Digitization, which is a major feature of the changing technological landscape, has finally caught up with the way the world signs contracts and agreements. Though the concept of digital signatures has been around since the late 1970s when cryptographers Whitfield Diffie and Martin Hellman theorized the concept in a paper, they gained legal recognition nearly two and a half decades later with the E-SIGN Act in 2000.
Essentially, digital signatures can be compared to ‘electronic fingerprints’. They utilize the Public Key Infrastructure (PKI) and cryptography to digitally sign documents in a manner that they cannot be tampered with after the signing. Each document that is signed using the signatory’s public and private key has built-in proof of the signatory’s identity and origin and timestamp of the signatures. Thus, they offer a high level of security in the signing of contracts.
The use of digital signatures is seeing rapid growth in the present context of the Coronavirus pandemic when in-person meetings and signing of documents is no longer a viable option. However, this shift in the way of signing documents will outlive the pandemic and change the way the world conducts business in more ways than one. Here’s how –
1. Efficient Completion of Sales –
In an analysis of 1.6 million proposals on its database, a company found out that “more than a quarter of winning proposals are signed online by the client within 11 minutes.” Thus, digital signatures are leading to quicker turnaround times for the completion of sales. When completing a contract takes only a few clicks of the mouse, the client is likely to do it right away rather than wait and let the thought of completing the purchase take a backseat.
2. Efficient Utilization of Resources –
Paper-based contracts are wasteful at many levels. They make use of a lot of paper and human effort. The human effort starts with printing the documents, leading to handling them and transferring them between different parties, and then finally ends at storing the documents safely.
Furthermore, there is a human effort involved if the documents have to be revisited after they have been signed and stored away. Signing documents digitally eliminates many steps of this process, and of course, the need for using paper, leading to time and cost-savings for companies.
3. Efficiency in Internal Processes of Organizations –
Internal processes of organizations such as the signing of project documents and employee-related contracts have been rendered more efficient due to the electronic signing of contracts, contributing positively to employee satisfaction. Furthermore, when employees are not involved in performing outdated processes, they can devote more time and effort to constructive work.
4. Positive Client Experience and Greater Client Satisfaction –
In the case of paper-based documents, clients have to go through the steps of printing the documents, signing them, scanning them and emailing them back to the party they are doing business with. This time-consuming and tedious process where documents are passed back and forth is likely to have a negative impact on client experience especially when they have to perform these steps multiple times for different transactions.
Digitization can make the process of signing documents efficient and frictionless, thereby ensuring positive client experience and enhancing client satisfaction. In the future, customers are likely to include their experience of signing documents as a parameter in evaluating the companies with which they do business.
5. Enhanced Security of Documents –
Paper-based documents are not only difficult to handle and store, but keeping them secure is a task in itself. They are vulnerable to getting damaged by elements such as moisture, water, fire, and rodents. They are also susceptible to wear and tear from physical handling and getting lost or stolen. Furthermore, they are not entirely immune to getting tampered. Digitization of signatures removes all these problems for organizations.
6. Favourable Changes in Laws –
The advent of digital signatures has led to the creation of laws that approve of them and recognize them in several kinds of documentation. For example, Canada, China, European Union and India have comprehensive laws that govern the usage of electronic signing of documents. These laws have made it easier for companies to engage in business with foreign entities.
7. Better Organization Image –
The adoption of digital signatures in business transactions reflect companies’ focus on being up-to-date on adopting the latest technologies. Furthermore, it portrays organizations’ responsibility towards the environment due to their initiative of eliminating the use of paper from their processes. Thus, the digitization of manual processes contributes to creating and maintaining a positive image of companies among their stakeholders.
Several companies are recognizing the efficiency gains offered by digital signatures and adopting them in their business processes. Logistics and supply chain management is a sector that is benefiting greatly from their use owing to the ease of participant authentication, workflow management, disclosure, and consent recording, and data capture they offer.
The global digital signatures industry is expected to grow from $2.33 billion in 2020 to $4.95 billion in 2023. It will not be an overstatement to say that digitally signing documents will become as common as QR codes and OTPs across industries in the near future.