The role of mobile devices in paperless transactions creates additional compliance concerns and precautions that must be considered beyond the existing procedures that lenders have established for desktop-based electronic documents and signatures.
In the past, organizations could create one version of a website or electronically delivered document that was viewed the same across all users. The varying screen sizes and layout orientations of smartphones and tablets create different end-user experiences depending on what device is used to view the content, Gregory Casamento, a partner at law firm Locke Lord, said at a panel during the Electronic Signatures and Records Association Conference, ongoing this week in New York.
"The big deal with mobile is ensuring customers actually get those disclosures, they see them and understand them," he says.
Lenders should inform borrowers they will receive electronic disclosures as early on in the process as possible so they know to be on the lookout for them, which has the dual benefit of reducing compliance risk and improving the process for consumers. "Tell them, show them and tell them again. Make it a good experience for them," Casamento said.
While few laws and regulations specifically address mobile devices, lenders shouldn't be dissuaded from adopting mobile-based e-signatures because precedents set by paper-based transactions and desktop-based electronic practices are applicable in mobile.
"There is just not a lot of express guidance on the use of mobile devices for e-signature," said Patrick Hatfield, another Locke Lord partner, adding, "This is not the first time we've gone through this, and we'll be applying old principles to new media."
Still, not all disclosures can or should be made to users on mobile devices. If the text on a disclosure appears small or squished together on a tablet or smartphone, lenders should use a different process (like paper or desktop-based e-documents) to avoid compliance exposure, he says.
When examining the business appetite for risk using mobile devices, "as long as your mobility process is as good or better than your paper process, then you're ahead of the game," Hatfield says.
Online and mobile transactions account for approximately 5% of the transaction volume at banks in the United States, but that rate is only expected to grow, said John Fraser, U.S. Bank's vice president of technology and operations services.
Since it first began adopting e-signature capabilities, U.S. Bank has developed thousands of documents that can be e-signed and accepts 400,000 signatures every week, he added. The initial impetus of these efforts was to reduce costs associated with paper processes, but that's since evolved to focus on meeting new consumer demands and expectations and reducing expenses associated with transactions that historically have happened only in bank branches.
"Through the advent of technology to take pictures of checks for deposits, we have an opportunity to serve customers without any human interaction," Fraser says.
Many financial institutions continue to have fragmented processes across in-branch, desktop online and mobile-based interactions. U.S. Bank works to resolve that disparity by developing generic capabilities that provide a consistent process for tasks across the organization.
"By having a single platform that can offer a consistent user experience it's going to save us from going to courts in the first place…and help us reach customers where they are," he says.