eIDAS - Remote Electronic Signatures for Banks - Harnessing the Savings Potential (part 1)

by Gaurav Sharma (guest) on 17. July 2020

User experience is always front and center when it comes to attracting retail consumers. But what about corporate and institutional banking? Surely large corporations with dedicated finance departments have things other than just user experience on their minds. Are remote signing solutions worth it for them?

The answer to that question is a resounding yes. This two-part series explores the benefits of remote electronic signatures from the perspective of corporate banking clients – both big and small. As it turns out, the potential savings can run into the millions.


Faster Onboarding

Onboarding new clients is a time and cost-intensive process for banks. In addition to credit risk management, a number of regulatory checks have to be performed as well. This includes KYC checks for all directors/ signatories, beneficial ownership analysis, various contractual documents, etc. The tally of the number of documents to be processed can run into hundreds for a single large corporate client. Handling such volumes can cause delays because mistakes or signature mismatches are discovered and must be corrected.

The cost impact of this cannot be understated. In addition to the direct cost of onboarding, there is also an opportunity cost, as for every single day the client is not on-boarded, significant revenue is being left on the table for others to extract.

Remote electronic signing can put a real dent in this problem. Qualified Electronic Signatures (QES) come with a qualified digital certificate that is generated by a qualified signature creation device. This certificate guarantees the electronic signature's authenticity and proves the signatory's identity in a legally binding manner. Banks can use this to drastically cut onboarding time and potentially save millions in lost revenue.


Transactional Efficiency

Signed documents are not only required during onboarding but also for everyday banking operations. Any sizeable banking relationship will likely have scores of unique products and services being offered across dozens of nations. The mere maintenance of this relationship itself requires a lot of paperwork to move and from between the client and the bank regularly. There are exceptions that must be managed even with host-to-host solutions.

eIDAS-compliant Qualified Electronic Signatures can help here as well by making remote digital signing possible. This can help in the daily transactional flow by:

  • Reducing the manpower necessary to process requests, which saves costs
  • Ensuring data integrity and non-repudiation of origin
  • Greatly reducing the time required to process such documents
  • Decreasing operational risks as the potential for fraud or acts of omission is reduced
  • Reducing the need for paper documentation or using courier services (which might be minuscule in comparison to other overheads, but it can help banks support their green initiatives)

Banks focusing on digitization require a solution that offers a legally binding remote electronic signature service that does not compromise on security. It is possible that some financial services firms may prefer a hybrid solution if they foresee use cases for both Advanced and Qualified Electronic Signatures. A hybrid solution would be very cost-effective in such cases as QES may be used for signing onboarding/ contractual documents, and adding its use for certain high-value transactions (above a certain threshold) would provide the benefits of QES without additional cost burdens.

With all of these benefits, banks would be able to develop stronger relationships with their largest clients. As operational efficiencies improve, the business relationship becomes more “sticky” and the cost to switch to another service provider becomes higher. The client would have less incentive to move away from a perfectly fine-tuned existing relationship and assign a higher value perception to the existing relationship.

We continue this discussion in Part 2 of this series.


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References and Further Reading

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