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Electronic signatures in the digital economy

With the increasing digitisation of businesses, a new solution for document signing is required. The old method involving paper, ink, postal services and couriers is simply too slow and cumbersome to deal with the velocity of information that an organisation needs to process today.

Traditional methods of signing documents are also costly, environmentally unfriendly, and expose the organisation to the risks of fraud and identity theft.

However, electronic signatures are emerging as the silver bullet that addresses all of these woes. Although not all digital signatures are the same, the concept behind these signatures is remarkably simple, yet very effective.

Electronic signatures use cryptography to tightly connect a unique individual with their endorsement, or 'sign-off', on a particular document. This leaves no room for tampering, forgery or modifying documents maliciously. It guarantees the validity of the document and the identity of the relevant individuals who have signed the document.

Privacy and security can be further enhanced by requiring the use of two-factor authentication in order to open documents – such as a password delivered via SMS, for instance.

Another key differentiator is that documents using electronic signatures can be more easily routed into workflow systems. This helps to cut down on administrative tasks, and reduces the chances of error as a document winds its way throughout the organisation. Individuals are able to increase their productivity by digitally signing documents from wherever they may be, using their smartphones or tablets. Furthermore, electronic signatures also have a positive environmental benefit as less paper is required and less energy is used to transport documentation.

How do electronic signatures work?

Firstly, an individual creates their unique and verified electronic signature. In South Africa, this can be accomplished through a division of the South African Post Office. This signature carries certain key properties – such as an ID number – which will render it unique and impossible to copy.

Documents that require signatures can be directed at certain individuals, people who are stipulated to sign the document. In these cases, the document is only ‘completed’ once all the stipulated individuals have signed the document. Other metadata, such as the designation of the individual, can be published; and viewers of the document can see certain properties, like the date and time at which individuals signed it.

From a legal perspective, the Electronic Communications and Transactions (ECT) Act 25 of 2002, saw South Africa following the global trend of recognising the legitimacy of electronic signatures. While electronic signatures are not valid for every type of transaction (such as property purchases), electronic signatures are legally acceptable and binding for almost all private and business documentation.

By reducing the possibility for fraud, organisations help to protect themselves against a host of cybercrime risks; and by embedding electronic signatures within their operations, they reduce the costs associated with manual signing and manual processing. Perhaps most importantly, electronic signatures raise the stature of the organisation and represent high levels of professionalism.

As everything else in the business becomes digitised, one has to wonder why we are still scrawling 'easy-to-forge' patterns on pieces of paper.

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