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tEChNICaLLY sPEakINg e-signatures helps Credit unions Extend reach and Expedite Loan Process By Roy W. Urrico improving the consumer experience may be the most used mantra in today s financial services lexicon but cost savings efficiencies and regulatory compliance need to be closely aligned with it in order for any new process to work. Teachers Credit Union ( 630-million in assets) based in Hamilton Ontario Canada achieved all of the above when it implemented Silanis service e-SignLiveTM in order to provide online members the capability to electronically sign for short-term loans. Teachers Credit Union has seven locations predominately covering the Hamilton-Niagara area in Southern Ontario a call center and a virtual branch. With online banking extending the financial institution s reach the credit union needed to provide members with a more expedient process to secure loans. Our virtual channel is predominantly lending products says Kathy Clark vice president of sales service and operations with Teachers Credit Union. It did not make it convenient for our members to deal with us. We had to look for a way to bridge that gap and make the member experience better. the transaction took place in the right sequence. When Teachers launched its virtual product in late 2010 it found that people were willing to borrow online and that those most likely to use the virtual channel lived in areas with no access to a credit union bricks and mortar branch. Kathy Clark vice president of sales However Clark admits it was not service and operations with Teachers convenient for members to close Credit Union their loans. Securing signatures for loan documents imposed an additional cost on the financial institution as well as time and inconvenience to the member. Gathering signatures usually involved making a trip to a physical location or using faxing and email with the member going to a notary to get documents signed and then mailing them back to the credit union. So there was a delay between the member signing and funding of the loan. There had to be some electronic signing mechanism in order for us to be successful with loan documents explains Clark adding there were cost savings but it was more about the customer experience. So in January 2013 Teachers launched Silanis e-SignLive a SaaS (software as a service) offering that allows financial institutions to electronically prepare and securely sign documents over the Web. Clark says it was quite simple to get up and running We did go through a process where our legal team did due diligence should we have to take our documentation to court because there aren t many financial institutions using e-signatures in Canada. We are the first credit union in Canada using it to fund loans. e-signatures at Teachers An electronic signature or e-signature allows a person to electronically attach a signature or its equivalent to an electronic document. In many countries including the United States Canada the European Union and Australia electronic signatures have the same legal consequences as the more traditional forms of executing documents. The laws in North America especially the e-sign law are technology neutral...they don t talk about how to do something they talk about the outcome explains Tommy Petrogiannis CEO and co-founder Silanis Technology. What this means is that the party needs to understand what they were getting into--did they know what they were agreeing to--and can an organization reasonably demonstrate what the party saw and that 34 Credit union BusINEss August 2013 CREATE A CAR-BUYING EXPERIENCE your members will love with AutoPilot Lending With SWBC your credit union can offer a car-buying experience that goes beyond just issuing a car note. Our AutoPilot Lending solution includes the superior MPOWERTM loan with complimentary vehicle and loan protection products giving your members financial security when they need it most. Plus we ll help you provide superior service and member communications that keep you top-of-mind when it comes to purchasing a vehicle. Scan the QR code to download the AutoPilot Lending product sheet or call 866-316-1162 for more information. For more information please visit autopilot-lending SWBC 2013. All Rights Reserved. MPOWER TM is a trademark of Enterprise Financial Group Inc. 5540-987 05 13 tEChNICaLLY sPEakINg How Does e-signLive Work Teachers loan origination system which does all the documentation and adjudication takes the loan origination via their call center or online. Then they load the documents into the e-signature platform. From there e-SignLive shepherds the entire process including sending an email to each signer authenticating the signers tracking progress providing a status notification and delivering the final securely signed documents. Teachers Credit Union calls the member to review key pieces of loan documentation. To secure the e-signature Teachers uses click to sign. Members open up the email click on the link to access the documents hosted on e-SignLive and click on the indicated areas (using virtual Sign Here stickers) as confirmation of signing. The member then clicks and accepts in the required places. Once it is completed it goes back to financial institution. The signee get a copy of the signed documentation and the credit union keeps a copy for its records and then proceeds with the loan process. The e-signature solution also captures the entire signing process including every Web page and action that a consumer takes. And to ensure the identity of the signer the credit union verifies this when a copy of the member s identification arrives along with a check for the member s share. From a regulatory perspective we wanted it to stand up in court should we ever need to collect on a loan document continued Clark. The members were thrilled it is so easy that they can do it right from home points out Clark It made it so much easier. It made it easier for staff as well. Silanis e-SignLive permits financial institutions to electronically prepare and securely sign documents over the Web. They can upload documents define who signs each document and where they sign it and select the secure authentication method. Our mandate was to bring to credit unions...all the functionality that the larger financial institutions have enjoyed (through an enterprise solution)...and deliver it at a faction of the cost says Tommy Petrogiannis. The e-SignLive process creates an enforceable transaction explains Petrogiannis plus it allows credit unions to move beyond face-to-face physical in-branch transactions to that transformational customer experience that they are now demanding when members are not able to come to the branch to complete a transaction. They can sign in real-time at the speed of the Internet using multiple methods--it is not one sign fits all. Individuals can satisfy the e-signature laws requirement using about a dozen different acceptable e-signature capturing methodologies including email secret question and answer SMS passcodes biometric signatures and third-party authentication services. When an organization uses an on-premise solution like e-Sign Enterprise they can start to use tablets and smartphones for handwritten signature capture. Silanis CEO and Co-Founder Tommy Petrogiannis Growing straight Through Financial institutions can get started right away with the SaaS based e-SignLive. The first step usually frees members from visiting a financial institution to sign documents. The next stage is to integrate it as part of the straight through processing (STP). This enables the entire process to be conducted electronically without the need for re-keying or manual intervention. The E-signatures piece was the last to complete STP--with systems already in place that could create and archive content and with business workflow engines in the middle. Where it all fell apart suggests Petrogiannis was when paper needed a signature. Then the process stepped out of an electronically controlled and monitored world and into a user-driven paper-based world with no control and no visibility. E-signatures connect the front office and back office for the first time and create a straight through process. Because you re not dealing with paper you are not dealing with errors because the workflow rules are controlling it and ensure against a bad transaction. So you get the cost-cutting and cost-saving on one end and on the other end you are accelerating the revenue cycle because you are closing business faster adds Petrogiannis. From a compliance or legal standpoint it drops the cost of demonstrating compliance Before institutions had to provide signed paperwork and prove that documentation was presented in the right order. With the Silanis solution you can pull up that information play rewind and push play to demonstrate how that transaction went down. Cost savings and a Better Customer experience We really see this as a benefit for us having changed our bond to be a provincially focused credit union to [be able to] reach out August 2013 Credit union BusINEss 35 don t bet on behalf of your members that your credit union won t be a cyber target. As a financial institution you are a favored target for cyber criminals. Are you protected CUNA Mutual Group offers more than just cyber insurance you get ccesstoresourcesthathelpmanagerisk A relatedtocybersecurityanddatabreaches nsuranceprotectionbasedonyourcredit I union sspecificneeds elpfromtrustedpartnerstorecoverfrom H abreach shouldyouexperienceone Learn about your potential exposures and what you can do to protect your credit union from cyber threats by calling your CUNA Mutual Group Sales Executive at 800.356.2644 or visit www. cyber. It s the first step to protecting your credit union and reinforcing trust within your membership. Could you be one of the 64% According to a recent survey conducted by Ponemon Institute 64% of bank respondents said their institution had a Distributed Denial of Service (DDoS) attack in 2012. Cyber Security Incident Policy are underwritten by CUMIS Insurance Society Inc. a member of CUNA Mutual Group. Coverage may vary or may not be available in some states. CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company a mutual insurance holding company its subsidiaries and affiliates. This summary is not a contract and no coverage is provided by this publication nor does it replace any provisions of any insurance policy or bond. Please read the actual policy for specific coverage terms conditions and exclusions. CUP-0213-2442 CUNA Mutual Group 2013 All Rights Reserved. tEChNICaLLY sPEakINg to people that are not local to our bricks and mortars. explains Clark. This allows the credit union to compete with larger financial institutions by offering a higher level of service which is important to retaining existing and attracting new members. Looking ahead Our plan is to open this up to how we capture the signatures says Clark. They are also considering looking at it as part of the credit union s brokerage channel to complete mortgages. The credit union thinks it might fit into physical locations as well. Just because they are close to a branch does not mean it is convenient...I believe there will come a time when it is the normal way of communicating with members when it is not convenient to come in suggests Clark. It provides one more opportunity to provide additional service for members. Roy Urrico is a freelance ghostwriter and byline writer of books articles newsletters guides case studies and white papers about financial institutions financial technology compliance information security credit and collections foreign exchange and many other financial topics. To find out more about how Roy can help your organization check out Roy s profile on LinkedIn visit his Web site at brightideaswriting. com or email him at roy What is an electronic signature An electronic signature or e-signature allows a person to electronically attach a signature or its equivalent to an electronic document. In many countries including the United States Canada the European Union and Australia electronic signatures (when recognized under the law of each authority) have the same legal consequences as the more traditional forms of executing of documents. The laws in North America especially the e-sign law are technology neutral...they don t talk about how to do something they talk about the outcome explains Tommy Petrogiannis CEO and co-founder Silanis Technology. What this means is that the party needs to understand what they were getting into -- did they know what they were agreeing to -- and can an organization demonstrate reasonably what they saw and the actions they took in the right sequence. E-signatures are really a legal concept digital signatures and biometric signatures are really how to do that. Canadian Law The Personal Information Protection and Electronic Documents Act (PIPEDA) - Canadian law distinguishes between the generic electronic signature and the secure electronic signature . Federal secure electronic signature regulations says that a secure electronic signature is a digital signature created and verified in a specific manner. Canada s Evidence Act contains evidentiary presumptions about both the integrity and validity of e-documents with attached secure e-signatures and of the authenticity of the secure e-signatures themselves About silanis Founded in 1992 Silanis e-Sign Enterprise and e-SignLive solutions are in use by thousands of organizations including four of the top 10 North American banks eight of the top 15 insurance companies and the entire U.S. Army. Silanis focuses on compliance-driven and regulated industries with financial services insurance company s right in its wheelhouse. As a company 75 percent of our revenue comes from insurance companies but we are now seeing financial institution which are more conservative by nature their regulated and careful adopting it at the same rate of insurance companies a few years ago says Tommy Petrogiannis CEO and co-founder Silanis Technology. According to Gartner e-signature adoption has grown 48 percent in the last 18 months. However it took awhile for the financial institutions to get their business heads around it. The E-Sign Act was signed in 2000 but it did not start to be employed significantly in financial services until about seven years later according to Petrogiannis. The recession slowed adoption but it came back with a vengeance post-recession mostly driven by financial institutions. Silanis business grew over 115 percent year over year predominately driven by financial institutions has not stopped according to the CEO. 36 Credit union BusINEss U.s. Law The Electronic Signatures in Global and National Commerce Act enacted June 30 2000 is a United States federal law passed by the U.S. Congress to facilitate the use of electronic records and electronic signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically. Although every state has at least one law pertaining to electronic signatures it is the federal law that lays out the guidelines for interstate commerce. The general intent of the ESIGN Act is spelled out in the very first section(101.a) that a contract or signature may not be denied legal effect validity or enforceability solely because it is in electronic form . This statement provides that electronic signatures and records are just as good as their paper equivalents and therefore subject to the same legal scrutiny of authenticity that applies to paper documents. The Uniform Electronic Transactions Act (UETA) is one of the several United States Uniform Acts proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL). Since then 47 States the District of Columbia Puerto Rico and the U.S. Virgin Islands have adopted it into their own laws. Its overarching purpose is to bring into line the differing State laws over such areas as retention of paper records (checks in particular) and the validity of electronic signatures thereby supporting the validity of electronic contracts as a viable medium of agreement. August 2013 250 000 Credit Union Employees 92 Million Members 100 Million Miracles Since 1996 Credit Unions for Kids has raised more than 100 million for Children s Miracle Network Hospitals giving hope and healing to kids in your local community. YOUR FUNDRAISING DOLLARS IN ACTION MILLION 10 2 1 iMRI machine and surgical suite 1 Cardiac X-ray machine 1 Ultrasound machine 1 Bone marrow transplant 1 Fully-equipped Giraffe OmiBed incubator MILLION THOUSAND 270 THOUSAND 250 THOUSAND 100