In Part 2 of this series, we discussed process constraints that may inhibit banks from becoming paperless. In this post, we will address policy and procedure constraints.
Recently I read Bank 3.0, by Brett King, in which the author details a few illustrations of procedure or policy constraints that are prevalent in banks. He suggests many of these constraints are a function of bad inertia. Banks continue to operate using certain default policies and procedures because that is the way the way they have done things in the past. Often, there is no legitimate basis, compliance-related or otherwise, to continue operating according to these policies and procedures. In fact, there may be good reason to rewrite the policies and procedures, e.g. improving customer experience, becoming paperless.
For example, Forrester Research reports from 2008 and similar research since show that at least 70 percent of consumers are willing to go paperless (North American Technographics Financial Services Online Survey – Forrester Research Q2, 2008) yet approximately 80 percent of customers (American Bankers Association) in developed markets still receive monthly statements in the mail from their bank
A significant percentage of customers are willing to or prefer to receive statements electronically. As Brett King suggests, banks should consider changing their policies and procedures to default to sending statements electronically. For those customers who insist on receiving paper statements, allow them to opt-out of the default process for a nominal monthly fee. Chances are, most of these customers will not opt-out, choosing to receive their statement electronically.
This is just one illustration of the policies and procedures that banks need to re-examine. Banks need to challenge the basis of their policies and procedures and ask: are they truly necessary? Do they support customers’ wants, needs, and behaviors?
Once a bank re-examines its policies and procedures, it may realize many of the so-called obstacles in becoming paperless are artificial or self-imposed, e.g. ensuring KYC requirements are met for online account opening. Fortunately, banks may overcome obstacles of this nature, in many cases, without significant financial investment.
In closing this series, we want to highlight a few thoughts to help your institution along its journey to become a paperless bank:
- Paperless is achievable – there many opportunities for banks to move towards paperless
- Often, paperless not only makes sense financially, but paperless is what customers want and expect
- There are technology solutions available that enable paperless – many of which are intuitive and easy to use.
- Technology is necessary to be paperless but it is insufficient – banks must re-examine their process and training as well as their policies and procedures.