Financial services providers preparing to integrate e-signature technology across their operations may have to settle for deploying it internally until consumers are ready to embrace the concept.And acceptance may take a while. Reluctant consumers aren't expected to embrace e-signatures until at least 2002. And when they do, the adoption rate is expected to be marginal, predicts Meridien Research Inc., a financial industry technology consulting firm based in Newton, Mass.

In a new report entitled "The Case of the Invisible Ink: E-signatures," Meridien projects that "widespread" customer use of the process is still "several years away." As a result, companies should divert their attention for e-signatures within the confines of their internal infrastructure, says Dennis Behrman, a research analyst for customer relationship management (CRM) initiatives with Meridien, and co-author of the brief.

"The use of e-signatures will occur in business-to-business or internal applications where employees, departments and partners use digital signatures and certificates in a closed, limited-use environment," Behrman says.

Internal focus

For example, Behrman sees e-signatures being transmitted within a company around the country or even around the world to get approval for internal purchases. "A branch office in the U.S. may need to get a signature for a software purchase from a branch office in Western Europe," he says.

In the business-to-business realm, the volume of transactions occurring on the Web will mandate that they be completed within an electronic environment, Behrman says.

Meridien is not alone as an e-signature skeptic, at least as it relates to consumer use. Carriers aren't banking their hopes on widespread use. Progressive Insurance Co., Mayfield Village, Ohio, sells auto insurance coverage on the Web, and would have a vested interest in a consumer-driven e-signature technology platform.

Nevertheless, the carrier admits "it will take awhile for consumers to get used to this because an e-signature is so intangible," says Toby Alfred, a spokeswoman for Progressive. "How long before mass adoption occurs, I wouldn't even venture a guess. Our projections are as uncertain as everybody else's are."

Consumer groups fear that an e-signature could be pirated by hackers somewhere within the system. But Behrman and brief co-author Tom Richards mollify this belief. They say that e-signatures are actually a more secure method of "authentication, identification and approval than physical signatures." A consumer's private key has a mechanism where "if the private key were compromised, the electronic record containing the corresponding public key and data guaranteeing identity and key pair possession, will invalidate the keys used for digital signing."

Consumer trust lacking

But Meridien projects that, even with this assurance, many consumers may not be convinced that e-signatures are fail-safe.

"The trust factor will be significant. A consumer will have to have full trust in the bank, brokerage or insurance carrier that is offering an e-signature service," says Behrman.

Safety aside, there remain logistical issues that could undermine mass acceptance. For example, consumers will register one private key to use across all transactions, but they may have to interface with multiple public keys for every financial services provider that they conduct business with. This may dissuade participation, says Behrman. "It's a question of interoperability between various public key infrastructures," says Behrman.

Currently, the interoperability is non-existent, says Behrman.

Behrman adds that "banks and insurance carriers will have to convince consumers that using a company's own proprietary PKI adds value to the consumer experience. This won't be an easy sell," he says.

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