B2C Electronic Signatures Building Stronger Consumer Relationships Lewis D. Levey, President & CEO Computime, Inc.

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1 B2C Electronic Signatures Building Stronger Consumer Relationships Lewis D. Levey, President & CEO Computime, Inc. Throughout my personal experience in the electronic signature industry, I have watched the technology grow from back-office buzzword to a consumer-engaging global ecommerce tool. Electronic signatures are beginning to achieve heavier penetration within business-to-business (B2B) transactions. With recent penetration in the retail point-of-sale domain, businesses are starting to realize the true benefits of a paperless process. With much progress already behind the electronic signature industry, there is still a lot of territory to conquer: document-centric business-toconsumer (B2C) workflow. It is my belief that businesses can conquer this frontier by clearly understanding the signing process, workflow, and the specific challenges or barriers they face. During the past decade, the esignature industry has gained significant ground with the passing of the California Digital Signature Regulations (1998), the Uniform Electronic Transactions Act (UETA, 2000) and the Electronic Signatures in Global and National Commerce Act (ESIGN, 2001). Together, these Acts define terms and set guidelines regarding esignature use at the state, federal, and global levels. This legislation serves as a parallel foundation to the use and implementation of electronic signatures for commerce. The entire esignature industry has focused almost exclusively on B2B workflow. esignature solutions allow businesses to electronically sign, send, and receive nearly any document, any time, any where, slashing back-end and overhead costs, automating processes, and accelerating transactions between employees, suppliers, and partners. With a solid regulatory framework in place, businesses freely capture the benefits of esignature solutions, including Straight Through Processing. Since the birth of Public Key Infrastructure over thirty years ago, esignatures have been a fixture of business to business (B2B) workflow. To fully maximize their return, esignature solutions need to be integrated into the B2C environment as well. Businesses experience reduced costs, improved customer experiences, and faster, more convenient transactions, benefits which can then be passed to the customer. Both parties enjoy improved relationships. The introduction of paper at any point in the process significantly impedes workflow, preventing key benefits of Straight Through Processing and cost savings from being fully realized. Barriers to B2C esignature Success Three substantial barriers, both real and perceived, currently impede the integration of esignatures within B2C workflow: implementation, acceptance, and archival. Implementation Overcoming Technophobia Internal resistance to implementation can derail an esignature solution before a business begins to reap the benefits. As with any new technology, businesses must consider the amount of training and support required to ensure that all agents, cashiers, and other employees are comfortable and knowledgeable enough to use an esignature solution on a regular basis.

2 Acceptance Reducing Consumer Stigma Establishing trust among consumers is significantly more difficult today than in the past. The widespread fear of fraud and identity theft in today s digital society leaves consumers hesitant to put down the traditional ink pen in favor of high-tech esignature solutions, particularly in applications where signatures hold legal or financial significance. While the retail point-of-sale domain has done much to introduce esignatures to the general public, it has also done a disservice to the technology by devaluing the ceremonial act of signing. For example, many people scrawl or use an informal signature when signing at the point of sale. Archival Enabling Long-Term Storage and Retrieval One of the most important attributes of ink-signed paper documents is the ability to store the original document and retrieve it at a later date with both the signature and document contents intact and directly associated with one another. Many companies have turned to scanning and converting signed documents to images for storage purposes. An entire electronic document management industry has emerged, and today s archival processes are as simple and complete as that of a paper solution. Businesses need to be aware of these recent advances. To most easily overcome these barriers and successfully make esignatures part of any B2C workflow, businesses should choose an esignature solution that digitally replicates the familiar, comfortable, and universally accepted paperbound signing process. An overview of how and why the process works when using paperbound handwritten signatures can help us understand why. The Truth about Signatures How and Why We Sign Throughout recorded history, the signature has represented our identity, intent, and ownership on everything from greeting cards to court documents. In fact, the signature has been a cornerstone of both commerce and common law since the dawn of civilization. Simply put, a signature is the way you sign your name or draw a symbol that represents you. It is your unique creation, distinct and separate from how anyone else would sign either your name or their own. The unique way in which you sign your name the pressure on the stylus, the rhythm, timing, and sequence of each stroke, and the and overall speed produces a result as individual as your DNA. All signatures, no matter the type, serve to perform one or more of the following functions: Authentication asserts identity Document Integrity attests to document contents being unaltered Non-Repudiation prevents denial Risk Mitigation authentication risk and repudiation risk

3 Electronic Signature Capture Imitation is the sincerest flattery Stemming from the development of tablet PCs in the 1980s, handwritten electronic signature capture technology allows a signer to electronically sign their name using a tablet PC or a digitizing tablet called a signature capture pad. The device records the biometric characteristics of the signature and software then links the data directly to an electronic document, just as if it were a paper document signed with a pen and ink. Handwritten electronic signature capture is the most similar to ink on paper as it has the ability to most accurately recreate the process. Not only does it replicate the familiar and natural physical signing experience, but it also produces signatures that meet the same standards as paperbound handwritten signatures to accomplish the same fundamental purposes. Of all current esignature legislation, the California Digital Signature Regulations sets the most explicit standards for determining the legality of an electronic signature, including separate regulations for electronically captured handwritten signatures. According to these standards, electronically captured handwritten signatures are legally binding by virtue of the following properties: Unique to the signer cannot be reproduced by anyone else Capable of verification per California Digital Signature Regulations, biometric signature characteristics may be forensically analyzed Under the sole control of the signer cannot be attached to more than one document or reused at a later date Linked directly to the document - bound to the document in such a manner that changes to the document s contents invalidate the signature Handwritten electronic signature capture offers more authentication and nonrepudiation support than other esignature solutions by capturing the complex biometric characteristics of a handwritten signature and binding the data directly to the document. Some handwritten electronic signature capture solutions also provide a time and date stamp option that provides environmental context to the signing event. The most robust solutions even provide the tools necessary for signature authentication at two levels: instant visual comparison software for businesses and complex forensic verification software for professional document examiners. Breaking Down B2C Barriers In addition to providing esignatures that are equivalent to their paperbound counterparts, electronic signature capture tackles the three barriers to B2C esignature solutions in the following ways: Implementation Handwritten electronic signature capture technology is user-friendly and requires little training. The act of signing differs only from the paper process in that the signer uses a digitizing tablet and stylus instead of pen and paper. Tablets are typically small and portable, and easily connect to any computer.

4 Acceptance People generally do not hesitate to provide a handwritten signature on a paper document. Since the act of signing a signature capture pad feels very similar to signing a sheet of paper, (and let me point out that there is a difference in a pad intended for commercial use vs. the retail store pad experience) consumers are more willing to use electronic signature capture than other types of esignature technology, particularly in the case of legally or financially important documents. Many signature capture pads have LCD screens that display text and other contextual information as well for another level of signer comfort. Most importantly, electronically captured handwritten signatures meet or exceed the letter of all current esignature legislation, so consumers can be certain their signature is legally binding and secure. Archival Handwritten electronic signature capture technology not only captures signature data, it binds it directly to the electronic document in such a manner that any changes made to the document s contents after the signing event will invalidate or delete the signature. Both the original document and the signature data and linked together and saved as one file. When document access is required years later, there is no need to track down and match two separate files. Barriers at Work: B2C Transactions in the Insurance Industry A perfect example of the barriers to B2C esignature deployment exists in the insurance industry. While it has been estimated that esignature solutions can save an insurance provider with 1,000 field agents as much as $25 million over the cost of using paper documents, the industry was slow to adopt the technology due to difficulty overcoming real and perceived barriers. To fully understand these challenges, let us examine the standard signature-centric B2C transaction in life insurance workflow. Agent meets with Applicant to Conduct Enrollment Proceedings Discuss/Agree to Terms/Options of Insurance Plan Agent and Applicant Complete and Sign Enrollment Forms Signed Documents Sent to Archives for Storage Policy is Processed upon Approval Agent Submits Forms to Underwriters for Review Within the Insurance industry, the obstacles to esignature implementation manifest in the following ways:

5 Implementation The agent population within the insurance industry is largely comprised of aging Baby Boomers who are not typically computer savvy. Technophobia is common within this demographic. Acceptance Insurance documents contain valuable personal information and are of significant financial and legal weight; comfort, security, and legality are important to the consumer during the signing process. Archival Signed enrollment documents must be stored in such a manner that, upon retrieval, both the original document contents and the signature must be directly associated with one another. Despite these barriers, the insurance industry has successfully integrated esignatures into the B2C process by choosing a technology that closely replicates the universally accepted paperbound singing process. Handwritten electronic signature capture systems are easy for agents to use, comfortable and familiar to customers, and create securely signed enrollment forms that can be submitted, stored, and retrieved from archival intact. Conclusion The paperbound handwritten signature has been a staple of world commerce for thousands of years. The recent advent of the electronic signature offers businesses the opportunity to automate the archaic paper processes that slow productivity and inflate overhead budgets. Unfortunately, barriers stand between businesses and the final frontier of the esignature revolution, B2C workflow. By choosing to implement handwritten electronic signature capture technology, businesses can digitally recreate the traditional paperbound signing process. Both businesses and consumers can enjoy the improved relationships created by the reduced costs, improved customer experiences, and faster transactions of esignature processes without compromising comfort, security, or legality.