Digital signatures – a sign of the future?

16th July, 2015

digital transformation

As technology whisks us swiftly towards the future, there are occasions where it’s important to be mindful that not all change is accepted with open arms. There are times when something pops up that makes some people stop and think: “Hang on, am I completely comfortable with where this is all going?” 

Such was the case, for example, with internet banking. The fears of mischievous types hacking our bank details, stealing our life savings, and selling our personal details to the highest bidder have abated to such an extent that I can count on one hand the number of times I’ve visited the bank in the past year (I’ve not). In fact I’m fairly certain I bought our house completely online, without any human interaction whatsoever.

And so today a new suspicious activity has arrived – digital signatures. Well, not ‘today’ – digital signatures have been a thing for a long, long, long time in the eyes of the Australian Tax Office (ATO). No, it’s the fact that digital signatures are becoming more and more and more prevalent that’s causing the concern.

And my hypothesis when I first heard about MYOB’s staunch interest in adopting the technology was that, like internet banking, the world would be slow and suspicious to adopt.

Supporting my case I’d heard anecdotes from accountants concerned about the legality of these signatures, of the ATO’s requirements – in fact, of a definite description of what, exactly, a digital signature even IS and how it’s made. So let’s get to the bottom of it, shall we?

READ: The truth about digital signatures

What exactly is a digital signature?

A digital (or electronic) signature is an alternate means to formally and legally sign a document. Or, as the Electronic Transactions Act of 1999 (yep, it’s that old) so backhandedly puts it:

“A transaction is not invalid because it took place by means of one or more electronic communications.”

So a digital signature replaces a wet (hand-written) signature.

With respect to the question of what the ATO requires, it’s fair to say that there are rules. Quite a few of them. Which is why MYOB, for example, spent an awfully long time working with the ATO to get concrete approval for its electronic signature procedure within MYOB Portal.

Which leads me to the internet banking analogy I touched on earlier. Since its release to users of MYOB Document Manager (and imminent release to all MYOB AE and AO users), MYOB Portal has been extremely busy requesting and receiving digitally-signed documents. In fact, thousands of documents have been processed this way since the beta label came off the free service in May.

Which makes a mockery of my hypothesis that clients and their accountants would be slow to accept and adopt the technology. Instead, over 70 percent of clients receiving sign document requests via MYOB Portal have happily complied. And the majority of those that didn’t sign simply had a request for more / changed information before accepting the document.

Digital signatures, it seems, are not only here to stay; it appears the signs are good that they’re an acceptable method of doing business in the 21st Century.

READ: Harnessing digital technology for business growth