then forward it, was and continues to be inefficient. It makes sense why we have seen an increase in the number of digitally signed documents and agreements. Now, with the rise of electronic signatures and digital identity verification, we can sign and authenticate documents with just a few clicks of a button.
But there is just one problem – the need to verify the legitimacy of an electronic signature. Can we really trust the other party involved?
Before the introduction of technology in the financial and legal sectors, as businesses, we were relying on physical signatures, notarizations, and overall a lot of paperwork to verify the identity of the signers. So, the entire process was tedious, time-consuming, and, frankly, quite frustrating – especially if we needed to get a document signed quickly. We’d have to physically mail or fax the document to the signer, wait for them to sign it, and send it back.
Not only that this process could take days or even weeks, but we had no guarantee that our signer was who they claimed to be. After all, falsification or alteration of signatures have been done for years. This was a problem in itself because the chances of fraud increased even more. Since signatures could be easily forged, it was difficult to determine the authenticity of a document, and we’d have to take the other party’s word for it.
Although we had these issues at hand, it is still considered by most a safer way of signing documents than electronic signatures. And it makes sense – especially if we’re signing a document in person, at least we have something tangible to hold onto.
The reality, however, is that electronic signatures are safer than we might think.
Before we start using the terms interchangeably, let’s see the difference between digital signatures and electronic ones. In the case of eSignatures, the US Federal ESIGN Act defines it as an electronic sound, symbol, or process that is attached to a record and executed by a person with the intent to sign it. In other words, this can be as simple as typing our name into a document or using a digital signature tool like Docstrat to apply a signature.
On the other hand, however, a digital signature is a more refined version of an eSignature. It uses encryption technology and requires specific verification processes before a person has a personal digital signature. Digital signatures are based on a system of public and private keys, which are unique to each signer and provide an extra layer of security to the signature. So, there is a high level of risk regarding fraud and reputation being ruined by not paying attention to the validity of an electronic signature.
However, digital signatures have a certificate that can attest to authenticity in case of need.
The certificate of authenticity is usually assigned to us by a Certificate Authority. This works based on a public key infrastructure (PKI) that uses encryption to make sure we leave a trail/a string of data every time we put our mark on a deal. Suppose anyone tries to copy or change the document. In that case, the public key is going to disappear, and in this way, one can prove the false document.
Now, some companies specialize their service in providing easy, trustworthy eSigning processes. Companies like DocuSign, PandaDoc, or Docstrat are extremely useful if we want to assign a third party to ease the process of getting a verified signature. However, the financial sector is facing lots of regulations and policies like the imposed KYC protocol. This only makes sense since we want to feel like we are not leaving any doubt when dealing with money.
Banks are collaborating with third-party software like the ones mentioned above to provide an easy extra layer of trust for their customers. In this way, both parties get a better feeling before digitally signing a document, knowing that the bank is taking safety protocols seriously and also knowing that the customer signing is a real person.
The process of creating a digital signature through a third party should be trouble-free.
We can imagine a lot of cases and industries, besides the financial one, where we, our companies, and our customers could benefit from the safe environment created by companies like DocuSign. From HR departments in big and small companies to even hospitals that undertake online appointments. Using these kinds of software and assigning them the technical part of the process of digital signatures, processes are moving faster and more efficiently.
We even have the opportunity to choose which level of security we need our customers and employees to go through. There are 3 possible scenarios that we can face: a simple electronic signature, an advanced electronic signature, and lastly, a qualified electronic signature.
When we refer to a simple electronic signature, we mean that this is the minimum security you can take. It requires something as simple as a person writing their name at the end of a document. The most secure way you can make a simple electronic signature is by adding a password that the person signing the document needs to put in at once.
When using advanced electronic or digital signatures, we start talking about an extra layer of trust and a verification process taking place. It’s what we’ve talked about above, with the public key being generated for the user. This level of security is widely used as it provides enough trust and confidence between parties.
Lastly, we might need to make important decisions and documents in our lives. When discussing life insurance for opening a bank account, we will probably be faced with a qualified electronic signature. The highest level of security in digital signatures is being built on the previous level by adding the requirement that the signature is made with a qualified signature creation device.
Nowadays, especially after the COVID-19 Pandemic hit and the need for social distancing and the increased rate of remote work, the use of digital signatures has become more common than ever – whether in contracts, agreements, or other legal paperwork. And it makes sense! Not only does it provide a higher level of security and legal protection, but it also saves time and resources by eliminating the need for physical paperwork and in-person meetings.
So, whether we like it or not, electronic and digital signatures are our future, and digital identity has been transforming the way we, as businesses, operate – it has made it easier, faster, and safer than ever before.
And Docstrat is here to help you out with streaming our signing process! With Docstrat, we can easily sign, send, and manage documents from anywhere in the world – and verify the authenticity of a document and the identity of signers.
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