Voltaire's mantra (or Spiderman's, if you prefer)—"With great power comes great responsibility"—could be the overriding theme of the financial industry's new digital age.
In order to maintain its powerful position in society, the financial industry must meet its responsibility to operate more efficiently. That means streamlined onboarding, documents being in good order and straight-through processing, all of which are thwarted by the industry's notoriously paper-intensive workflows. Digital processes authorized with e-signatures can solve this problem, and the benefits extend beyond faster processing and higher accuracy to include substantial cost savings in paper, shipping and storage.
Because the financial services industry also has the responsibility to protect clients' personal data (and to protect company liability under the Gramm–Leach–Bliley Act), advisors and firms must navigate the e-signature landscape carefully to assure that the solution chosen is secure and valid today and far into the future.
Here are four key questions to ask potential vendors to assure that you choose an e-signature partner that meets this criterion.
1. "Where will data and documents live?"
Many people don't realize that all e-signatures aren't the same. For example, "dependent" e-signatures maintain the evidence supporting an e-signature's validity on a vendor's server, accessed via a link in the signed document. This means evidence must remain on that vendor's server indefinitely and can only be accessed with an Internet connection. You may be able to download a document, but the evidence behind the signature will always be linked to your vendor. "Independent" e-signatures permanently embed the evidence of an e-signature's validity directly into the signed document. This means that your documents and supporting e-signature evidence don't have to stay on a vendor's server, and evidence of a signature's validity can be accessed offline.
Convenience aside, in an environment where hackers always pose a threat – something that is not likely to change in the future – eliminating a potential access point to data, documents and evidence is critical to mitigating risk.
2. "How are signers' identities verified?"
Identity authentication is imperative to electronic signature verification, as it assures that the person intended to receive and sign a document is, in fact, the person who does receive and sign it.
Discuss authentication methods that your transactions need. Should your documents include account numbers, personal data or other closely held information, using the highest means of authentication available may be important. This includes knowledge-based authentication (KBA), which requires signers to answer a series of multiple-choice questions based on information pulled from public databases that wouldn't easily be known or gathered by others, such as asking you to choose your past addresses or pet vaccination records from a list that includes both true and false answers.
