Digital Signature Technology: Realizing a Paperless Society

by Mike Gardner July/August 2007
For more than 30 years, businesses across North America have discussed the idea of the “paperless society,” and less than ten years ago, one of Canada’s most prestigious national magazines claimed it was “almost at hand.” Yet when we look at how close Canada has come to realizing this paperless society, it’s pretty clear that we are lagging behind our U.S. counterparts.

Why? Is Canada less technologically advanced than the U.S.? Are we, as a society, afraid to relinquish paper’s control? I think not. Canada has proven itself in the technological arena time and time again — most experts place us ahead of the U.S. when it comes to adoption and use of broadband Internet, a key component of digital signature technology. So what has been holding Canadian firms back from a new, more efficient way of doing business?

To put it simply, it’s a fear of the unknown. Paper is familiar — you can touch it, file it, store it — while the digital world is still relatively unknown. When digital signature technology was first introduced, there was a fear that the technology was not legally binding.

Unsure of its legal weight, corporate Canada felt more comfortable with tried and true paper and wet ink; continuing to send, receive, sign and store paper, and bear the brunt of the expense as long as they could see that physical ink signature. Then, as the Canadian government began to increasingly recognize the legal weight of digital signature technology, corporate concerns shifted to security and implementation, such as where is the digital signature stored and who has access to it?

Will our customers and employees embrace this new technology, or will their fear of the unknown push them to take their business elsewhere? If our customers are forward-thinkers, how quickly can they put the technology into practice?

The key to nationwide implementation of digital signature technology is accepting the limitations of paper, and understanding the benefits and operation of electronic agreements. Yes, we can touch, file and store paper, but we can also lose it, accidentally destroy it or leave it open to the wrong hands.

When it comes to sensitive documents, paper can be much more of a liability than digital technology. On the other hand, not only are digital signatures legally binding, but also with the right e-agreement technology, a business can ensure digital attachments are never sent unencrypted over the Internet. In addition, electronic agreement technology allows regular e-mail communication to continue between parties without the cost or complexity of encryption while protecting documents from interception or tampering. As an added security feature, many e-agreement technologies allow e-documents to be signed with a legal digital signature and digitally fingerprinted to guarantee unmodified authenticity.

So, we know it’s legal. We know it’s secure. But, do we fully understand the benefits? Obviously, not all intra-company memos require legal signatures, but HR, compliance documentation, employee policies, contracts and external facing documents such as Non-Disclosure Agreements often do. Once corporate Canada does the math on what it costs them to collect, file, verify, track, manually update and report on documents, going digital becomes a viable and cost-effective solution.

Canadian companies that have adopted digital signatures have seen a remarkable difference in their administrative and labor costs. Throughout Canada, it’s been the document-intensive leasing, temporary staffing, HR and vacation/property rental industries that have wholly embraced and benefited from adopting digital signature technology. In addition to the enormous savings they accrue from eliminating costly paper trails, these industries have the added benefit of an easily accessible, legally binding, secure document trail.

Canadian leasing firms, in particular, have benefited from the adoption of digital signature technology. The integration of electronic agreement technology into their lease/loan origination systems has allowed them to send their existing pre-configured templates to customers in order to acquire digital signatures. Documents are encrypted and tracked in real-time throughout the entire process and, once signed by both parties, copies of the completed agreement and critical data are pulled directly into the leasing company’s back-end system, saving hours of manual data entry and filing.

Paper is a negative side effect of business, and while we may never fully eliminate the need for it, we can take steps to reduce our use of it. While Canada has been slow to jump on the digital signature bandwagon, we are seeing a steady growth in its adoption across major industries. With its usability, portability and cost-effectiveness, digital signature technology may one day be as common as paper in this country.


Mike Gardner is CEO of Recombo, Inc., a provider of online agreement and secure electronic signature/digital signature software.

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