|Paperless branch, now within reach (December 2010)|
Going paperless may be the next best thing since branch capture
BY JOHN GINOVSKY, CONTRIBUTING EDITOR
For years bankers have dreamed of ridding their branches of the crushing piles of paperwork generated by even the simpler applications, such as new-account opening. Now a combination of forces—declining revenues, regulatory compliance, risk reduction and heightened efficiency pressures—is taking this dream closer to reality.
In fact, the technology to do this has also been around for years, in bits and pieces. Branch capture, for example.
Yet, the paper piles remain. Microsoft, which is working with some very large banks on paper reduction, found that one institution has more than four million paper documents active at any given time.
Going truly paperless requires a more fundamental attention to “digitalizing” everything in a given folder, and, in fact, routing and archiving that very folder digitally—a process generically termed “enterprise content management.”
“If you talk with operations personnel, they’ll say they already are paperless,” says Joe Pitzo, ECM product manager, Wausau Financial Systems. “They tend to forget about all the other documents that are created throughout the branch network, from new accounts to customer service to loan origination and—depending on the size of the branch—even some human resources documentation as well as accounts payable.”
What’s different now is the intensifying need to find new and sustainable ways to cut costs and increase productivity, says Sam Kilmer, vice-president, Market Development for Harland Financial Solutions. “Back in 2006 and 2007, you saw some banks that were looking at paperless as a means of differentiating themselves, like around green banking. There’s nothing wrong with that, [but] the reason you are seeing more of this activity now is because all the pressure points are there where improved efficiency, year over year, is critical,” he says.
Paul Cornell, deputy CEO of SpiritBank, Tulsa, Okla., says his bank has taken some steps in this direction. On the teller line, for example, where the bank uses a Fiserv platform, “everything is scanned at the point of [presentment] and put into the system that way. All the things that once were done from the standpoint of coding, tickets, and all that, is an automated function now.” Nevertheless, Cornell agrees there is a long way to go to take full advantage of paperless branching.
“Electrifying” new accounts
Bryan Peckinpaugh, account executive at Fiserv, gave a hypothetical example about what being paperless would mean in a new-account opening:
“If I am sitting at a new accounts desk at a bank, I will spend a lot less time gathering and putting documents in the right order and working through those document-based issues because the system can handle it automatically in the background for me. Which means I have more time face-to-face with my customer, doing what I’m really paid to do, which is to drive new business for the bank.
“From the customer’s perspective, we’re cutting down on the time they spend going to the branch.”
Logistically, he says, the customer would be able to view all the associated documents on some sort of electronic tool, like a computer screen or mobile device. Digital signature, electronic notary, and other such systems would allow for immediate authorization of needed forms.
This is just the start, though. Wausau’s Pitzo explains: “By capturing all those documents in the branch network you eliminate the need for centralized scanning and indexing processes…[Your system] automatically performs a basic validation on new accounts and loans, such as validating that all the documents that require a signature, have a signature, and that all the necessary documents have been captured. There’s also the automatic routing of documents to each individual who needs to be involved in an approval process along the way…Each of these processes can happen in parallel, where in a paper world typically you would be waiting for those documents to be couriered.”
While bits and pieces of the technology have been around, what’s new has been the provision of integrated solutions by a variety of vendors.
Wausau Financial Systems offers a product called “Paperless Branch,” which combines three primary applications: teller-line capture, back-counter capture, and new accounts, loan origination, and other customer servicing.
Fiserv touts a similar ability, with products such as its Nautilus ECM Global Payment Solutions.
Microsoft, for its part, is deeply involved in the paperless chase, offering bank-specific versions of its SharePoint application. “[SharePoint] is not looking to replace any of the back-end system, line-of-business, and silo applications,” says Ben Narey, director of banking and capital markets at Microsoft. “What it does is aggregate information and acts as a portal to pull information from those back-end systems.”
Harland Financial Solutions is yet another player, with its Active:View Content Management system.
Simple is the way to get going
Most people are under the misconception that you have to do everything at once when you move into a paperless environment. “It’s important that they dissect all the processes and implement them one at a time,” says Wausau Financial System’s Pitzo.”
Generally speaking, paperless conversion should start from simplest to more complex. This could go from automating signature cards to keeping track of safety deposit usage. Then could come new-account opening and trust account opening. The more advanced applications would begin with consumer lending, then mortgages, and finally commercial lending.
Also important is recognizing that there is a cultural shift involved.
“I can remember when, years ago, we implemented loan-file imaging and we had to fight the lenders from keeping ‘shadow files’ in their desks,” recounts Paul Cornell of SpiritBank, “which defeated the [whole thing.] It takes time for people to have confidence in the system,” he adds. “Old habits are hard to break.” â–
Payback timeWhat do you get by going truly paperless? Here’s a compilation of suggestions from various vendor analysts:
• Cost savings. Up front, the biggest savings likely will be dropping the need for courier services from one per day to perhaps two per week. Also, full-time employment counts could drop due to reduced administrative work.
• Efficiencies. If everybody looks at the same data in near to real time, whether it’s a loan origination or a payment transaction, there’s a better ability to collaborate.
• Speed. The average time to open an account could drop from 48 hours to four hours or less, by some estimates.
• Risk reduction. The average paper document is copied 19 times as it goes through a financial institution’s loan approval process as everyone makes a “shadow copy.” Obviously this creates security risks.
• Compliance. With the advent of recent federal laws, such as Check 21, file electronification has become more accepted by regulators—even expected. Some states have different requirements for maintaining paper documents, however, and those should be checked out.
The electronic version of this article available at: http://www.nxtbook.com/nxtbooks/sb/ababj1210/index.php?startid=22
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