Benefits and challenges of electronic signatures

Electronic vs. digital signatures

Digital signatures are, by definition, electronic signatures. They differ in the security and nonrepudiation that transactions require.

Digital signatures use cryptographic technology to validate the signer's identity and ensure the document wasn't changed, which e-signatures lack. Additionally, digital signatures have different levels of security based on the issuing certificate authority and the level of encryption provided.

Most e-signatures include an image of a wet, or handwritten, signature, but that isn't required. More importantly, the service should comply with the legal standards established in the organization's region.

The benefits of electronic signatures

While most people understand the convenience of electronic signatures, they might also overlook or take several aspects for granted. Benefits of e-signatures include the following:

• Accessible. Whether signees are across town or in another country, they can access e-signatures regardless of location. This also means employees can work from anywhere and the business can operate remotely or on a hybrid model.
• Secure. When correctly implemented, e-signatures are very secure. Several firms specialize in cloud-based e-signature services -- like Docusign and Dropbox Sign -- and many desktop tools, such as Adobe Acrobat, have embedded e-signature capabilities.
• Enable process automation. For many organizations, e-signatures are part of a streamlined digital process. As soon as teams collect signatures, the next step can begin automatically. Also, visibility into who has signed can help advance the process.
• Improved records management. Once signed, parties can save document copies locally in their own records. No one has to make copies or email finalized documents, so parties can readily reference and use them.
• Fast. Above all, e-signatures are fast. When a party sends a document out, it alerts everyone at the same time, and they can sign quickly.
• Cut down on paper usage and costs. Organizations can cut down on stationery and paper costs with e-signatures, which helps teams who want to be more sustainable cut down on the amount of paper they use.

E-signatures can future-proof businesses against the different ways people might work over time.

The challenges of electronic signatures

Universal electronic signatures bring up a few challenges. Organizations might need backup plans if they can't overcome a challenge for a particularly critical transaction.

• Might require advanced technology. Technology is not evenly distributed. While online tools can work, they do not address every scenario. Many transactions already involve an in-person component, so parties can collect a wet signature or share e-signature tools for fully remote transactions.
• Long-term validity. As technology continues to advance, so do cybersecurity best practices. Because of this, e-signature software or features could become less secure if they aren't kept up to date.
• Trust. Many people do not trust technology, so organizations should accommodate wet signatures.
• Compliance. Some jurisdictions might not allow e-signatures in legal cases, so businesses that operate internationally must tread carefully.
• Resistance to change. People can trust technology and still resist change, which is why wet signatures are still common.
• Costs. Like most critical business initiatives, proper e-signature strategies require software to support them. These platforms could be too expensive for SMBs or small teams, as well as the potential for maintenance costs or increases in price over time.

What to know before implementing e-signatures

Electronic signatures can future-proof businesses against the different ways people might work over time. Still, organizations must build trust and ensure all parties are familiar and comfortable with e-signatures. They often contain an image of a wet signature, as it can increase trust and limit potential changes.

Additionally, all involved parties must consent to use e-signatures. If one side elects not to, the organization must collect wet signatures from that party, or the transaction can't take place. If a company moves exclusively to e-signatures, it must determine how to accommodate situations that require hard copies.

To implement e-signature software, organizations must look to software providers. These vendors can handle security and bring a level of trust with their technologies. Organizations must understand their own security needs, and have alternatives prepared just in case.

Editor's note: This article was originally published in 2022 and updated to reflect changes in best practices for e-signatures.

Laurence Hart is director of consulting services at CGI Federal and has more than 20 years of IT experience.