Are Your eSignature Processes GDPR-Compliant? A Guide for Finance

As digital workflows and remote finances continue to increase, security and data protection have never been more important in the financial sector. Electronic signatures have many benefits for organisations looking to save time and increase efficiency.

However, it’s important to ensure that your e-signature workflows are fully compliant with relevant industry regulations, such as GDPR. In this guide, we explore how financial institutions can ensure their compliance with GDPR through effective tips and best practices.

What qualifies as an e-signature under UK law?

In the UK, an electronic signature refers to any data in digital form that is linked to, or associated with, other electronic data and used by an individual to sign a document electronically.

This definition is intentionally broad, giving organisations flexibility, but it also means businesses in highly regulated industries like finance must carefully choose the type of e-signature they implement.

Basic methods, like uploading a scanned signature or ticking an “I agree” checkbox, often lack the necessary security for the financial sector. To safeguard customers against fraud and cyber threats, robust security and privacy protocols must be in place when managing sensitive digital information.

The eIDAS regulation

The eIDAS regulation in the UK defines three types of electronic signatures, with each offering an increased level of security and assurance. These are simple, advanced, and qualified. 

Simple

Simple eSignatures (SES) are the most basic and easiest to implement, as there is no identity verification required. A signature can be added to a document by anyone who opens it, whether that is by drawing the signature, typing it, uploading an image, or ticking a checkbox.

Due to the lack of verification, similar to a traditional wet signature, simple eSignatures can be easier to forge, which is why they are not suitable for regulated industries such as finance.

Advanced

Advanced signatures offer additional security and identity verification. In accordance with eIDAS, advanced electronic signatures must meet the following criteria in order to qualify:

• Correctly identify the signer
• Be specifically linked to the signer and only them
• Have been created using eSignature data that the signer has full control over and confidence that they have the sole ability to sign it
• Connected to data in a document that the signer(s) can monitor for any further changes

To meet the requirements, AES uses a technology called Public Key Infrastructure (PKI). This technology helps confirm that an electronic signature is valid using a digital certificate. A digital certificate works like a passport or driver’s license; it’s verified by a trusted authority. It’s also very secure because it’s unique to each person and almost impossible to copy.

Qualified

Qualified electronic signatures (QES) are like advanced electronic signatures but follow stricter rules under the eIDAS regulations. They use certified public keys and require a secure, multi-step identity check, including encryption and two-factor authentication.

A trusted third party must first verify the signer’s identity, either in person or through a video call. Only approved providers, known as Qualified Trust Service Providers (QTSPs), can issue the certificates needed for a QES.

The eIDAS regulation requirements for qualified electronic signatures include:

• Ensure only one use of the signature is allowed
• Protect the confidentiality of the signature creation data
• Be suitably protected by the legitimate signer
• Shield the signature from forgery
• Not change the data in any way or stop it from being presented to the signer before their signature
• Create or manage data on behalf of the signer only when requested by the qualified trust provider

Most financial companies will require at least an advanced electronic signature, with many banks typically using qualified to ensure full protection and security for customers.

GDPR fundamentals for financial services

What is GDPR?

In 2018, the EU implemented GDPR, or the General Data Protection Regulation, to better monitor how organisations, including the public sector and government bodies, are handling personal data. This regulation is still in place in the UK, as it was retained following Brexit. GDPR is also supplemented by another UK data protection law, the Data Protection Act 2018, providing further details and amendments to effectively protect individual rights and sensitive details. 

There are several key principles in the regulation relating to the processing of personal data, which are essential for businesses across all industries, including finance, to be aware of. Examples of these principles include:

• Lawfulness, fairness, and transparency
• Purpose limitation
• Data minimisation
• Accuracy
• Storage limitation
• Integrity and confidentiality
• Accountability 

They are the fundamental elements of the regulation that aim to ensure compliance with data protection law and protection of the rights of individuals (‘data subjects’). 

Best practices for ongoing compliance

Maintaining GDPR compliance in the UK requires consistent effort and ongoing management. Below are some best practices to follow to ensure financial companies protect themselves and their customers.

Regularly review your e-signature workflows

When using e-signatures in your processes, make sure that every point where data is collected, signed, stored, and shared meets current GDPR standards. Check that the legal basis for data processing is clearly documented, that only necessary information is collected for the transaction’s purpose, and that retention policies align with GDPR and industry-specific requirements.

Choose GDPR compliant providers

Your e-signature provider must meet GDPR requirements, especially in relation to robust audit trails and consent logs, data residency (UK), and encryption standards. 

Train staff on data privacy and e-signature protocols

Compliance isn’t just about technology; it’s about the people using it, too. It’s important to provide ongoing training for staff across different job roles and departments, including:

• Legal, operations, and finance staff handling digital documents
• IT and risk teams maintain e-signature software
• Frontline employees who obtain customer signatures

Topics for training should include GDPR basics, secure document handling practices, and phishing/social engineering awareness. 

Implement appropriate access controls

Restricting who can access signed documents and personal data will minimise the risk of a data breach. Examples of access controls include role-based access management, multi-factor authentication, and logging and monitoring of user activity. Not only does this protect data, but it also strengthens accountability across departments. 

Stay up to date with regulatory changes

The data protection landscape is consistently changing, and financial organisations need to ensure that they stay ahead to stay compliant. This includes monitoring guidance from the ICO and FCA and adjusting practices when legal rulings come into effect.

Conclusion

Hopefully, this guide has given you a better insight into how you can ensure your financial organisation maintains GDPR compliance when using electronic signatures. Now is the time to review your current practices, challenge any assumptions about your existing e-signature workflows, and take action to close any gaps. From understanding the legal landscape to choosing the right tools and enforcing internal controls, GDPR compliance demands both effective planning and ongoing management. 

E-Sign can help financial institutions maintain GDPR compliance and increase efficiency with secure, legally binding, and cost-effective e-signature solutions. Contact us today to discuss your digital document requirements.