Sign of the Times: Digital Sigs

Going paperless cuts commercial lender's costs

The year 2000 started with a New Years resolution at GMAC Commercial Mortgage Corp. that sent the IT department scrambling.

The Horsham, Pa., companys chairman and CEO, David Creamer, issued a mandate that the commercial lenders internal processes become paperless by years end. With the company planning to expand its international operations by adding a loan-servicing office in Ireland in February 2000, Creamer wanted to avoid adding even more lag time to loan approvals and other transactions that could be slowed by time-zone differences and international mail schedules.

"That was a pretty heavy thing to say to a commercial mortgage company and a traditionally paper-based company," said Tom Gimpel, the companys chief software architect.

Rather than fold under the pressure, though, Gimpel and other IT leaders got to work. They realized that one of the main reasons GMACCM employees printed paper in the first place was to obtain signatures. So they focused their efforts on finding and deploying an enterprisewide digital signature system that would allow employees to sign documents electronically. The use of digital signatures began in October. The technology is now used in just about every internal process, from loan approvals to employee benefit sign-ups. As a result, GMACCM expects to reduce its spending on paper by one-third this year and has already cut some loan approval processes from two weeks to a few hours, Gimpel said.

For enterprises such as GMACCM, though, deploying digital signature technology internally is doing more than saving time and money. Its also giving them experience they can eventually use to deploy digital signatures externally to speed processes that touch customers and business partners. Specifically, they are working on getting users to accept the technology—often the toughest part of implementing digital signatures, experts say. Already, in fact, GMACCM has begun experimenting with using digital signatures with outside partners, a goal Creamer set for this year.

In the commercial mortgage industry—indeed, in most industries—deployment of fully electronic, interenterprise digital signatures remains a long way off, said Craig Forcardi, an analyst at Tower Group Inc., in San Francisco. Forcardi said he doesnt expect major pilots of digital signature technology among mortgage companies for the next 18 to 24 months. Wide-scale use is at least three years away, even though laws such as last years federal Electronic Signatures in Global and National Commerce Act have made digital signatures legally binding, he said.

"GMAC Commercial has achieved very strong internal efficiencies simply by speeding up routing and approval processes," Forcardi said. "Even at the end [in closing], if they use paper documents, thats still amazing."

Paper, Paper Everywhere

signatures are core to gmaccms operations because, as a commercial lender, the company deals with loans for projects as large as golf courses and major hotels, with values ranging from a couple of million dollars to $1.6 billion.

Before such large sums are handed over, potential loans need the expert review and approval of high-level executives. Historically, that has meant lots of signatures and lots of documents. The largest and most sensitive loans often reach the desks of 14 people throughout the company. Before digital signatures, bottlenecks such as mailing time prolonged the process of getting signatures.

However key to speeding up the process digital signatures were, though, company officials said not all employees were thrilled when they first learned of the new way to sign documents. To launch the digital signature effort, officials started by having employees in October sign up for employee benefits using digital signatures and then, in December, requiring them to sign their performance appraisals electronically.

"Taking away peoples pieces of paper is very difficult," said Andrea Dauphinee, human resources IS and benefits manager at GMACCM. "[But] its becoming more commonplace."

Overcoming some employee resistance was worth it for HR, Dauphinee said. She no longer has to worry about paper being lost through a fax or in interoffice mail, and employees can more easily access and fill out electronic documents.

Even before giving employees their first experiences with digital signatures, however, the company in May 2000 began testing and deploying the ApproveIt software package from Silanis Technology Inc., of Montreal, on 1,800 desktops. The software integrates with popular applications such as Microsoft Corp.s Word and Excel and Adobe Systems Inc.s Acrobat so employees can sign documents directly in those applications. The software also handles user authentication.

In addition, the company used a hosted version of Silanis ePersona Server, which creates an encrypted file with an electronic replica of physical signatures that are stored on each employees computer.

But digital signature software and services werent the only tools that GMACCM needed to take its first step toward paperless. The company also needed to revamp its imaging and document management processes because much of the documentation for a mortgage application from outside companies continues to be on paper. The company last month began implementing a new imaging and document management system, Hyland Software Inc.s OnBase, which allowed Web access to scanned documents across the company, Gimpel said.

With its in-house operations largely paperless, GMACCM is now looking outward. Company officials would like to be able to sign documents digitally and exchange them with business partners such as appraisers and suppliers of equipment and office supplies.

The company in May began a pilot, testing Silanis ApproveIt Collaboration Server with IT contractors. That software allows GMACCM to grant partners permission to sign a specific document for a limited amount of time. The contractors, for instance, are authorized to sign time sheets with digital signatures, Gimpel said. The company hopes to expand such external efforts later this year.

Some processes, though, will remain paper-based for now. Loan closings, for instance, will continue to use paper documents largely because the other parties that need to sign them, such as applicants and attorneys, arent yet comfortable with digital signatures and because industrywide standards for authentication, for example, have not yet been nailed down. Still, Gimpel said, GMACCM will be ready—and ahead of the competition—when the industry fully embraces digital signatures.

"In 10 years from now, were all going to be there," Gimpel said of digital signatures. "Its a question of, Are you going to do it in the first couple years and take advantage of it and get the benefit of it, or are you going to do it in the last five and catch up to what the rest of the industry is doing?"