Monday, August 10, 2020

What is Digital Signing and How Does it Benefit Businesses?

The rise of the digital signature has revolutionized finance, and real estate sectors, as well as commercial and industrial enterprises. This is likely to be happening even more now that contactless transactions, social distancing and digital adoption are all traits of the new norm amid COVID-19. 

Digital signatures are ways to verify your identity on an electronic file (like a sales contract). They work with encryption technology, so you're the only person that can use any electronic file to access your unique encryption. Using tech for digital signatures can be part of system modernization and a larger, overall digital strategy. Some have adopted the technology while others remain skeptical. Either way, digital signatures have measurable benefits, like most technological advances, as well as associated costs and risks.



Electronic signatures (e-signatures) and digital signatures are not the same

e-signatures are notoriously susceptible to fraud because they are essentially just electronic symbols, processes or sounds attached to documents to represent a form of assent or agreement. A digital image of a handwritten signature can easily be captured on a smartphone or tablet before being pasted back into a document. Without any encrypted authentication process to reinforce security, e-signatures aren't able to determine the identity of a human operator who last used the signature.

On the other hand, digital signatures are reinforced with higher levels of security and advanced technology to assure optimal safety for documents. They are often built on Public Key Infrastructure (PKI), which is used to generate unique "digital fingerprints" through mathematical algorithms. These digital fingerprints are then safely embedded in the documents, and signers will have to perform 2-Factor Authentication measures to confirm legitimate identities.

What's more, the digital IDs of each legitimate signer can only be issued by an accredited CA (authorised bodies empowered by the government to issue digital IDs for evaluated individuals). In essence, each signer is legally permitted to use these generated signatures. 

Prioritizing authenticity

Digital signing is generally made up of a simple process. Users simply upload their documents and take simple steps to set up the necessary signatures. An automated process prompts the signatories via a mobile app or email, which leads to the creation of a highly secure and convenient digital signature on the respective document.

For the most part, there are two main types of digital signatures; those for internal documents, which don't have to be compliant with the Malaysia Digital Signature Act 1997 (DSA) since they are just for internal approval processes, and DSA-compliant signatures with digital signatures produced via digital certificates issued by one of the Certification Authorities (CAs) which is a mandatory step for official transactions like agreements and legal contracts.

While electronic signatures are simply digital images of hand-drawn patterns which cannot guarantee that they are tamper-proof, digital signatures can, in fact, guarantee document authenticity by utilizing cryptography techniques - achieving non-repudiation through identity authentication and e-KYC.

In essence, digital signing refers to a process by which an encoded signature is attached to an electronic document. Digital signatures are basically legally binding. This means that companies are no longer tied to paper for contract execution. The benefits with regard to process improvement, as well as cost savings resulting from this can be substantial. Similarly, the use of the digital signature in Malaysia is also regulated through the Digital Signature Act 1997 (DSA 1997). Essentially, the act can help ensure that legal issues related to electronic transactions are secured and digital signatures developed through certificates issued by a licensed Certification Authority (CA) are verified in accordance with the country's laws.

Authenticity is the principal benefit of digital signatures. To prove that you are who you say you are, there's no need to print, sign, copy, scan, fax or mail files. Even if someone hacks into your email account, you don't have to worry. Digital signatures prevent impostors from sending false information or manipulating files while preserving the integrity of electronic documents.

Convenience is a huge advantage of digital signing. In the past, before digital signatures were legally recognized, every contract had to be signed, shipped, faxed, or scanned and filed. This process obviously requires multiple steps, making it time-consuming and expensive. It should, therefore, be avoided whenever feasible in favour of digital signatures.

Documentation security

It is difficult to track paper documents unless you keep them in sight at all times. Relying on the transferring of hard copies can mean sharing sensitive information with your rivals. One can forge signatures. Moreover, paper is fragile and can be easily damaged, as well as easily lost.

Almost all digital signing solutions add security layers including encryption so malicious hackers won't be able to access documents. Some often provide audit trails which document the exact signature time and whether somebody tried to manipulate a document after it had been signed.

Furthermore, digital signatures are more reliable than ink signatures. In order to forge your digital signature, one must have access for both your computer and your signing certificate password. Technology or merely good copying by hand facilitates the easier forging of an ink signature. Nevertheless, people are wary of electronic forgery of documents, because you cannot replace the authenticity of physically witnessing someone's signing with a pen. 

The digital signature offers a higher level of security than the paper contract, thanks to the asymmetric encryption it uses. This allows for the precise verification of the unique digital identities of each signer while maintaining the chain of custody throughout the process. Ultimately, digital encryption and audit trails keep your signature secure, protecting your organization against fraud and keeping your information safe.

Optimizing remote working capabilities 

Working remotely is currently a hot topic. However, this might not be for positive reasons. Teams and organisations, in the era of corona cancellations, are redefining themselves, prompting their processes to become even more digital and seeking out better solutions to make the most out of their investments.

Communication between employees can be crucial, which is why the demand for remote services is high. Anyone who collaborates with peers spread out over various locations has probably used shared documents over the internet.

Remote working doesn't need to be a gigantic hurdle. Deals can be signed and documents shared without depending on where we work. In fact, numerous brick and mortar processes are gradually becoming obsolete and might be considered backdated compared to the many digital alternatives that exist today. This is especially prevalent as the COVID-19 pandemic prompts lockdowns across the globe and people resort to working anywhere and any way they can.

Although emails and remote signatures are sensitive for legal/security reasons, by using a Trusted Service Provider for digitally signed agreements, you can protect your businesses.

Enhancing the Legal Sector

The legal industry relies heavily on vast amounts of documentation. Using the digital signature allows legal organizations to save costs and give their clients more time and attention. Thanks to this technology, contracts can be concluded with increased efficiency, both from a mobile phone or tablet, without having to depend on a set time for customers.  

Until now, the process flow for legal expert departments has been tedious. It was necessary to print the paperwork, sign them by hand, scan them, send them to the client by email or fax and wait to receive a signature, then proceed to file them, after having copied them several times. The result was a remarkable cost of paper, time and space in the office, and a deadened workflow that revolved around waiting to receive the document signed and validated by all parties.

That is unacceptable nowadays. Law professionals, who charge by the hour, can not continue to waste more on paperwork than is necessary. Their customers also require more flexibility, without this affecting the confidentiality of information in their documents.

For this reason, the digital signature will be used by many more legal departments and legal professionals, such as lawyers, magistrates or notaries. At present, there are some exceptions to the applicable use of digital signing in Malaysia for legal binding documents. These include power of Attorney, wills and trusts.

Enhancing customer experiences

Consumers demand speed and efficiency from their interactions all the time. In order to keep up with client’s expectations and to be able to provide competitive services and added value, digital signatures can reduce the need to organize meeting times and places to be able to sign paper documents. The process also gives more time for customers to look over and fully comprehend what they are signing on.

Customers often look at piles of paper as simply something to get through during interactions in person. They seldom read what they sign, as they feel pressured to complete the transaction. Customers feel better informed when they can take their time to read through documents at their own pace during the process.

Cross technology collaboration with digital signing industry

Innov8tif is already working with Securemetric's Signing Cloud, a DSA-compliant digital signing solution, on cross technology collaboration. Innov8tif's EMAS eKYC is embedded into Signing Cloud's ID verification process.

At the same time, Innov8tif is also introducing digital signing solution from our industry partners (e.g. MSC Trustgate.com, Securemetric's Signing Cloud) to enable truly end-to-end digital customer onboarding that does not involve any single piece of paperwork in the journey.

As reported by The Malaysian Reserve, Innov8tif's COO commented:
“In emerging areas that we will see huge up-take of e-KYC are use cases related to the online signing of business-to-business (B2B) or business-to-consumer (B2C) agreements.

“It could be a tenancy agreement led by property technology (proptech) company, a service subscription agreement signed between consumer and service provider, or a business transaction agreement (ie financing facility) signed between two business entities,” he said.

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