Electronic Signatures Hasten Digitalization

2020-01-01

Electronic Signatures Hasten Digitalization

The COVID-19 pandemic has underscored the significance of the digitalization of paper processes. Due to restrictive measures, companies in various fields have had to change their business practices on short notice. The sudden limitation of personal contact has disabled processes which require physical interaction with clients.

Electronic signature technology is able to transform the way that companies serve their clients and offers them more comfortable and effective digital interaction. The digitalization of paper processes enables companies and institutions to conclude contractual relationships without the need for face-to-face meetings. This signature also has its own technological and legal restrictions which influence its implementation and use. 

Digitalization Is Inevitable

The vast majority of society recognizes the importance of the digitalization of business processes and perceives digital transformation as a tool for maximizing sales, effectiveness, and productivity. The pandemic has transformed a trendy topic into a long-term company strategy. 

Paper administrative processes increase overhead which is linked to the support of the processes of the offered services. Apart from the obvious costs of office paper, it is also necessary to take into account the time employees spend manually preparing, printing, signing and scanning documents. If these processes are automated, the costs of implementation, employee training and accepting electronic signatures are minimal in comparison to the costs of paper processes.  For many companies, the loss or destruction of paper documents is a common occurrence. Internal processes often require the signature of several people in different locations. In cases such as these, the electronic signature eliminates the need to send the originals of signed documents by delivery services. The signing of an electronic document also eliminates the need to create and distribute copies. One of the biggest shortcomings of manual processes is human error, which is discovered only when processing the signed documentation. Electronic signatures ultimately lead to correctly prepared documentation and the automation of related processes. 

Electronic Signatures Are Legally Binding

The rules governing the use of electronic signatures in the European Union are stipulated in Regulation No. 910/2014 under the abbreviation eIDAS – electronic identification, authentication, and trust services.  

eIDAS sets the framework and regulates electronic identification and trust services of electronic transactions in the European Union. It regulates electronic signatures, electronic transactions and offers a safe way to conduct business - for example, during the electronic transfer of financial funds or transactions with public services. The eIDAS regulation stipulates the standards by which electronic signatures, qualified digital certificates, and electronic and timed seals are granted the same legal status as the paper forms of these documents. EU member states are required to acknowledge electronic signatures that meet eIDAS norms.

Based on the character of their use, it is also necessary to examine the relevant rules and regulations based on geographic jurisdiction. In specific cases, national legislation prefers the signature of documents in paper form due to related administrative tasks.   

Not Every Signature Is the Same

According to eIDAS, a signature cannot be rejected as evidence in legal proceedings simply because it is in electronic form. However, this regulation also lists three levels of electronic signature and the purposes of their use

A simple electronic signature is essentially the implementation of an action which represents the authorization of the process. It is the manual entry of an object into a document in various formats (a picture of a signature, a name written on a keyboard, a finger signature on a touch screen), or the implementation of a certain action (marking a checkbox, pressing a “sign” button). The signatories offer their agreement with the subject of the document with this kind of electronic signature. However, the technology of a simple electronic signature cannot identify the person who signed the document.

In the eIDAS hierarchy, an advanced electronic signature is on a higher level and must meet a series of technical and legal requirements. The signature must contain unique and non-transferable identification information which connects it with the signatory, such as data from the process of the electronic signature, or the identification of the device. An electronic signature with an electronic pen also makes it possible to capture a series of static and dynamic characteristics which offer data for determining the authenticity of the signature by forensic experts. An advanced electronic signature can be connected to the signing person even retroactively. With an advanced electronic signature, the signatory must have sole control over the information used to sign the document. The integrity of the signed document must be preserved and any changes must be recorded. If the information in the document is changed after signing, the signature is marked as invalid. Maintaining the integrity of the document after its signing is defined by XAdES, CAdES, or PAdES (XML, CMS, or PDF advanced electronic signature) standards.   

A qualified electronic signature unequivocally connects the subject and authorization of the document on the basis of a digital certificate. The use of this kind of signature is required during some electronic communication transactions with public institutions and bodies. A qualified signature ensures the authenticity of the signature, the identification of the signatory, the integrity of the document and the legal certainty of the use of the electronic signature. A qualified electronic signature is different from an advanced electronic signature in that it uses  a unique key and has a qualified certificate issued by an accredited certification authority. The chip on an identity card is an example of a qualified electronic signature. The certificate as well as a pair of cryptographic keys are saved in the chip.  

Digitalization and COVID-19

Restrictive pandemic-related measures have abruptly disabled personal meetings with clients. As a result, the remote signing of documents has become a key factor in the necessary transition to digital sales channels. However, one must know the restrictions related to electronic signatures in order to minimize risk.

The range of electronic signature solutions is relatively broad, but not all platforms are suitable for specific types of use. The volume of a company’s signed documents is among the factors which need to be considered when choosing an acceptable solution. The scope of the implementation process in the signing of documents within a business network and outside it differs. The type of signed documents and local legislation which governs the conclusion of contracts can narrow the type of signing solution. The specific options of personalization (visual side, workflow) must be considered if the solution is to be used in contact with a client.   

A simple electronic signature can be implemented almost immediately and without a complex implementation process. It represents an agreement with the content, but it is not possible to solely link the signature with the signatory, nor is it possible to ensure that the document was not edited after the signature. The legally binding nature of this type of electronic signature is limited.

The eIDAS EU legislation states that a qualified electronic signature has the same legal effect as a handwritten signature on paper, but it must also be in accordance with strict technical norms and may only be used after the verification of the identity of the signatory by an independent certification authority.

An advanced electronic signature is legally binding and its implementation is faster and simpler. The difference between it and a qualified electronic signature relates to the identification of the signatory. If biometric data is captured along with the data of the electronic signature, it will be assessed by the same experts from the field of graphology who assess signatures on paper documents in the event of a lawsuit. However, this depends on the device on which the signature was created and on the additional recorded data which helps connect the person with the specific signature (for example the speed of the stroke, pressure during writing, the tilt of the pen on the touch screen).  

The basis of digitalization includes the simplification of processes, the improvement of the quality of services and the elimination of manual errors by employees. Companies that do not quickly adapt to the current situation can face financial problems caused by laborious and time-consuming manual processes. Electronic signatures are one of the simplest tools to help accelerate the digital transformation of a company.