Digital Signatures Now | The Final Step for Paperless Finance
By: Tim Vasko
As soon as the initial explosion of home computers hit in the early 1980s and turned into a rolling cannonade, forward thinkers began to envision the promise of ‘paperless’ transactions and financial contracts. Today, nearly three decades later, this promise is finally starting to be realized. With all the advantages to going paperless, one burning question a lot of people may have is: Why did it take so long? Followed by the wonder; Are we really there yet?
The first step in the path to paperless transactions is pervasive computers. Despite the enormous early success and proliferation of home computers, the commonplace use of computers in businesses, and in homes did not really commence until the late nineties.
For paperless finance to work, pervasive computers were just the start. Even as most customers got to the point of having a computer at home, the majority of transactions that require a signature would still have taken place at the business, where historically only the customer service representative would have a computer. Most financial institutions had computer kiosks for customers to post their own transactions electronically. With the advent of smartphones and tablet computers, however, kiosks are unlikely to continue to be an advanced business solution.
The next important trend in the path to paperless transactions was common software standards and the ubiquitous availability of compatible tools to share e-documents, along with the Internet to transfer them. With the market penetration of smartphones and tablets and the ability to be online and computing through your phone, the final step to paperless finance is truly just the digital signature.
Digital Signatures, Some Surprising Advantages
In financial transactions, the use and accuracy of the digital signature over the web versus a paper signature is the key to success for a paperless environment in the exempt market. In a word – reliability is essential. Digital forms and signatures are at least five times more effective than paper ones as they more clearly and consistently provide:
3) Efficient filing
4) Immediate sharing
In the exempt market, the needs of the clients, firms, agents, issuers, and the regulations are met much more effectively through this paperless process.
Digital Signatures and the Exempt market
How do digital signatures meet exempt market needs? First, authentication is made possible – digital signatures are created on forms that are authentic – in other words we can trace exactly who created the form, and to whom it was delivered; there is a 100% ‘audit trail’ the minute the form is opened.
Second, digital forms and signatures are able to be monitered. With a digital form, our firm can ensure there is only one signature, and one related form. In the case of the exempt market this tracks the transaction between the Dealing Representative and the Investor.
Third, efficient filing is created – the form and the history of versions are automatically attached to the record of the client.
Fourth, immediate sharing allows representatives to click a button, which opens a task for compliance to check the form, and once checked by compliance (in the case of a subscription agreement for example), an issuer can then receive the form for their review and have an exact copy.
Fifth, the accuracy is exact. There are not any modifications that can be made, that are not clear on a digital form due to version control. So errors or changes are not possible without having a full ‘audit trail’ that shows exactly how the form was created and signed.
Digital Signatures and Authentication
But how can we really know for sure who is signing off on a transaction if it is just on the other end of a computer? A unique ID for the digital signature it tracked to every client and every IP address. The client, the representative, the compliance officer, the issuer are all connected to the internet with a unique ID.
Technology allows us to time and track every single step and record those in a secure data trail. Anything other than the original is a new version; any other copy is added to version control and does not overwrite the original. Since every piece of data is unique and has what we call in data management a unique key. An electronic signature, and the form that is signed, have a unique key – so the who, what, when and how of how the original was created is clear – as well as where it is stored or filed - including all of the people who have accessed or signed the forms.
The digital signature form, subscription agreement or trust documents, are stored in a database, like the 1to1 File Manager. Once they need to be accessed a time sensitive link is created and provided to the person who needs the form. Participants simply use their iPhone, iPad, another smart device, or their home computer and click to save. There is no time delay. Everything is tracked and instant. And it is auditable – using the same security and privacy as online banking. Digital forms make so much more sense.
Our society’s technology usage has come a long way. With technology from a GPS smartphone in our hand to a unique ID on every click we make – we can make use of all of this technology we now carry with us in our pockets to make everything more transparent and secure in transaction processing.
We now have the secure technology for the long awaiting potentials of paperless finance. Leveraging all the technologies that are now commonplace and bringing them together can make financial transactions a swift and seamless process. Industries like the exempt market are pioneering using paperless applications like 1to1eForms, but the rest of the market will soon follow suit, especially as they begin to recognize the true business cost savings, operational, and environmental benefits of paperless transactions.