Conventional wisdom used to be that anyone other than the developer or end-user could serve as the escrow agent. However, as business has evolved and their technology agreements have matured it is now agreed that there are critical characteristics an escrow agent must have in order to provide an acceptable service:
- Proven escrow agreements
- Best practice secure storage of the deposit material
- Proactive alerts and compliance reporting,
- Escrow agent neutrality
- Auditing validation and verification services
The use of "casual escrow agents" has dropped significantly in the past decade as typically they can only offer part of these necessary components. The following illustrates some of the short-comings of "casual escrow agents":
Lawyers / Accountants - will likely have strong knowledge of the business / contracts and may be able to provide account information as needed. However, they usually lack the storage facilities and requisite experience in handling electronic data. Also, lawyers are seldom neutral third parties as they usually represent one party in the transaction.
Banks - Banks are often considered as escrow agents because of their physical vault facilities. However, bank vaults are not designed to store electronic media and banking industry employees typically have no training in this area. Further, their employees are not trained to handle electronic media. Over time, banks have learned that software escrow services are not in their core competency.