Paper is fragile, cumbersome, and expensive. The cumulative cost of creating, storing, securing, retrieving, and destroying paper documents is a drain on the financial resources, staff time, and overall productivity of financial institutions. Add in the difficulty and expense of finding or replicating a document that has been damaged, lost, or destroyed, and the cost can be astronomical. The average document is printed five times after it has been created, which results in overflowing inboxes, proliferating file cabinets, and expensive off-site storage. ThePaperlessProject.com puts the cost of creating, managing, and distributing paper documents as high as 15% of company revenue.
Despite the clear case against paper, data from a recent Bluepoint Solutions credit union survey indicates there is still resistance to its elimination. Seventy-six percent of respondents said they still used paper-based systems, and more than two-thirds of respondents had no plans in place for changing their current content management practices.
Source: Bluepoint Solutions
Paper costs are an enterprise-wide problem with strategic implications that should be addressed at the executive level — with feedback from every department — not, as is often the case, by the IT or operations department alone.
Why Is Paper A Problem?
Paper is a source of inefficiency in nearly every financial institution, but the data contained on paper documents is a critical asset that credit unions must manage. When managed effectively, credit unions can use this data to market and cross-sell services and provide members a superior level of service. According to studies conducted by Gartner, ARMA, and AIIM, the average knowledge worker wastes $4,500 per year working with paper. New member onboarding documents, loan applications, signature cards, identification and social security cards, checks, and loan documents are all stored on paper. And studies show the average employee spends 60% of each day working with paper documents, whether it’s printing, scanning, filing, or rummaging through thousands of files to find information. Searching for information and tracking down documents is more efficient when paper documents are digitized and accessible throughout your financial institution.
The Weaknesses Of Paper
Reliance on paper as a storage medium for vital information is risky and prevents a financial institution from being able to use one of its most valuable assets: member information. There are numerous examples of critical paper records being lost, destroyed, or damaged, resulting in substantial costs to the organizations that must then re-create the records.
Natural disasters, such as fires, hurricanes, and floods, occur frequently, and when a credit union does not have a contingency plan, they can be debilitating for the institution and its members. These unavoidable situations will understandably cause disruptions across the organization, but losing vital documents can significantly lengthen the downtime after the disaster has passed and inconvenience members who must complete or provide new documents. With digital documents stored off-site or in the cloud, however, credit unions can restore a backed-up version that is safely and securely hosted remotely.
Loss And Theft
It is difficult to prevent credit union staff from taking printed documents home with them — maliciously or by accident. This represents a serious data risk for your members; once a sensitive document is outside of the credit union, confidential information is unprotected and members’ financial data and personal information could be at risk. According to Javelin and the FTC’s Consumer Sentinel Network database, approximately 1 million U.S. adults were victims of identity fraud in 2012, and 23% of victims suffered a financial loss as a result. In Minnesota, a bank teller smuggled documents containing customer social security numbers, addresses, birthdates, and account numbers in a large-scale identity theft ring that resulted in nearly $40,000 being illegally withdrawn from customers’ accounts.
Almost all paperwork in a credit union contains sensitive financial data or private, identifiable information such as home addresses or social security numbers. Compromising this information puts your credit union at risk of damaging or losing a member relationship. Maintaining this information in an electronic and secure medium can protect your members and save your institution from incurring losses.
Multiple Copies And Collaboration
In the 24 to 48 hours after an employee receives or creates a file, they frequently make multiple copies of the same document as they actively process the file and receive additional information or collaborate with coworkers. Employees need access to the document but have to relinquish it for processing. The result is an ad-hoc filing system in which multiple copies of documents float around the credit union. Some copies even contain important notes that never make it into the member’s official file.
Paper is fragile, risky, and expensive. It represents a significant source of visible and hidden costs to credit unions, but your institution can easily convert the data contained within its documents into a valuable asset for improving service and building deeper and stronger relationships with your members.
Click here to request a copy of Bluepoint’s white paper, “Are You Prepared for a Data Breach?” and read additional information about the ways in which paper is putting your credit union and your members at risk.