President Clinton signing the E-SIGN Act into law last year may not rank up there with John Hancock signing the Declaration of Independence (or Alex Rodriguez signing a $250 million contract with the Texas Rangers), but for those working in the field of electronic signatures-and those waiting for electronic commerce to fulfill its potential-it was a very big moment. A sign of the times, if you will.
The Electronic Signatures in Global and National Commerce Act hasn't changed the way business is conducted, but it kicked open a door to the future: one in which the world of paper signatures could be crumpled up and thrown into the waste can. E-SIGN simply removed state governments from the tangle of laws that governed the use of electronic signatures in this country; it removed impediments that made public-key infrastructure (PKI) technology king in one state, while others preferred electronic facsimiles. Most importantly, it created legal recognition for electronic signatures in interstate and international commerce.
The legislation is making technology companies working in the electronic signature field much busier than they have ever been. The growth of electronic signatures, particularly for B2B transactions, is growing steadily, while the future of e-signatures in B2C is still being debated.
Mo Is on Their Side
"The E-SIGN Act added the kind of momentum that can't be bought," said Tony Vank, president of Topaz Systems, developer of electronic pens and tablets. "It increased the rate of companies adopting electronic signatures. It had an immediate impact to double or triple the amount of business, and I think the growth will continue unabated."
Vank feels there was another catalyst as well: the growth of the Internet and e-mail. "People wanted instant access," he said. "A signed piece of paper just wasn't in that realm."
Michael Plante, vice president of marketing for iLumin, developers of Digital Handshake software, said the legislation has made this an exciting time for the industry. He points to other factors as contributing to the growth, also. "The maturation of the Internet was important," he said. "Businesses are no longer offering brochureware on their Web sites. Companies such as eBay dominated the second phase of growth. They offered low risk, simple transactions." Businesses are now moving into the third wave of electronic business, he explained. "We are going to see higher order transactions with multiple participants. That means you are going to need a higher level of enforceability."
E-SIGN brought enforceability to business, but there are other complicating factors in how successful electronic signatures are going to be in the marketplace. Erasing the physical look of a handwritten signatures for an encrypted "key" may be easy to explain to businesses, but consumers are a different story. While PKI technology has dominated business to business dealings, the future for consumers is still being played out in the marketplace.
Vank said that one of the problems with PKI is "you don't slog your digital signature around with you." The risk of compromise if you lose the signature or someone gains access to it can threaten security.
The Virtual Dotted Line
Celent Communications recently issued a report titled "E-sign on the Virtual Dotted Line: Electronic Signatures and the Financial Services Industry." In it, Meredith Hickman wrote that mass adoption of digital signatures will not occur in the retail sector until they are made less cumbersome. "Consumers are notorious for continuing with their familiar patterns even when a better technology emerges," she wrote. "Additionally, for low value transactions, it simply does not make sense for institutions to deploy expensive infrastructures."
She also believes that the technology market in electronic signatures is too crowded. "There are too many technology providers to support a relatively small industry today and adoption will not take off until interoperability issues are resolved," she said.
Bob Pratt, director of product marketing at the Internet trust service VeriSign, said companies can realize a great deal of value from utilizing electronic signatures. "It's faster and more cost effective," he said. "Companies can realize a significant cost reduction-plus improved response rates."
He disagrees on the future of private keys for consumers, pointing out that some companies, such as Hewlett Packard, have issued private keys to all its employees. "As things grow there will be more consumer acceptance," said Pratt. A private key is a more elaborate PIN for consumers who need to become accustomed to electronic purchases, according to Pratt. He points to the use of ATMs as an example.
Consumers were leery of the machines when they first came out, but "now they're taken for granted," he said.
Plante said that iLumin's Digital Handshake Server is installed on a company's Web site and provides a "robust API into the back end, workflow, anything you can talk to." He said the system can incorporate smart cards or holographic signatures. "It is up to the customer to align with their risk management policies," he said.
A Place for Everything
Russ Davis, vice president of product development for Communication Intelligence Corp., developer of e-signature products, said that PKI has a significant place in the market. He believes the key feature of electronic signatures is the identification of the individual signing the document. "PKI is a part of that, but it is not fully a PKI issue," he said.
According to Davis, the E-SIGN Act removed the legal barriers on electronic signatures, but other barriers still exist. "There are barriers based on cost," he said, pointing to the technology available, including touch screens, electronic pads, and voice recognition. There is no doubt that electronic signatures can eliminate time concerns, costs and effort, but there is one question that businesses have to answer: "Is it cost effective?" said Davis.
Using electronic signatures is becoming easier. Many systems were tied to the PC before, but companies such as Silanis have brought the technology to the Internet, freeing users, such as insurance agents, to close deals away from the office.
Nathalie Benoit, PR director for Silanis, said her company sees the focus remaining on business-to-business transactions this year, but moving toward more business-to-consumer applications in 2002. "Once organizations and the public in general understand the functionality and security of electronic signatures, Web-based transactions will be completed electronically," she said.
Sauce for the Gander
The past six months have been good for those dealing with electronic signature technology, and that spells good news for insurers and other industries looking to e-commerce as a bright point in their future. The E-SIGN Act may have been a signature moment in the history of this technology (pun intended), or it may have been a culmination of the assorted technologies that will make e-commerce the way we do business over the next decade. Either way, the future looks promising as consumers and businesses buy things electronically and want to make their business partners certain that the person on the other end of this electronic business deal is the person they say they are.
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