and integrate new innovations. Many solutions are available, including lending apps, cryptocurrency exchanges, savings apps, investment platforms, money exchange tools, and investment platforms. These solutions are constantly evolving, which is why we will explore the financial industry market trends we expect to see in the months ahead.
Customer Data Platform (CDP) Implementations Will Help Banks Compete with Fintech and Rivals
Bank marketers have difficulty leveraging integrated customer data to increase customer acquisition and conversion rates. CDPs allow real-time data to be accessible and acted upon by marketing teams. This allows them to identify and present relevant stories and personalize product recommendations.
Customers use the bank's product ecosystem to navigate from online banking to in-app transactions to asking about their mortgage rates. It's important for marketing and bank product teams to understand these touchpoints. CDPs can identify and prioritize product strategy and priorities and help improve customer experience and cohesion within products.
A CDP is a great technology to look into if your bank's analytics are shaky and if you can't track users across mobile and browsers to create person-based insights and campaigns.
Generation Z is Too Valuable to Ignore
If your bank has not done so, it's time to invest marketing dollars for Gen Z (individuals born after1996). It is important to consider their future financial potential and willingness to spend. GenZ is more involved than any other generation in financial decisions that will secure their future. GenZ has been through the 2008 recession, followed by a pandemic. It's not surprising that they are seeking financial security.
Think about what is most important to them: the global and socioeconomic issues that affect their lives and their uncertain financial futures. This will help you gain their attention and loyalty. These platforms can be used to communicate authentically and will resonate with them.
Beyond that, reaching GenZ requires new tactics--gamification, influencer marketing, and invitations for in-person conversations should be integrated with your strategy.
The Metaverse is Happening. It’s Time to Face the Trend
McKinsey predicts that metaverse worlds will have a global impact of up to $5 trillion by 2030. In the first five months of 2022, brands have invested over $120 billion into the metaverse.
Although banks may doubt the Metaverse’s true potential, given the brand names invested in it and the technological advancements promised, it would be a good idea for every bank to analyze its viability with long-term growth goals.
Banks should not be distracted by the hype and allure of the metaverse.
Banks should think about the metaverse for a variety of reasons:
- Future customers: We discussed the importance of attracting Gen Z. You should also be aware of the next generation, Generation Alpha, individuals born between 2011 and 2025. They will be the richest, most educated, and tech-savvy generation ever. In just a few years they will open bank accounts.
- Gamification: In the same way that Web 2.0 made every company and brand a publisher, Web3 will make every brand a player in the entertainment market. While entertainment is still one of a new financial services trends for banks, you can be sure that it will drive future engagement.
- Brand Image: Early adopters are considered innovative, cutting-edge, and ahead-of-the-curve--qualities that people seek in their financial institutions.
- Customer Service: Face-to-face virtual experiences for customers will provide new levels of convenience. At the same time, banks can shift away from an FTE-in-branch mindset.
- Virtual banking The metaverse promises that "what's new, is old again." Imagine customers who have had only online/in-app interactions and can now show their digital faces to you in your virtual branch. You are now back in the world of customer intimacy.
For crypto investors and traders, this year has been an exciting one. The worst times saw $2 trillion in paper wealth disappear compared to the peak year.
However, this could be temporary and not permanent. This could be partly because blockchain technology is broader than it appears. Cross-border payments are a notable example.
Currently, international fund transfers are expensive and slow. These issues can be addressed with blockchain technology. It offers increased speed and security for international payments and typically lower costs.
Recent surveys revealed that more than half of consumers (52%) view cryptocurrency as a valid alternative to overseas fund transfers and that 45% have used it in this regard. Blockchain technology could prove to be a game-changer in this respect. There will be a silver lining if this is yet another dot-com bubble.
Artificial Intelligence is Not the Future—it’s the Present
Banks must find investment-worthy use cases for technology advances as smart technologies and AI (artificial intelligence) grow in consumer adoption. It's not technology-first. However, suppose you look at Bank of America Erica's strategy and try to copy it. In that case, it will leave you behind (and broke). Instead, identify your problems.
Banks use AI to address problems in risk management, credit card fraud detection and cybersecurity, new product development, customer services, customer acquisition, staff turnover, and customer service. Phase2 can help you brainstorm solutions if AI is a new concept in your bank.
Consumers are using AI to manage and access their finances. Robot advisors are now available 24/7, provide automated account alerts and incorporate natural language processing (NLP/SMS) services. This is part of the revolution.
The Demand for Self-Service Will Continue to Increase—Don’t Ignore It
The number of digital bankers in 2022 will exceed 200 million.
Bank leaders must ensure that their bank can service customers on all platforms. Customer convenience cannot be underestimated. Customers need to have easy access to all information, services, products, support, and other information to meet their digital needs.
Banks that invest now in digital self-service will reap long-term benefits. You will reap substantial benefits from reducing high-cost/low-value transactions, meeting modern customers, and strategically restructuring your branch footprint.
Your institution should design processes and platforms to support the increasing demand for digital self-service banking.
- Super app that offers a wide range of support and services, with an exceptional user experience that rivals any fintech
- A service portal that is easy to find and rich in content within the online banking platform. This goes beyond FAQs and uses AI-driven searches to understand the nature of a search query.
- Video banking integrated into ITMs (interactive bank machines), Universal Associates, and ATMs with advanced transaction capabilities
- Extended customer support hours and the ability for customers to contact customer support via mobile devices
- Chatbots and chat agents are available 24/7
The Covid-19 virus, which has been ravaging the world for three years, is now a serious threat to almost all corners of the globe. It has shattered local economies and businesses with every uninvited visit. A majority (79%) of bank executives claimed that they did not reduce capital for trade support in a survey from 2021. However, the global trade finance gap continues to grow, which is where alternative financing is available.
Alternative financing, also known as alternative finance, refers to nonbank financial institutions that offer business financing. They are not loans, however.
Revenue-based financing (RBF), for example, is a non-loan option. RBF funding is paid out as a percentage of the monthly business revenue and not in fixed payments with set schedules. Invoice factoring is another alternative financing option that allows businesses to sell their outstanding invoices for cash.
Although alternative finance has been practiced and a concept for some time, they haven't gained much popularity until the rise of e-commerce. Because online and young businesses are often considered "high-risk" by traditional banks, they are denied credit.
Alternative financing is now valued at $6.62 Billion and growing at 6.3% CAGR from 2022 to 2028. This sector offers promising prospects. Alternative finance is expected to play a greater role as fintech companies strive for financial inclusion.
Benefits of Electronic Signatures for Financial Sector
Electronic signatures have been widely accepted as a modern and efficient way to obtain signatures in most industries. Electronic signatures are becoming more popular as more businesses offer their services online.
We will highlight the many benefits of digital signatures for the financial sector.
Reduced Transaction Time
Transactions and processes can slow down when you rely on manual signatures. One example is Know Your Customer (KYC), which is required for the banking industry to verify identity details. This process can seem long if you're used to it. However, electronic signatures can make the process much simpler.
Digital signing eliminates the need to wait for customers to sign documents traditionally. You can also verify the identity of signers within seconds to ensure KYC compliance. Customers can sign in using their smartphone or tablet from anywhere and anytime. There is no need to go to the bank. These processes are completed in minutes, not hours or days, as with manual ones.
Automation and digitization reduce the time required to get signatures from multiple departments, which is one of the financial industry's most time-consuming and laborious tasks. Digital signatures will eliminate the need to print, scan, copy, and send contracts, loan applications, credit card applications, or other paperwork. Digital signatures are a great way to sign multiple contracts in one click. This reduces paperwork and improves organizational productivity. You can also send reminders or notifications to the parties involved if they have not signed a document, increasing collaboration.
Improved Customer Experience
It is crucial to provide flexible, efficient, and prompt customer service for the financial sector. Financial services customers are changing in a way that makes it easier for businesses to do business. Businesses are demanding more improvements in the:
- New customer’s retention
- Maintaining a competitive edge
- Improved customer communication and collaboration
- Transforming customers into ambassadors
- Stable client growth and repeat business
For any company that relies on signing contracts and other documents as part of their day-to-day operations, electronic signatures can make life easier for customers and businesses. Customers may be reluctant to use services or establish new relationships if paperwork and agreements are too complicated or time-consuming. Any difficulty in signing a contract is an opportunity to cancel it.
Digital signatures make it easier for customers to complete their transactions online. No longer are customers required to meet with the office to initiate processes or complete paperwork. This image portrays an innovative, modern organization that isn't wasting clients' time.
Transparency is an essential requirement for any financial institution. The eSignature implementation makes the lending process much simpler and quicker. This is good news for both the client and the lender. Multiple signatures are required for many loan applications. It can be difficult to see where clients are in the document signing when contracts are sent via fax or paper. Financial institutions can see where clients are during the signing process with eSignatures. This allows you to be more proactive and send reminders and notifications when necessary to ensure smooth transactions.
Improved Document Security
It is easy to forge paper contracts and wet-ink signatures. Plus, copies can easily be lost or stolen. Financial institutions can no longer worry about security when using digital documents or electronic signatures.
Electronic signatures are protected by encryption technology, making them impossible to be altered. Electronic signature solutions such as eSignly provide detailed auditing and tamper-proof features that enable financial institutions to identify any modifications made to electronic contracts after they have been signed or executed. Businesses can also use two-factor authentication (2FA) and knowledge-based authentication (1KBA) to request additional steps before accessing documents. This ensures that documents are secure and confidential at all times.
Organizations in highly regulated sectors, like financial services, must comply with stringent industry and legal requirements. Electronic signatures comply with all major certification bodies, including Soc 2 Type II PCI DSS and 21 CFR Part 11. eIDAS ESIGN and UETA. In addition, electronic signatures can quickly and easily identify documents, using detailed audit trails that show every movement, making it secure and tamper-proof. This allows for industry-specific compliances to be met faster and easier than ever.
Reduced Human Error
It is easy to make mistakes when you're handling thousands of documents. Signing in the wrong spot or pages can lead to errors. Information may not be complete, or all signatures may not have been obtained. Financial industry organizations spend millions of dollars each year fixing errors in documents. This is not to mention the time lost chasing down corrections. Financial organizations can almost eliminate errors in paper-based transactions by using eSignatures. Features include mandatory field completion, leading signers through signing and completion processes, providing detailed instructions on documents, and more. It's easy to correct mistakes and resend for completion in minutes instead of hours or days.
It takes a lot of time to input data, print forms, copy, scan, and convert change files into digital format.
Electronic signatures make back-office tasks easier by significantly reducing processing times. It improves staff productivity by reducing inefficiencies in document preparation and signing, encryption, tracking storage, retrieval, and storage. Businesses of all sizes in the financial sector have the unique opportunity for collaboration, efficiency, and time savings by digitizing their document processes and using premade templates and workflow-based electronic signing processes.
Digital signature software has many remarkable advantages in the financial sector. It reduces dependence on paper, overhead paper, printing, and mailing costs. Organizations can save significant amounts on document-related expenses by investing in electronic signatures. This allows them to repurpose the money and use it towards other company goals.
Considerations When Using Electronic Signatures for Banks
Banks and credit unions need to be familiar with the law to understand how electronic signatures 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 appetite 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. Hybrid models might be attractive. A bank may accept eSignatures for loan documents it holds separately, but will need physical signatures in any other business lines that cross state lines or involve separate entities.
Authentication Financial institutions may require identification verification to ensure that eSignatures are authentic. A Certificate Authority (CA) can do this. CAs 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 eSignature documents look like?
- What security protocols 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 eSignatures can be handled correctly.
The Key Takeaway
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 a successful business. Having the right solutions for customers is crucial. eSignatures allow financial institutions to offer more products online and provide transparency, security, and a customer experience unimaginable only a few years ago. It's crucial to stay on top of the technology changing how the industry and its customers interact with it.
The banking industry is now focusing on a digital platform offering the best customer service. E-signature software greatly reduces operational costs and environmental impact while providing a positive customer experience.
Electronic signatures are a crucial component of automation in the banking industry. E-signature technologies saved the financial system during the pandemic, when "wet signature" was unimaginable.
Banks can now have greater transparency thanks to e-signatures. It can be used to identify where clients are during the signing process. Bankers can quickly complete the paperwork online and can then proceed with processing.
Banks can increase customer loyalty and repeat business through E-Signatures. They create a digitally dynamic relationship that is personalized and responsive to customers.