As a regional bank located in the highly competitive San Francisco Bay Area, Heritage Bank of Commerce ($1.2 billion in assets), a subsidiary of Heritage Commerce Corp (San Jose, CA), continually needs to differentiate itself from

the larger banks in its market. Businesses make up 90 percent of Heritage Bank’s customer base, and these customers demand fast and accurate processing of transactions such as commercial loans. For Heritage Bank, decreasing turnaround times on commercial loan applications can be a competitive differentiator, explains Larry St. Regis, Senior Vice President of Information Services. Indeed, analysts estimate that attracting a new customer costs six times more than retaining an existing customer, and Heritage Bank can boast that 70 percent of their business comes from their existing customer base. Heritage doesn’t intend to lose these customers and is looking to grow its customer base as well. Slow loan approvals due to time-consuming and unwieldy paper processes could jeopardize both their customer retention and growth strategies.

Lending remains a paper-centric process based on “wet” signatures. Loan approvals can take days as paper is passed from approver to approver for signatures. St. Regis and his team wanted to eliminate timely and costly paper processing of loan documents and streamline the lending process by replacing paper-based signatures with digital signatures. “The path a document has to take on the way to approval requires many steps including couriers,” explains St. Regis. “We felt that applying digital signatures to this process would give us the greatest return on our investment.”

Streamliningthe Lending Process

A

HERITAGE BANK OF COMMERCE:

REDUCING COSTS,WAIT-TIMESFOR COMMERCIALLENDING with IdenTrust™ TRUST SIGN“The IdenTrust solutions were built by banks, for banks, and that meant a lot to our senior management team. IdenTrust understands the regulatory and compliance issues financial institution face.”

––LARRY ST. REGIS, Heritage Bank of Commerce

Customer:

IdenTrust Solution(s) Used:

Trust Sign

Loan approvals can take days as paperis passed for signatures

Traditional digital signatures do not providethe same level of security as wet signatures

Utmost assurance is needed that signaturescannot be forged or ducuments changed

Heritage Bank of Commerce, San Jose, CA

Commercial Lending

Results:

Estimated cost savings of $1.5 million per year by streamlining processes

Improved customer service and retention

50 percent reduction in loan approval times

Tighter controls and better audit trail

Business Application

Business Challenges:

At A Glance

Security,Trust is Key

Brown PaperProves Important

Business Benefits

For more information, visit www.IdenTrust.comor contact us at +1.866.IDENTRUST

However, although digital signatures are viable from a technology perspective, traditional digital signatures do not provide the level of security and trust that paper-based signatures provide. The bank needed the utmost assurance that signatures could not be forged or documents changed and that they would be able to retain strict control over the credit analysis and approval process. They also required a document trail that would survive the most stringent of audits and facilitate employee adher-ence to bank policies and procedures.

Heritage Bank selected Trust Sign from IdenTrust, Inc. to enable online document collaboration in a trusted and secure environment. Several factors were important in choosing Trust Sign, explains St. Regis. First, the IdenTrust infrastructure was developed by financial institutions. “The IdenTrust solutions were built by banks, for banks, and that meant a lot to our senior management team. IdenTrust understands the regula-tory and compliance issues financial institutions face,” says St. Regis. “Plus, you don’t get institutions such as Citibank and Wells Fargo participating as IdenTrust members if the solution isn’t viable.” Second, the IdenTrust technology is cost-effective, proven, and simple to use, says St. Regis, and will require very few bank resources. Third, the IdenTrust identity credentials provide limited repudiation in the event a signature is challenged. Fourth, Trust Sign keeps track of user signatures and user review acknowledgements, time stamping and providing an auditable trail whenever the document is changed. Heritage Bank did look at other digital signature solutions. “Other solutions were cumbersome, convo-luted, and very expensive. Our adminis-trative overhead to maintain the system would have been huge,” notes St. Regis. “I don’t have those concerns with IdenTrust.”

As they implement Trust Sign, Heritage Bank values the support the bank receives from the IdenTrust team. “IdenTrust support has been excellent and they’ve been terrific to work with,” says St. Regis. “It’s quite obvious this is not their first implementation,” he adds. While the IdenTrust technology is straight-forward, facilitating the cultural change at the bank required a bit more cajoling. St. Regis says that the first step for the bank was to educate manage-ment and staff that digital signatures are secure and legally binding. To help change the paper-only mindset, Iden-Trust led a “brown paper” session at the bank, covering the IdenTrust methodol-ogy. By bringing together all operational areas in one room, the bank could docu-ment workflows comprehensively and determine where they could streamline processes. The session proved critical in getting buy-in, both for the Trust Sign product as well as for the bank’s vision of eliminating paper. “People were excited by the prospects of paper-less processing,” recalls St. Regis. “It gave them a clear understanding of how it would help them in their specific jobs.” As an added benefit, the session “turned into a positive team building experience,” relates St. Regis.

Based on early tests, the Bank believes that when fully implemented, they will decrease the time it takes to approve a loan from four days to less than two days. They also expect a signifi-cant reduction in the amount of time it takes to respond to customer requests which will boost customer service. For example, employees who may have spent hours bogged down with paper can now turn their attention to providing exceptional service to their existing customers as well as attracting new customers. Heritage Bank is confident that automating the commercial lending process with Trust Sign digital signatures will provide the bank with a very real competitive advantage. “Digital signa-tures will become increasingly important to our industry,” predicts St. Regis. “We expect digital signatures to be a huge success for Heritage Bank, and it repre-sents just the beginning of what we can accomplish by getting rid of paper.”■

Based on the output from the session, the bank was able to develop a business case with projected return on investments. For example, Heritage estimates that the bank will save more than $1.5 million a year by improving customer service, closing loans faster, eliminating paper, and exercising tighter document control. Additionally, custom-ers will be much happier with the speed and ease of the loan origination process.