The world today seems to be closely knitted and more integrated than ever before. Social media and online communication channels have changed the way humans interact. In the quest to attain efficiency, everyone is exploring ways to leverage the digital space.
In the field of business, digitalisation and automation have enhanced user experiences. Utilising artificial intelligence, machine learning, active learning, data analytics, and other techniques to streamline processes and minimise gaps have proven beneficial.
Digitisation benefits include:
- Simple and user-driven: Enterprises no longer have to chase down papers or manage the trail.
- Back traceable: Digital solutions offer transparency and workflows can be customised to create an audit trail.
- On the move: The hardware requirements are minimal and one just needs a computing device (laptop, computer or mobile) with an internet connection.
One disruptive innovation to enhance user experience is digital or electronic signatures (eSignatures). Signatures form the part and parcel of daily business transactions and are considered a time-consuming processes.
The needIn the digital era, the requirements of businesses and customers shift rapidly. The manual process of getting a document signed is always time-consuming unless all the parties have a common objective. However, thinking of business transactions between two geographically distant parties with conflicting priorities, the question arises “Who will bell the cat?”. The chances of either party not perusing the contract in their free time are minimal.
Three decades ago, the fax was considered a technological innovation compared to postal service enabling one to send a copy and inform the other party. Fax took over the time consumed by postal mails but could not bring in an effective turnaround.
The early 2000s saw the evolution of email, it was magical to share contract copy within seconds and receive a signed and scanned copy in a day or two. Thereby enormously reducing the transportation and conversion time.
Still, the process of getting a contract signed was cumbersome and monetarily encumbering for businesses. However, the introduction of digital signatures, made the process much easier and cost-effective.
RecognitionAdoption of digital signatures in enterprises is not just mandated by procurement or finance departments for revenue recognition. Rather, different laws direct the use of digital signatures to better secure and regulate interstate and foreign commerce.
Australian Government’s research titled Modernising Document Execution found, “SMEs and consumers spent around nine million hours a year printing and collecting statutory declarations, travelling to the locations of authorised witnesses, discussing and filling out declarations with witnesses, making copies and submitting completed declarations.”
Based on the finding, the Australian Government implemented temporary measures allowing companies to execute documents, including deeds, electronically under the Corporations Act 2001. These temporary measures were subsequently renewed and will be in place until 31 March 2022. The Australian Government has also announced its intention to make this measure a permanent feature of the Corporations Act. These measures replaced requirements for company officers to physically sign the same hard copy of a document to execute a document, including deeds, on behalf of a company. These reforms not only allowed companies to continue to operate during the height of the COVID-19 crisis but also demonstrated the value these reforms provided through increased flexibility and a reduction in time and costs for business.
Other laws and jurisdictions that regulate the use of digital signatures globally include:
- The Uniform Electronic Transactions Act (UETA) and ESIGN Act in the US
- The Electronic Identification and Trust Services (eIDAS) regulation in the European Union
- Information Technology (IT) Act of India
- Contract and Commercial Law Act 2017 of New Zealand
Benefits of Digital SignaturesThe global e-signature market is expected to reach USD 12,721.4 million by 2030 and advance at a CAGR of 26.6% from 2021 to 2030, as per the E-Signature Market study conducted by ReportLinker.
The report also talks about key growth contributors and states “the adoption of remote working as a result of the pandemic, and the burgeoning requirement for secure online transactions and connectivity are driving the expansion of this market. The report also predicts that the Asia-Pacific (APAC) demonstrates the fastest growth throughout the forecast period. This is attributed to the increasing adoption of digital services, surging online commerce activities, and growing user acceptance of online billing, payment facilities, and paperless transactions. Additionally, India is predicted to exhibit the fastest growth during the forecast period.”
Let’s have a quick look at the benefits offered by digital signatures:
- Simple and Intuitive: A significant benefit of digital signatures is that they are easy to use and guide the user through each step.
- Secure: The solutions are developed to make it easy to upload, sign, and send the document via a secure link to the recipient.
- Ease of access: The days of spending time on printing, scanning, and wet signature are gone. Now, the documents can be signed within a few clicks. Platforms like DocuSign, HelloSign, AdobeSign offer a robust framework, and make the whole process seamless, saving time and money.
- Compatible: Apart from compatibility with computing devices, every digital signature tool also recognises the common formats including PDF, MS-Office, Open-Office, Text, HTML, RTF, CSV, images, and Apple Pages. However, some solutions even sync with workflows like Google Workspace, Outlook, and Microsoft Teams.
- Quick Turnaround: Irrespective of the transaction value, digital signature enables a faster turnaround. The use of digital signatures also opens up different opportunities including concentration on business-critical activities.
- Cost-Effective: A digital signature solution only requires a computing device with an internet connection. Thereby, enterprises and individuals save on stationery and hardware cost including paper, printer, scanner, and postage.
Applications of e-signatureAccording to Legal Dictionary, “The purpose of a signature is to authenticate a writing, or provide notice of its source, and to bind the individual signing the writing by the provisions contained in the document.”
A digital signature is based on cryptography, which uses mathematical formulas, or algorithms, to scramble messages. Using encryption and decryption software, the sender can scramble the message and the recipient can unscramble it. To affix a digital signature to an electronic document, a signer must obtain electronic keys. The keys are assigned in pairs: a private key and a public key.
The application of digital signatures can be found in numerous fields where consent is of utmost importance like sales, supplier/vendor agreements, customer forms, approvals, onboarding, licensing, rentals, disclosures, insurance, taxation, loans, and even parental consent.
While digital signatures were prevalent before the COVID-19, the pandemic accelerated the pace of adoption and usage across industries and sectors.
Time is of great essence in every dealing, business or personal. Enterprises look for ways to generate revenues and reduce the conversion cycle. Digital signatures streamline the process by minimising human intervention. Imagine a document management process without a pen, printer, fax, and scanner.
Enterprises are unlocking global opportunities while maintaining the highest security measures with digital signatures.
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Disclaimer: While every attempt has been made to ensure that the information in this article has been obtained from reliable sources, neither Novum Learning or LPI nor the author is responsible for any errors or omissions, or for the results obtained from the use of this information, as the content published here is for information purposes only. The article does not constitute a comprehensive or complete statement of the matters discussed or the law relating thereto, and does not constitute professional and/or legal advice.
Disclaimer: The views and opinions expressed in this article do not necessarily reflect the official policy or position of Novum Learning or Legal Practice Intelligence (LPI). While every attempt has been made to ensure that the information in this article has been obtained from reliable sources, neither Novum Learning or LPI nor the author is responsible for any errors or omissions, or for the results obtained from the use of this information, as the content published here is for information purposes only. The article does not constitute a comprehensive or complete statement of the matters discussed or the law relating thereto and does not constitute professional and/or financial advice.