by Melanie Friedrichs
In Chapter 5 of Bank 3.0, Brett King briefly outlines the primary challenges to making easy to apply for accounts and loans online:
“In some instances, customers are still being asked to print out application forms and take them into a branch, or fax them into a call center. This is a usability problem because, instead of simplifying the process for applying for a product, you’ve just increased the complexity by introducing both the printing of the form and the requirement to visit the branch physically. You’ve completely missed the intent of the internet from a user perspective—convenience! It would be better not to have the application form online at all in this respect. If he wanted to take a form into a branch, why did he come online?”
He’s absolutely right. In the U.S., the requirement to print and mail an application, and the existence of signature cards are a bit of a puzzle. Legally, signatures are nothing more than an indication of consent, the stamp that says both parties agree to the terms of a contract. Literally, signatures began as stamps in ancient Sumer, and evolved into written scribbles when ink and paper became more convenient than wax or wood. But technology is changing, and electronic signatures are replacing written signatures just as written signatures replaced imprinted seals. Courts have upheld consent via new technologies. In the 1800s, the New Hampshire Supreme Court upheld the legality of telegraphed consent, and a number of cases in the 70s, 80s, and 90s supported signatures transmitted via fax machine or signature pad. In 2000, Bill Clinton signed a bill—electronically—that should have resolved the question for good.
Why then do so many banks and credit unions still rely on the pen on paper approach? There doesn’t seem to be a clear answer. It’s partially inertia; everyone knows that financial institutions are slow to change, and legacy systems are loath to admit defeat. It’s partially risk aversion. It’s easy to argue that applications requiring physical signatures are less subject to fraud, but I’d argue it’s primarily confusion.continue reading »