BEST PRACTICES FOR DEPLOYING E-SIGNATURES TO THE BANK BRANCH

BEST PRACTICES FOR DEPLOYING E-SIGNATURES TO THE BANK BRANCH

WHITE PAPER

TABLE OF CONTENTS

Executive Summary

3

Introduction

4

Initial Process

5

Key Stakeholders

6

Get Started with a Kick-off

7

MVP: Technical Infrastructure

8

A Means to Capture the Signature

10

Preparing Deployment

11

Time to Go-Live

12

Change Management

13

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EXECUTIVE SUMMARY

Abstract

In retail banking, interest in e-signature is at an all-time high. According to CEB, now Gartner, e-signature is one of the top investment areas for retail banks in 2017, with half of retail banking executives expecting e-signature spending to increase between 2016 - 2018. Written for retail banking and digital transformation leaders who are evaluating a branch digitization initiative, this paper draws on the direct experience of leading banks and financial services companies. Their firsthand knowledge informs the guidance set out in this paper, on how to apply and deploy e-signature technology to different value chains.

Methodology All of the banks and financial services companies mentioned in this paper are customers of OneSpan. As part of the research methodology, more than 10 interviews were conducted between Q2 ? Q3 2017 with business and IT stakeholders from U.S. Bank, Bank of Montreal, OneMain Financial, one of the top four banks in the United States, ARGO Data Resource Corporation, the OneSpan Professional Services team and others. This qualitative data was compared with learnings from earlier interviews with RBC Royal Bank, BMW Financial Services, one of the top 10 largest banks in the U.S. by assets, and others. All of the data collected was used to validate the learnings and practices compiled by OneSpan over 10 years of retail point-of-sale deployments. We are grateful for the time that all of our customers and contributors allocated to shape the content.

A special thank you to Abe Karar, former Director of Business Process & Digitization at BMO Bank of Montreal. In his role at BMO, Mr. Karar spearheaded the eForms and eSignatures initiative that led to BMO winning the 2017 Celent Model Bank Award for Digital Transformation in Personal Banking and the Gartner 2017 Eye on Innovation Award for Most Innovative Digital Business Model. Currently the Founder and Digital Solutions Consultant with ALCHEMY Digital Solutions, Mr. Karar provides strategic and technical expertise to banks undergoing digital transformation.

Key findings

? Select the right product to start with: Choose one that will provide rapid ROI, with enough impact and visibility to encourage expansion of e-signature to other channels and areas of the bank. The best way to approach this is through a data-driven exercise. See page 4 for the methodology to prioritize processes for e-signature.

? Focus on minimum viable product (MVP): Have the core team consult with all stakeholders to define the MVP. Best practice is to start simple, iterate over time and build out additional functionality in increments. Capture all requirements, then categorize based on must-have versus nice-to-have. This will make the initial launch easier to manage.

? Visualize the transformation: Show internal stakeholders the before-and-after scenario. Share a concrete use case and introduce personas. (e.g., "Here's Jessie, a student. Here's Mark, a retiree.") This approach works well because it gives people a clearer understanding of what a signing ceremony is and how it can improve the customer experience. This puts the technology into real-world scenarios that people can relate to.

? Involve the right stakeholders: Involve Legal & Compliance early on. These stakeholders often become one of the biggest supporters of e-signature, due to the fact that controlled digital workflows eliminate risk, errors and the blind spots in paper processes. In addition, there are eight other groups of stakeholders within the bank who will be critical to the success of the project. See page 6 for a description of each group's role and contribution.

? Work with your existing infrastructure: We are constantly asked about the minimum technical infrastructure that must be in place, to even consider implementing e-signatures. There are only four (possibly five) baseline components. See page 8.

? Adequately support change management efforts: Many banks have achieved impressive adoption rates in their e-signature processes. While consumers are ready to adopt e-signatures, retail interactions are largely mediated which means staff must learn a new way of doing business ? which may surprise some as the bigger challenge. In this paper, we recommend eight key measures to maximize adoption.

Contact

OneSpan has extensive experience digitizing banking processes, and can provide tailored best practices guidance for creating an intuitive, compliant customer experience in the branch. To learn more, contact us at 1-888-745-2647 or visit .

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"BMO uses approximately

1.6 billion sheets of paper per year. Assigning a piece of paper the value of 0.08 cents [...], once all products have been converted to eForms, the reduction of paper in its retail branches would save [USD] $98.2

" million a year.

Celent, 2017

Introduction

There is a strong business case for digitizing the branch network. Online and mobile channels have not made the bank branch obsolete. Banks have downsized their branch footprint, size and staff ? but as customers migrate to online and mobile channels for transactional banking, the branch remains the destination of choice for expert advice and higher value interactions like onboarding, account openings, retirement planning and mortgage.

Still, the branch is the biggest cost center in banking. Therefore, branch digitization strategies must have multiple anchor points ? provide a differentiated experience, become a seamless extension of other channels, and make the branch leaner and more profitable. E-Signatures underpin all of these. And while many banks associate e-signatures first and foremost with self-serve channels, the paper trail proves that the biggest ROI is in the branch.

According to CEB, now Gartner, "Fifty percent of retail banking executives expect spending on digital signature solutions to increase over the next two years, making this technology one of the top investment areas for retail banks in 2017."1 For national and regional banks, credit unions and brick-and-mortar lenders, the question is no longer whether to implement e-signatures in the branch, but how.

This paper provides a standardized methodology for deploying e-signatures to the branch. Based on firsthand insights from the Digital Transformation teams at national and regional banks, their implementation partners and our Professional Services team, we answer pragmatic questions like:

? How to determine the best first product to digitize?

? Who are the primary stakeholders?

? What are the minimum infrastructure requirements?

? Do the branches need to be redesigned?

? How to best prepare the rollout?

? What is a realistic timeline?

? What are the best practices for training, communication and adoption?

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Initial Process

It is important to carefully select your first process. Choose one that will provide rapid ROI, with enough impact and visibility to encourage expansion in other areas of the bank.

Over the last five years, there has been a change in the e-signature adoption mindset within banking. In the past, banks would implement e-signature in silos ? an individual build for each line of business or channel. Today, banks are looking at e-signature from an enterprise perspective and evaluating how it can be leveraged across the organization.

The best way to approach this is through a data-driven exercise. There is a methodology to prioritizing your processes for e-signature. At a high level:

? Create an inventory of all processes that need to be digitized, along with the associated documents that need signature

? Group by standardized process taxonomy

? Rank each of the processes by complexity, cycle time, quality (error rates) and profitability

? Apply a lens for both customer and employee experience ? determine the greatest opportunities to wow customers and make employees' jobs easier

? Analyze the metrics to substantiate your recommendations

Most banks prioritize new customer onboarding and account opening as the starting point for e-signatures. Onboarding is a good target because it:

? Is the first interaction the customer has with the bank

? Is one of the best means to identify and attain primary customers (more loyal and profitable)

? Is not always consistent across employees or channels

? Tends to have high error rates (e.g., missing signatures, incomplete forms, etc.)

? Generates much manual work between the front and back office

? Is more complex due to regulatory and tax reporting requirements (e.g. FATCA)

? Is a high frequency transaction, making it an ideal target for high adoption by bank personnel

? Is paper intensive (one bank printed a 30-40 page package per account opening)

ORGANIZATION

PROCESSES AUTOMATED IN-BRANCH

BRANCHES AUTOMATED

HARDWARE

SIGNATURE CAPTURE

One of the largest financial institutions in the U.S.

Checking, savings and credit card account openings

5,200

Desktop (Microsoft Windows), monitor, mouse

Click to sign

U.S. Bank

Consumer Loans Deposit Account Openings

3,013

Monitor, Topaz signature pad

Hand-scripted signature

RBC Royal Bank

Retirement Investments Unsecured Personal Loans Deposit Account Openings

1,209

Monitor, Topaz signature pad

Hand-scripted signature

BMO Bank of Montreal

Onboarding

940

Everyday Banking Service

Transactions

Web-enabled tablets

Hand-scripted signature

One of the top 50 banks in the U.S.2

Account Openings

2,200

Tethered secondary monitor (touchscreen device)

Hand-scripted signature

OneMain Financial

Consumer Loans

1,700

Kiosks with 22-inch Monitor

Click to sign

BMW Financial Services

End-of-lease inspections Leasing contracts

U.S. dealerships iPad

New Business Applications Credit Applications

U.S. dealerships

Monitor, Topaz signature pad

Figure 1. Select banks and financial services companies using e-signature in-branch and at point of sale

Hand-scripted signature

Hand-scripted signature

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Key Stakeholders

Early involvement from primary stakeholders will ensure the right people have a personal investment in the success of the project. Once you identify the primary stakeholders, involve them early and communicate updates regularly.

STAKEHOLDER

Retail Banking Executive

? Establish high-level vision of the desired future customer and employee experience

? Establish the key success measures to hold the team accountable ? Drive the strategy from the top down

Branch Operations

? Establish the impact on the day-to-day operational tasks that are carried out in the branch

IT

? Ensure proper understanding of the business objective and the true business

value that is being delivered to enhance the customer and employee

experience, as well as drive profitability

? Provide input on critical considerations for proper integration of the e-signature solution with the bank's existing digital capabilities and to ensure effective enterprise scalability

Product Owners

? Establish the impact on the products involved in the process (e.g. disclosures, pricing, crosssell opportunities, etc.)

Process Team

? Establish current-state process maps, future-state design hypotheses, process metrics, intersections with other cross-LOB processes

? Identify impacted policies, procedures, standard operations, manuals, etc., and make any necessary updates

Legal and Compliance

? Review all digitized documents and ensure adherence to bank policy, industry standards and regulatory/legal requirements

? Provide input on any optimal design standards that continue to adhere to the legal and compliance requirements

Risk Management

? Review new e-signature-enabled processes to ensure that the bank's risk exposure is mitigated and within acceptable thresholds

Back Office (Ops)

? Verify that the new processes are supported on the back-end; this includes appropriate access by Ops to the newly digitized e-signed documents for fulfillment and auditing

? Redesign back-office processes to accommodate the new paperless processes

? Establish the metrics associated with measuring efficiency gains

Document Storage/Archival

? Input on the appropriate file format and metadata required to store and index the e-signed documents properly

? Establish standard enterprise processes for archiving and retrieval of e-signed documents

Figure 2. Key stakeholders for a retail e-signature initiative

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"Effectively managing all

of the internal factions is

as important as having a

narrow focus and starting

simple.

James McGuire

VP, Digital Strategy and Experience RBC Royal Bank

"

American Banker

Get Started with a Kick-off

The best way to broach the subject with stakeholders is by holding a kick-off. This is an opportunity to bring everyone together to explain the value of e-signatures and each team's role in the project. In our experience, it is a better alternative than simply announcing the digitization of forms and introduction of e-signatures. An announcement can create more issues, for two reasons:

? Not everyone has the same level of understanding of e-signatures or digitization.

? Every stakeholder has their own accountabilities that they must deliver on, and may not see how e-signature can support and benefit that cause.

Expect to see as many as 25-30 people involved in the initial planning sessions. At Bank of Montreal, "The initiative was driven by a cross-functional team with representatives from business and technology departments of the bank. The core team was 15 people strong, and over 60 employees were involved in the project at various stages of its build."3

During the kick-off, focus on two things:

? Minimum viable product (MVP): Explain that the core team will consult with all stakeholders to define the MVP. Best practice is to start simple, iterate over time and build out additional functionality in increments. Capture all requirements, then categorize based on must-have versus nice-to-have. This will make the initial launch easier to manage.

? Visualization of the transformation: Show the before-and-after scenario. Share a concrete use case and introduce personas. (e.g., "Here's Jessie, a student. Here's Mark, a retiree.") This approach works well because it gives people a clearer understanding of what a signing ceremony is and how it can improve the customer experience. This puts the technology into real-world scenarios that people can relate to.

Involve Legal & Compliance Early On In the highly regulated financial services industry, keeping the legal and compliance teams engaged throughout the project is key. These stakeholders often become one of the biggest supporters of e-signature, because digital transactions eliminate the risk and blind spots in manual paper processes. Digital transactions have a stronger audit trail and ensure compliance due to controlled workflows.

According to David Whitaker, counsel for the Electronic Signature and Records Association (ESRA) and counsel at BuckleySander LLP, "The earlier in the design and deployment process these team members are plugged in and participating, the better."

In a recent BankNews article, Mr. Whitaker goes on to explain that organizations should "...create a design team that includes members with expertise in the:

? Compliance and legal issues associated with the use of electronic records and signatures

? Compliance and legal issues related to the products and services themselves"

As banks move forward with an e-signature initiative, there are always questions to work through. One example is how to apply business rules to a multi-party signing ceremony. You may have a situation where some of the documents are pertinent to only one party. If a document contains information that should not be shared with the other signing parties by regulation, then you will have to ensure that consumer A does not see consumer B's detailed information. How you apply business rules in OneSpan Sign, to properly manage these types of scenarios, will require internal collaboration. Having the compliance team involved in what may seem to be very granular discussions early on can save the project from stalling later.

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""The work [U.S. Bank's]

technology team put into creating electronic forms to replace paper ones, and building workflows around those, is being repurposed for other product offerings and other business lines."

" American Banker

MVP: Technical Infrastructure

When evaluating a branch deployment, one of the top questions asked is: "What is the minimum technical infrastructure that must be in place, to even consider implementing digital transactions with e-signatures?"

There are the four (possibly five) baseline components:

1. Banking servicing platform

2. Document generation system (e-forms)

3. ECM for electronic records storage

4. A device to present the documents to the customer (can double as the signature capture device)

5. A means to capture the signature (if not included as part of #4)

To determine your requirements, first establish guiding principles around the customer experience. For example, if your bank is starting with deposit account opening, you may decide to rule out the idea of using the customer's personal smartphone as a signature capture device. The bank may decide that it is not accurate to assume that all customers have smartphones. This guiding principle will drive the requirement that ensures that each branch has the necessary equipment in place.

Banking Servicing Platform (Channel Application) First, you need a servicing platform (e.g., channel application), which will have to be integrated with the e-signature platform. Think of this servicing platform as an interface to capture customer data and transaction details. Customer data is the most important part of the process because it:

? Feeds regulatory requirements such as KYC and AML

? Is required to populate the required documents and forms

? Drives the signer's name, signing sequence and product details

The servicing platform has the ability to pass data automatically to the back office; hence, it will be able to take the provided data, augment it with any necessary product/customer information from the backend systems, and generate a PDF from a pre-existing electronic document template. The servicing platform will then make a call via the OneSpan Sign API to pass the PDF to OneSpan Sign with the data from the original data feed from the servicing platform. This call would tell OneSpan Sign: "I need Joe to sign, John to sign and Lisa to sign, in sequence."

In more visual terms, wherever there is a "Print" button currently in your servicing platform, there will now be an "eSign" button as well.

This is the minimum baseline to be able to move forward with an integrated scenario. From a customer and employee experience, it will be seamless ? even though the back office may need more work in a future iteration.

Document Generation System (E-Forms) Once the customer data is handed off to your document generation system (e.g., an in-house build, GMC InspireTM, OpenTextTM Exstream, Adobe? LiveCycle?, etc.), that system will merge that data with the appropriate document template. An integration between the document generation system and OneSpan Sign creates an automated hand-off to the e-signature platform. From there, OneSpan Sign takes over and executes the signature transaction. This includes the presentation of documents, review and signing by the customer, and the hand-back for downstream processing and storage. A major benefit of this end-to-end digital workflow is that if documents

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