Jun 10 2020

Remote Online Notarization: What Is It, and How Can Financial Services Use it?

The emerging service can help process important financial documents regardless of the circumstances.

The way people go about their daily routines has changed. With various levels of social distancing restrictions in place for most, everything from grabbing a morning cup of coffee to going to the grocery store has been altered. Trips to the bank are no different. 

Banks are widely considered to be “essential businesses,” as customers still need access to financial services. But at a time when public health is front of mind, both employees and customers alike are in need of alternative ways to get business done. One of the tools banks could utilize is remote online notarization.

Remote online notarization (RON) is the “use of audio/video technology to complete a notarial act when the principal is not in the same physical location as the notary public,” according to the Mortgage Bankers Association. Like most aspects of banking, it is regulated, but there is currently legislation in Congress to set uniform standards for the practice. According to the MBA, 23 states have enacted RON laws and rules, and all but two have at least introduced RON legislation. 

With nationwide standardization potentially coming soon, banks can prepare to use this tool long after social distancing restrictions have lifted. 

Why Remote Online Notarization Is Useful for Banks

Mobile banking applications have moved much of consumer banking online. Customers can make transfers, deposits and even investments at the touch of a button. But more complex financial processes still mostly require an in-person consultation or a physical signing of papers.

This is where RON can help banks maintain the level of ease and convenience their customers have grown accustomed to. Beyond convenience, RON can help crucial processes continue amid disaster in the event all parties can’t be in one place. The global health crisis has led more states to take a closer look at the practice.

“Prior to the COVID-19 pandemic, approximately 45% of states permitted some manner of remote notarization,” according to the National Law Review. “As the COVID-19 pandemic progresses, additional states are passing orders and legislation that either permanently or temporarily permits remote notarization.”

Just as online banking has made more day-to-day financial tasks more accessible during this time and beyond, RON can do the same for things like mortgages or other loans. 

The Technology Banks Need to Utilize Remote Online Notaries

Before banks can begin using RON, they first need to check with their state’s regulations. Some states have permanent guidelines on the books, while others are allowing the practice under temporary orders. Different states have different rules for using RON, and they may impact the necessary technology. 

The RON process is powered by videoconferencing technology. Notary publics need to be able to see the person who is signing the document to confirm the identity of the person. They do so through reviewing photo ID and also by asking a series of questions.

“One question might be to say, ‘Here are five addresses. Which one of these were you associated with in 1968?’” Bill Anderson, vice president of government affairs at the National Notary Association tells Marketplace Tech

Once identity is confirmed, the parties meet on a secure video connection and electronically sign the necessary documents. There are several platforms that offer end-to-end remote notarization service, according to the National Notary Association. Since different states have different technology and security requirements, those guidelines will likely dictate which one is the best fit.

Supporting a convenient and agile way to process this important financial service can be a powerful asset for banks. Maintaining a high level of customer service, along with operational efficiency, can be a significant step toward resilience in times of disaster.

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