Banks, brokers first to adopt e-sign

One day consumers will sign on the digital dotted line for everything, but that day may not dawn for years.
Written by Ben Charny, Contributor on
Digital signatures make it possible to buy a soda with a cell phone or make funeral arrangements with a few clicks of a mouse. Eventually, electronic signatures will be as pervasive as e-mail, but experts think Americans will have to wait a while before they can do anything other than banking online.

"Five years ago, Internet-based e-mail was rare," said Bill Brice, chief executive officer of AlphaTrust Corp., a digital signature company. "Now it is an essential business tool. Within three to five years, digital signatures could be the same."

As much as it pains the tech industry to admit it, the digital dinosaurs -- state and federal governments -- are likely to be the earliest adopters of e-signatures, which were made legally binding by the Electronic Signatures in Global and National Commerce Act.

Several states already have made many of their services available online. Some are moving towards electronic filing of building plans and legal documents, which all need official signatures.

So far, federal agencies are using digital signatures internally: Center For Disease Control inspectors verify water contamination reports over the Internet, and Food And Drug Administration inspectors are beaming in results of seafood inspections.

Business-to-business exchanges are likely to be early adopters. So will federal contractors trying to comply with the U.S. government's 2003 deadline for making most of its services available online, said Robert Weideman of Cardiff Software, Inc., an automated online systems provider.

Among mainstream businesses, the financial and health industries will be next to adapt electronic signatures. Only then will e-signatures be widely used by most consumers, experts agree.

"The largest markets for the last few years for (e-signatures) have been financial markets, especially banks," said Andrew Morbitzer, vice president of marketing for Baltimore Technologies.

Brice, of Alpha Trust, believes banks will embrace electronic signatures as a way to let customers do business with an e-mail, which they currently aren't allowed to do.

One private bank, National City Bank, uses digital signature software to sign up new banking customers. The bank claims e-signatures cut transaction processing time in half and increased its customer base by 1,200 percent.

BankDirect, an online banking company, is said to be rolling out an electronic signature program to its customers as well. Brokerage firms, which are just now beginning to embrace online selling, could also be among the earliest users.

Brice said his company is in negotiations with three different investment firms to replace usernames and passwords with digital signatures.

"Most brokerage houses say essentially anybody who uses your username and password, those are your trades," he said. "Brokerage firms can offer securer services using e-signatures."

Real estate deals may also involve electronic signatures. Carl Boecher, president and CEO of Datakey, said one Datakey customer plans to make closing mortgages online a reality.

That is the future, however. Most digital signatures in use now by the financial sector is internal, including one company working to help chief financial officers transfer money.

Some pharmaceutical companies have begun using digital signatures to help transfer patient files. Sending prescriptions from doctor to pharmacist is likely the next step, said Carrie Bendzsa of Entrust Technologies Ltd. in Plano, Texas.

Children's Hospital in Los Angeles is in the middle of developing a program that lets a nurse open a patient form and make changes. Signatures are required.

Only a handful of major corporations are beginning to use electronic signatures.

Software from Cardiff is in place at Siemens, where it is used to verify purchase orders between the company's 25 offices worldwide.

Right now, more than 160 companies and government entities have begun pilot programs involving electronic signatures. An estimated 165,000 electronic signatures are in circulation. One Web site, OnSign Inc., says someone is downloading an electronic signature that is available free on its site every two minutes.

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