Sign Iowa Banking Agreement Computer

Industry sign banking iowa agreement computer

our first speakers are John Brown and John Hughes they're going to be talking to us about implementing an electric electronic contract program John Hughes is an agribusiness Account Manager at John Deere financial he's enjoyed working in the a variety of credit sales and marketing roles during his John Deere career his undergraduate business degree is from the University of Northern Iowa where he was a summa laude graduate in human resource management with a minor in business communication John earned his law degree from the University of Iowa and is a licensed attorney in Iowa John Brown is the associate chief counsel for John Deere financial he is a graduate of Northwestern University with a BA in economics and political science and the University of Iowa School of Law he earned his JD in 1980 he provides the legal support for US consumer and commercial installment lending in all 50 states along with legal support on privacy and information security issues and John Deere's US bank john deere financial FSB he is licensed to practice law in Iowa Illinois Minnesota and Wisconsin he was selected as the John Deere Fellow and financial services law in 2015 is on the Governing Board of the conference on consumer credit law and the State Historical Society of Iowa and his chairman of the payment card subcommittee of the American Financial Services Association law committee he's published articles in the Drake Journal of agricultural law the consumer finance law quarterly report the Journal of bankruptcy law and practice and with John Hughes the Kentucky journal of equine Natural Resources and agricultural law I've been looking forward to this talk for almost a year when these guys volunteered to give it so without further ado John good morning thank you for the opportunity to present today my name is John Hughes which on your financial pleased to be joined by my teammate John Brown from John Durr financial and today we wanted to talk about the john deere financial experience working with electronic signature contracts some of the business and legal considerations that we made along the way some best practices some lessons learned and hopefully some neat ideas that you might find helpful as you go back to your clients working with electronic signature so as Dennis mentioned John and I are both attorneys and yet we work in different parts of the John Deere financial Enterprise John works in our law department does a great job there and my career has primarily been on the business marketing sales side and John and I have been working together off and on around electronic signature working with our John Deere dealers and then most recently working on some legal research particularly around remote electronic signature and look forward to sharing that information with you here today so first a bit of background around John Deere financial the company to employees John and me for those of you in the Des Moines area you might have seen our headquarters building on 86th Street in Johnston there we booked a hundred and twenty thousand contracts each and every year on equipment finance and they're coming in from John Deere dealers across the United States ik waiting to about eight billion dollars each year and what's notable the John Deere dealers send in the business had John Deere financial for their equipment purchases for customers those dealers are independent businesses so they're not obligated to use John your financial we're certainly appreciative of the business that they send to us but because they're independent they have a choice and so when they voice their concerns about particular things with John your financial or they might highlight some emerging things such as electronic signature we're really excited to hear that so that we can help serve their needs even more so as we talk today you'll hear that John Deere dealer theme and how we were able to be responsive to that need within the dealer marketplace another thing to note here about today's presentation while John gear John Durr financial is a global company our presentation today will focus primarily on US law we have some limited experience in Australia and Brazil around electronic signature but bulk of our experiences around the US law US experience so we have a path today for our presentation and really it mirrors the path that we took at john deere financial to implement electronic signature first we're going to set the scene what were the considerations what were some of the factors that came into play around electronic signature and then john is going to share the legal landscape what were the laws what were some of the considerations there as we looked at electronic signature then we mentioned that John Deere dealer need sure enough that shows up here as well as at a high level the technology what were some of the things that we looked at the vendors some of the considerations there and then putting all those pieces together to form the solution that we offered up to John Deere dealers and then some future things what are some next steps around electronic signature at John Deere John your financial we're gonna focus on offline signing and then remote signing such that no one is able to witness that person signing the contract for equipment financing and then finally some best practices that we'd be happy to share with you as well as you think of questions or think of comments if you will please go ahead and hold those to the end John and I will be happy to take those at the end of today's presentation so let's set the scene and up here you'll see that there are three images and really what we try to do at John Deere financial is provide balance between these three areas the first on the upper hand left corner that John Deere dealer image and for those of you who have criss cross the state of Iowa likely have seen a John Deere dealer and that John dear dealer perhaps 30 40 50 years ago was a small family-run family operated business today those John Deere dealers are becoming much more corporate in their approach and are looking for business efficiencies just like any other large business so when those John Deere dealers came to us and talk to us about electronic signature that was one of the considerations that we wanted to make sure that we understood we move over to that picture of the customer and sure enough this customer is holding a tablet computer and our survey evidence we're finding across the country that farmer producers are becoming much more comfortable around electronic solutions technology they're using technology to make planting decisions technology for their operation across the board so when these customers are becoming more familiar and in some cases demanding more electronic convenience that's a consideration that we took in as well and then finally we had to consider the law what was the law telling us around the early 2000s but what does the law continue to tell us around things such as remote signature all of these things we wanted to make sure that we maintained a balance and as we look to vendors who could meet our needs for electronic signature that was first and foremost understand the dealer the customer and what the law would provide and for that law presentation I'm going to go ahead and pass the baton over to my friend John you know the the legal landscape evolved approximately 20 years ago on this and first prior to 97 some of the states had passed electronic transaction laws a lot of them were not technically neutral they required a certain technology that you know the pair was it would soon be out of date they were not uniform at all and so the National Conference on uniform state laws formed a committee in 97 to create a uniform electronic transactions Act in 1999 that committee completed their work that was proposed to the states and very rapidly 37 states adopted unfortunately a lot of those states 19 of them including Iowa made significant changes to it and uniform law really only works if you basically adopt the uniform law so it wasn't like most of the provisions of the Uniform Commercial Code and other uniform laws it was very much a different state-by-state and so those of us that wanted to promote electronic commerce realized that Uyeda had so far failed because it had not been adopted in a uniform way and so an effort rose up to create a federal statute that would in some circumstances preempt Uyeda and Deere participated with a number of other country companies in a group called the National Coalition for privacy and electronic commerce and the the esight Act was proposed the electronic signatures in global and national commerce act and it's very much like Uyeda it's it doesn't require a certain technology and it's an overlay statute so if you have some statute that's already enacted that says you have to do something in paper the the federally sign law and you either say notwithstanding those provisions you can do it electronically and so that passed there are more provisions in esign that relate to consumer transactions but it's very similar to Uyeda and as we discuss later it had kind of a reverse preemption approach to it so that if necessary it could preempts state law and then most of the states realized that they had to conform to Uyeda or be preempted by the federal statute and so we're now at a point where most states have adopted Uyeda and they also in 2000 there were significant changes to article 9 the secured transaction provision of the Uniform Commercial Code and one of the things they added was the electronic chattel paper concept and this is in section 9 105 of the UCC and you know with regular chattel paper like promissory notes you have to as a spy getting possession of the note or having an agent of yours have possession well how do you take possession of an electronic contract and they developed this concept of authoritative copy and if you had control of that or if your agent had control of it you then had a perfected interest in in that electronic channel paper well then this after 2000 the states realized to either have to have our state law and electronic transactions be preempted by the federal statute or we have to adopt Uyeda without significant variations because the federal esign law says it preempts any inconsistent state law unless it's a uniform electronic transactions acts substantially as proposed by nakusoo without any significant variations and so in 2004 Iowa adopted Uyeda with just very very minor changes that didn't really affect the preemption of computation and so Uyeda is now the law and in Iowa and so today we now have 45 states that have adopted the uniform electronic transaction act without significant variations and some of these outlier states like California has adopted Uyeda but they've made some changes that say it doesn't apply to certain consumer installment financing and some of these other states like Illinois have just a radically different law and so they're they're preempted today by the federal statute and as I mentioned here you know the National Conference on Commissioners on uniform state laws first adopted Uyeda and then when Isan came into effect they had this reverse preemption and this preempts any state ecommerce law that's either not an adoption of the coucil Uyeda it can't have anything that's inconsistent with the federal esign law and it can't have excessive exceptions so all these Isan laws have some exceptions like for wills and codicils and I think power of attorney but if you start exempting a lot of other types transactions then assign will preempt the the state law and then as I mentioned we had the article 9 1 or section 1 9 105 of the UCC was adopted in 2000 2000 most of the states adopted it in 2001 or 2002 and so that's also now the law and so all of these developments really created the legal groundwork for what we wanted to do which was to start having electronic contracts used by our dealers and customers and unfortunately as as john will explain further this is one of those rare instances for us where the law was ahead of the business usually the business is saying why can't we do this and we're saying that the law doesn't allow that yet in this case by the end of 2000 we had what we needed to go ahead with electronic transactions but frankly every year when we proposed it we'd ask you know this is a good idea here's the kind of efficiencies that could drive for us and the dealers and the customers and the answer usually was yeah it's a good idea but we don't have it in this year's budget so we had to wait awhile and what we what we did though when we first finally got the approval to go ahead we created a detailed list of requirements so we went through all the federally sign requirements all the Uyeda requirements which largely parallel esign except for assigns separate consumer provisions and all the requirements of the UCC Chadd electronic chattel paper concept and we decided that we would include all the requirements for both commercial and consumer transactions so while the majority of our business is commercial tractors excavators things like that we do finance lawn mowers and we have a commercial use credit card so we what we included both the commercial and the consumer once and I think that was extremely important because if you're technical people start heading down a road that's different than what the law requires it's sometimes pretty hard to get them turned around there are a lot of requirements that did not change there you still have to have the same content you've still got to look at all the timing when is a customer get the document the transaction processes that are required different documents that are required those are all the same and the disclosures are the same so on your electronic contract likes for instance on a consumer installment finance contract the annual percentage rate has to be larger than anything else in the contract that still has to be on your electronic version of that and how it appears to the customer it still has to be larger so you still have to pay attention to all those other requirements and then you have to look at the scope of things so there's a few things that you just can't do electronically like wills and codicils so as John mentioned really the law was the head of the business in this case around electronic commerce and to John's credit he provided a consistent drumbeat within John your financial encouraging our senior leaders to look at the electronic signature solutions early 2000s didn't get a whole lot of activity around that but fast forward a bit to 2008 and we had a John Deere dealer meeting with one of our largest most influential John Deere dealers in attendance and it just so happened that that dealer was telling our John Deere financial leadership hey wouldn't it be a good idea if we had electronic signature contracts we're seeing a needed in our business and we'd really like to see john deere financial step up and provide this for dealers across the country so to the credit of our john deere financial leader in attendance he said yes we'll take note of that came back to john brown and said jaan we're hearing about this electronic signature drumbeat across the country particularly from one of our largest dealers were in 2008 let's see if we can't make this happen in early 2009 so all this sudden let's scramble let's hurry up and get something into motion - John its credit to the credit of a lot of our folks at John your financial we're able to step up and put something into the marketplace that met the needs of not only this dealer but dealers across the country and as we looked at the request of this particular dealer started to talk to other dealers across the country we were finding similar things and we talked about it earlier these John Deere dealers are becoming much more corporate and their approach they're looking for efficiencies where they might have had two or three locations to manage now they have 10 12 15 locations to manage and they're looking to coordinate with customers for maybe four hours away from that John Deere dealer so all the things that can help move business get tracked your soul could excavator sold so much the better so that's what was really driving that need from t e dealer perspective we also benefited from corporate support not only within John Deere financial but also within Deere and company from Moline and that would be one of the best practices that we would like to share and it's something that I'm sure all of you are familiar as you're putting change effort into motion that executive sponsor that leadership from top down to say this is important and this is the way that we're going to go it's very helpful and we were blessed to have that with the John Deere financial experience with electronic signature and as John mentioned there were benefits that went not only to the dealer but also to John Deere financial when we put electronic signature into motion and we have a list of benefits up here on the screen with a lot of good solutions they tend to decrease the bad things and increase or enhance the good things and so when you're talking about printing costs for paper storing contracts and the mailing cost that would take for the dealer to get that paper contract over to John Deere financial for booking electronic signature tends to decrease those bad things or costs and then in terms of getting that contract signed and over to John Deere financial for booking that time line decreases or enhances the experience there so lots of good benefits that went to both dealer and John your financial to benefits that we'd like to call out in particular one the idea that we had fewer late filed contracts John Deere Financial will file a UCC to get a security interest in that particular piece and the idea that we could get that contract sent over to John Deere financial in a quicker fashion with electronic signature that just speeds up the time that we have to get that filing in place another benefit particularly for John Deere financial and dealer the idea that the contracts sometimes on paper customers might get creative and they might want to cross out provisions might want to write in some things or by accident the customer might not sign page 7 or page 7 might be missing and the paper contract of the dealer submits all those instances require John Deere financial to send that paper contract back to the dealer just adds more delay and frustration the idea behind the electronic signature solution is that that contract language is locked in and with the electronic signature that customer is prompted for each and every time that he or she must sign so the likelihood that a signature is missed goes down dramatically so those benefits really have helped the experience with dealer and customer and John your financial and as you can see some benefits that really go across the board in terms of efficiency so now we'll go to the technology and what we'll talk about at a high level some of the things that we considered some of the things that we put in place or electronic signature one of the key things that we had in place goes back to 2004 and it was a credit delivery system that we call series that allowed John Deere dealers to send them information on customers the equipment to be financed send that over electronically on an interface over to John Deere financials so that we can perform a credit review and then once that deal is approved can then electronically generate a contract from that same platform so that 2004 introduction of series really sets the foundation for our electronic signature solution at john deere financial the idea that things can be sent in electronically and then that contract can be generated once approved so we had our some series in place we then needed to look to a vendor who could help us build that electronic signature solution for the electronic contract and John was a part of the vendor committee that we had at John Deere for the selection and one of the other best practices that we'd like to share today would be the idea that this vendor committee was quite diverse involved a lot of different folks from a lot of different parts of not only John Deere financial but Deere and company and it helped to ensure that we were able to meet the needs of our business more fully once we had those voices aboard as John tells me we looked at a number of different vendors we were very favorably impressed with the vendors that we looked at we looked at vendors such as salinas echo sign DocuSign will share the vendor that we selected here in a bit but equally impressed with all but we had a set of very specific considerations that we wanted to achieve with this vendor and we have two up here on the screen with John Deere financial the idea that customers could sign offline so that you might not have an internet connection when you're out in the middle of the field on the hood of a pickup truck but we wanted that idea that that customer could still sign and then also the idea that any vendor that we select would need to provide international support as we unroll international excuse me electronic signature down the road so key considerations there another part of the electronic signature solution is what they call an evolve where are you going to keep these things to comply with all of the requirements of Uyeda and esign and UCC provisions you have to have a secure server that meets a lot of specific requirements but we already had a situation where we were shipping paper contracts out to an office in Reno Nevada and so that's where we we actually have a our own server out there that's it's pretty secure it's covered by this metal greeting and bolted to the floor and all that and it has all the technology in it to process these electronic contracts after they're accepted now in that was it was quite a bit of work to set up the eval capability we'll go into some of the things that that has to do most people probably hire an evil company to do that but the important thing there is that Eve alt has to maintain those contracts and have control and audit trails and all that to comply with all those requirements of those statutes and but there are a number of companies that offer the evil the other thing that we had to consider was the paper out process you at some point may have to convert an electronic original to a paper original and that's required for us in in various instances we'll have situations where say that where our credit extended to a customer is half a million dollars and that's all we're comfortable extending and they want to buy another excavator but we don't want to have to tell them to go to another lender we may book that additional contract and then sell that off to another lender well we either have to give that lender access to our evil and we never built it for third party access and you have to be careful who you let access it or you've got to convert it to paper also in some instances when the dealer submits the contract to us they you know they make a number of promises to us the contract is genuine they witness the signature everything that they have told us about the transaction is true and there's some instances where those one of those warranties is breached and we force the dealer to buy the contract back well we don't have access to our Evolved either and so they want a paper original there are a few but not many but a few instances where a judge just says I want the paper original and then there's a couple states in the consumer area that require a paper original contract be marked paid and sent back to the customer at payoff so we needed a paper out process and so we have in our electronic contracts a provision that says at our discretion we can convert the electronic original to to paper and then there's a certain process that one of two authorized people and and Reno can do and involves the simultaneous production of an electronic original that has kind of an original watermark on it and then the the electronic authoritative copy on the server is then flagged as a copy and as part of our solution here if you print out an electronic contract it always prints out with a copy watermark on it because it's important that you only have one original you can't have multiple originals of the same contract so we talked a bit about the vendor selection process and the idea that that provided a diverse set of voices at John Deere to weigh in on which vendor that we selected we ultimately opted with DocuSign and we just like to share a little bit bit of background around DocuSign and some of the things that were particularly attractive to John your financial in our choice with DocuSign as you can see up here you can see the slogan from DocuSign that their vision is to empower anyone to sign anything anywhere anytime pretty comprehensive and that's reflective of where DocuSign sits in the market very clearly the global leader in electronic signature they have 20 million unique users of the electronic signature signing over a hundred and twenty million documents to date using the DocuSign technology so quite comprehensive they're also international in scope they have users in 188 countries signing in 39 different languages and as you recall that was one of the key considerations that we had at John Durr financial to have that international support when it came to the John Deere financial solution DocuSign was able to present a compelling presentation for us in our needs and particularly around the offline solution now this is something that is still in process we're still working with DocuSign on the ability for that customer to sign on the back of her pickup truck in the middle of the field we're still working on that capability with DocuSign but it is something that we did build into our solution also compatible with John Deere dealers that repurchased what we call a topaz signature pad so that as customers look to sign electronically you might have seen this in your retail experiences signing on a credit card transaction it's just a little electronic screen with a stylus pen those dealers that had invested in that technology consistent with what DocuSign can support so lots of good things with DocuSign and we continue to work closely with DocuSign as we build on our electronic signature Legendre financial a bit more around DocuSign and this particularly goes to the evidentiary standards that of course are very important forge on your financial and compliance with US law DocuSign provides a warranty that it will be compliant with esign and also as we look toward the bottom of the screen we see another slogan from DocuSign in the sense that their their their technology their electronic contract is better than paper and in many ways you can see that where the metadata the who the what the wind how the tracking that DocuSign can have in place for that customers signature is very important so that if need be we can go back and see the time that that customer signed and it can indicate an intention to be bound by the terms of the contract something that traditional paper would be hard for us to do so certainly evidentiary standards the legal compliance very important in our selection of DocuSign as well so now we're starting to put the pieces together we talked about the dealer needs we talked about the customers we talked about the technology how do we start to assemble these things into the solution that we have in place today at john deere financial and as many of you worked with clients no procedure process very important no different at john deere financial so that we already had processes in place for traditional paper contract acceptance we needed to look to those and see if we need to make any tweaks to that process now that we had electronically signed contracts coming into jondor financial so we made sure that we updated our processes and procedures as needed also did extensive testing and work closely with partners in the field working with dealers to understand how this will be implemented within the John Deere dealership we want to make sure that any solution that we put out there would be up and ready for dealers and customers to use we also put support materials together and certainly support for our internal employees so that we understood how this new electronic world might work but also for our John Deere dealers knowing that this was going to be a process change for our dealers and we put together some flowcharts to understand for people in the dealership from the customer signature all the way sending it into John Deere financial what were the steps needed who should be doing what when and understanding how that could be put in place within the John Deere dealer we put those flowcharts together and we also developed an online training module to understand from A to Z how that electronic signature could be collected and then submitted on a contract for John Deere financial and then finally the idea of feedback that constant communication loop very important and as you'll hear from me a little bit later on I was part of that communication feedback loop when I was in the field but understanding how it's working and understanding where we could improve that was very important as well as we unveiled the electronic signature solution the next piece we had to work on once we got electronic signatures up and running was securitizing those assets john deere financial funds its its lending around the world really for three ways before there's an equity that Deere puts in and there's medium-term notes and there's commercial paper and then there's some asset back securitization in an asset-backed securities ation you take a pool of notes usually between half a million and a billion dollars worth and you sell them into a trust and investors buy into that trust so the customer never knows that their account has been sold this trust in which the buyers are usually some of basically the world's largest banks they buy a piece of the each trust and so we start wanted to start putting electronic contracts into that well the securitization process is kind of Commerce cumbersome and it's also very lawyer intensive and so we first had to start out and the the outside law firm that we use for some securities work they had to get comfortable with it so we walked them through the process and a flowcharts in the process and all that then when they were comfortable than the main firm that represents the investor banks they wanted to get comfortable with it so we walked them through every step of the process and in all the safeguards and how it complies with Uyeda and esign and the UCC and then there's four rating agencies we use for these each securitization offer has a rating agency that rates at triple-a and we do credit enhancements and stuff to make sure it achieves that rating but they all four so that's like Standard & Poor and Moody's and Fitch and one other agency I can't remember so we had to walk through with their attorneys all of the the process that we use and then once all that was done in 2009 we included the first batch of electronic contracts in a securitization pool we were the first equipment finance company to do that Nissan Motor acceptance had done that for auto loans that were originated electronically before we did it but that was a lot of work but it was also reassuring and that if you can get that many lawyers to say that a process is compliant you know you've done the right thing and then the other thing we had to worry about is collecting these things you know we we try to only loan money to people that are gonna pay us back but some of them don't and we have a network of about a hundred us collection law firms that that collect past two accounts for us and those can they can be representing us in a bankruptcy proceeding they can we used to get a replevin order when the customer won't turn the equipment over to us upon default and then they also if there's a deficiency still owing after the equipment sold and then that sale proceeds are applied you know they'll pursue the customer and try to collect the money and you want them to be able to first know the legal basis for electronic contracts and why they're at least as good as paper you don't want them losing a case particularly one that goes up on appeal that creates a bad precedent for you so you want them to have all the right tools that they need to prevail and so we created a cd-rom for all of them and sent it to them and then we have meetings with them about every two years we're either electronically or in person we get together with them and we reviewed this at one of those meetings and it reviews all the requirements and these are in the outline materials most of them are on esign and Uyeda and UCC we included some case law reviews then there's a really key case out there that's in the material Laurene versus mark all-american insurance where the judge took a lot of time and effort and and really outlined the evidentiary issues very well and then we also in this cd-rom we gave them a template for a brief and an affidavit it could used to you know establish in court how the process works and this has worked very well we have to update that from time to time but you don't want those people who are collecting your contracts losing cases because they didn't you didn't give them the facts that they needed so that what that whole process worked very well so continue to put the pieces together and we talked about the importance of a feedback loop understanding what was working well but the John Deere dealer experienced what can be improved and I was part of that myself my career earlier on working in the field I was working with John Deere dealers in Arkansas and Louisiana as electronic signature was just coming aboard and understanding how we could implement that successfully within their dealerships I was fortunate and that earlier one of those dealers I mentioned that that John Deere need excuse me dealer meeting in 2008 one of those dealers was on my territory so that worked out well that that dealer is already on board with the idea of implementing electronic signature so we mentioned earlier about the importance of having corporate sponsors within the Deere company John Deere financial we had those within the John Deere dealer as well so it was very key to have those dealer principals making clear to all of their employees up and down the line that electronic signatures the way that we're going to conduct business so that there was no mistaking the direction that that dealer was taking with customer signature another idea that we put in place was to track adoption not only at the dealer level but also at the employee level who is using electronic signatures successfully within a particular location and maybe can we use some of those folks as super users or mentors for others who are maybe a little bit slower in adoption and that constant tracking was effective not only with the electronic signature but with a lot of change efforts to understand what's working who's using it and what can we do to enhance adoption and then finally we worked with John Deere dealers across the country to understand what could be improved one of the things that we learned was that offline signature early on was very important very well received and that actually helped increase adoption we're gonna find out a little bit later that we had to once we've worked with DocuSign temporarily take that off of the platter and by taking that offline signature capability off the platter that helped to decrease adoption of the electronic signature so understanding that ebb and flow understanding what was working in the field very important we've talked about offline signing and explain how our process works today the customer is at a dealer location there's a dealer computer there the the keyboard and mouse are given to the customer and they then complete the electronic signature process through DocuSign and a dealer employee representative witnesses the transaction and so that they they verify identity before the the person signs so they if they don't know them they've checked the state issued driver's license and so that's how we make sure that we have the authorized signer the offline signing is a similar scenario except the dealer representative would like you would take a paper contract to a customer and meet them out in the field or at the construction site you would take your PC or tablet out to the customer and they would then with the dealer representative and the dealer what representative as a witness they would complete the transaction and that's very important because dealers particularly in the western parts the United States can be quite far apart and if you tell somebody you've got to take three or four hours out of your day and drive to a dealership and sign and you're buying a half a million dollar piece of machine machinery it's so an easier sell if you say I'll send the salesman out to your location and sign and you can still do it today if you go to the customers home or place a business and they have a Wi-Fi connection you can sign today but a lot of times they want to do it basically outside where you don't have a Wi-Fi connection we've been working with DocuSign on that frankly it should have been available available again by now but in technology sometimes things don't move as quickly as you would like and so really that's that's the next step for us unfortunately when we had to take that away when we switched from just the Topaz signature pads to also being able to use DocuSign as john hughes mentioned that did negatively impact the pace of dealer adoption of electronic signatures so in addition to offline signature being a next step remote signature also being a next step for the john deere financial experience and as we talked earlier about customers and the distance between customer and dealer sometimes four hours of driving and it's not always convenient for that customer to come into the John Deere dealership to sign a contract wouldn't it be neat if we could send that contract electronically to that customer so that he or she could sign in the kitchen at 8 o'clock at night and send it back to the dealer and then move on to John Deere financial the trick behind that of course is that no one would be able to see in the kitchen that customer signing to authenticate that he or she was the actual signer of that contract so as we look at remote signature really that authentication piece is crucial for us and it's something that candidly we're still working through the idea that an electronic process would prevent against not only fraud someone acting as an imposter but also repudiation to say that the customer might have initially signed but then claims later on oh no no I didn't sign so preventing against fraud repudiation very important with an electronic process as we look at John your financial a lot of the fraud that takes place with our paper contracts today it's not some random person off the street trying to be an imposter for someone else it's frankly within the family it could be the son trying to sign on behalf of the father for a contract and we're trying to prevent against that and with an electronic process John made this comment earlier and it bears repeating the idea that the electronic process need not be any better than a paper process in terms of preventing against fraud or repudiation it just has to be as good as that paper process so working through it and one of the things that we need to tackle would be this idea of authentication and mentioned earlier that we've done some research around the electronic signature particularly around remote signing and we've found some different options out there that could be effective in helping customers get the proper signature in place but also John your financial to confirm that that customer made that signature we've got those options listed up here on the screen and the research would tell us that any one of these by their lonesome not a silver bullet in terms of prevent excuse me in terms of preventing fraud or repudiation but it's probably some combination of these options because as we'll talk about while some of these options have very clear benefits they also have some drawbacks so for example we could offer up knowledge based authentication questions and we could ask the signer about properties that he or she might have owned or vehicles he or she might have owned and that would be a way that we can verify in terms of using public record information the drawback behind that particularly when we talk about farmer producers they could own several different properties or several different vehicles in their lifetime and they could be legitimately confused by a knowledge authentication question posed to them and saying wow did I own that truck or not so it could trip up people that we actually want to keep in passwords we're all familiar with passwords using our online accounts in business or in personal life of course unique and strong passwords can be effective unfortunately they can also be forgotten tokens are smart cards something physical that that signer could have to use in authentication sometimes those can be lost or they could be misplaced so that's a drawback there we started to learn a little bit more about biometrics in our legal research around remote signature and that's an emerging field working with your eye scan or your thumbprint something very unique to you as a signer and yet there's a cost associated with that sometimes a fairly significant one for companies to implement and then also to some folks might not be really excited about providing a thumbprint just to be able to sign something electronically so some drawbacks to consider there and then finally security questions we could ask questions such as what is your favorite book or what is your favorite movie hopefully those things that only the signer would know but as we talked about earlier with fraud a lot of times family members or those close to the signer might be able to guess the correct answers to those security questions so we'd have to judge which ones we asked and the number as well so all of these things provide benefits is probably some combination of these in order to implement medication within this solution I'll go a little bit off script here and talk about some of the issues we have you know the scenario we're trying to solve for is as one dealer in Illinois described it he's got a used combine on his lot he puts it on his dealer website and a guy in Kansas who he's never met wants to buy it and finance it with John Deere financial and they aren't gonna send one of their people down there to deliver it they're gonna hire a trucking company that doesn't want to mess with paper documents and getting them signed and so they want to be able to email this guy they've never met know nothing about and have an authenticated way to prove that he electronically signed that agreement and so it's in some of these instances like passwords and biometrics if you meet with the person first you can establish the baselines to allow you to use that verification but if you have somebody you've never met you know you have to have an independent way to verify them and then we do use passwords in a very limited way we have about 20 of our largest customers that have signed an electronic signature agreement and they say if I'm dealing through this website and and I use this password no matter who uses it I'm agreeing that that's a valid contract if you then a complete electronic signature concept or process that's just not very scalable it works well for a few large customers it's not going to work well for a million customers so we're kind of struggling with the and you know how do you make these things work for our customer base and then on the knowledge based authentication I'm sure a lot of you have used that it's really built for suburban homeowners it uses public record information ask questions like where have you lived what vehicles have you owned and for normal suburban homeowner that's pretty pretty easy to answer then you got a farmer who maybe owned six farms three of which have rental houses on them and they probably got half a dozen vehicles and they tend to flunk those things so we really need a we're still looking for a good approach of kind of mass authentication that'll work for any US customer those are good additions thanks John so now we're coming to the finish line and talking about some best practices that we've shared this morning and be happy to share again here as we close the first idea of having that diverse set of voices on any type of vendor selection committee that really helped to make sure that we met the business needs that John your financial Dearing Company had for electronic signature and then as John mentioned earlier the idea of having a comprehensive set of specifications we want to make sure that we complied with not only commercial the consumer law but we also want to make sure that we have an international solution also trying to make sure that we have offline capability having that list at the outset really helped to steer our decision-making process talked about earlier the importance of having process and procedure again probably not foreign to me the clients that you serve but particularly important within the finance industry and which on your financial given the regulation and compliance needs that we have not only within John Deere financial but we also provided that process mapping for our in use customers that job your dealer making sure that they understood how best to implement electronic signature talked about training that was very important to have both online and also paper for electronic solution my paper as well so that we could help folks understand how best to put that in motion and then finally we've talked about this several times but it bears repeating here the importance of having executive sponsors with such a big change effort as taking something that traditionally is paper-based putting in an electronic solution having that buy-in at the very top and helping understand across the organization how important it is that was particularly helpful in the John Durr financial case we've also done a lot of benchmarking with other other companies that have tried this like Nissan and harley-davidson and various other companies that are somewhat similar to ours but not direct competitors and I'm a firm believer if you can borrow something that somebody else has done as long as you don't violate you know any intellectual property laws and and benefit from what they've created instead trying to do it yourself that's a great thing and and they're usually very helpful you know our competitors don't want heard are very helpful to us and we frankly don't ask them but the companies that are like in the auto finance world a similar business somewhat different we learned a lot from things they tried and have shared information with them and also you know whoever the players are in your business a model you've got to coordinate closely with them we always knew that if we put out a solution that the dealers just wouldn't accept that it would totally fail because they have a choice they don't have to do business with us also rolling it out in phases there's some advantages and disadvantages to that but we first rolled it out with the towpath signature pads the problem with that is every computer that uses takes electronic signatures has to have a pad and it cost about 300 bucks apiece and we also told the dealers well we're going to roll this out in phases we're going to have offline signing in the future we're going to have remote signing in the future and you can't do it all at once but if you tell your your market that you're gonna roll it out in phases it's gonna be an ever improving product a lot of them will say well we'll just wait till that whole phase is done so we don't have to make changes like like replace our signature pads or anything like that we'll just wait till you got it perfected and then we'll start and so that is slow that adoption of electronic contracts and then in this business especially with technology you got to be careful what you promise I think everyone who deals with advanced technology at all knows that a lot of times the marketing people at the technology companies and even in your own own organization the marketing people but no offense because you spend a lot of time marketing yeah sometimes they go oh no problem we'll do that right away and then when it comes down to the technical details and also really testing things to make sure they're they're gonna wor and you're not going to put it out there and have it break down that's very very important so you got to be careful what you promise and when you saying we'll probably have it next year you-you-you really need to have it next year and it's I I believe in the concept they call it double and double again if you take the I T estimate you double it and double again then you have about the right answer so that's the conclusion of our presentation does anyone have any questions now I'll say this is Jonathan Kennedy from the IP section Council we have a lot of attendees online about 50 or 60 people on the webinar so if you do have a question I'll bring you the microphone just so that they can hear your question and benefit from that as well I had one question going back to your illustration of the story in can you know person who wants to buy something in Kansas and there's a dealer elsewhere I mean would is there a possibility of utilizing or have you guys historically utilized a dealer in that area to then help with the signature is that kind of been a stopgap for the time being yeah you know that is sometimes done where they'll ask another dealer you know they're always the neighboring dealers they're always competing against but the ones that like in Kansas they could they could ask to do a favor and if the other dealer is willing to do it that that would be a solution and there's also you know for a fee you can go into most banks and they have you know signature verification processes and they issue kind of a limited guarantee and so that's that's another solution that is used in the paper world or could be used with an electronic transaction - we just need to have something that's very fast and easy if we're not the quickest and easiest finance a vendor you know they'll just go somewhere else so we need something real quick for remote remote signature thank you any other questions not that I want to thank you both for speaking with us and for your presentation is excellent really enjoyed it thank you [Applause] you