Financial institutions operate in a dynamic, ever-changing environment. As mentioned in one of our previous articles, “Tech-Savvy Financial Advisors Do More Business,” we touched on the fact that financial advisors who embrace modern technology, so called “e-advisors”, tend to be more successful at garnering more clients than financial advisors who are reluctant to keep up-to-date with the advancements of modern technology. This also holds true for financial institutions such as banks. The reason for this is simple: clients are more trusting of institutions that leverage technology to handle their assets than institutions that do not. Clients view financial institutions that embrace modern technology as more relevant and more capable of keeping up with a constantly changing business landscape.

The proof of this is in the statistics: based on research conducted by Fidelity Investments Inc., financial advisors who use modern technology to bolster their services have on average 40% more assets under management than those who do not. Furthermore, according to the same study, approximately 69% of younger, tech-savvy investors expect that the latest technological advancement be used in managing their finances. What is even more surprising is that 41% of individuals in the study stated that they would leave a financial institution that did not make integrate modern technology into their services.

Given the above, in an effort to satisfy the needs of the modern consumer in this digital age, the banking industry is quickly moving towards investing in technology and talent required to retain customers and remain competitive with “fintech” (financial technology) firms. One of the available technologies that can help financial institutions such as banks remain relevant and competitive is document management software (DMS).


Financial Institutions and Document Management Technology

IT modernization has in recent times has become the main priority of the banking sector. According to Temenos: “Banks are investing in capabilities such as analytics and channels that will help deliver a better customer experience.” We shall see shortly in this article that in addition to the technology mentioned by Temenos, document management software is equally as important in allowing financial institutions to remain relevant and competitive.

Why document management? Think about the many financial transactions that banks carry out on a daily basis and the efforts made over the years to optimize their processes. However, in spite of the progress made in terms of customer data management and data transmissions, most of these transactions are still largely paper-based and inefficient (you can view our many articles to get an idea of the drawbacks of paper-based systems and the various advantages of going paperless). Therefore the efficient management of documents has become a priority of major banks worldwide, thus the need for robust document management software.


The Benefits of Document Management Software for Financial Institutions

Saves Time–The management of paper documents usually entails a number of resources for manual tasks such as filling out forms, placing files in envelopes to send by post, file retrieval, etc. This can result in significant burnt man hours, considering that even a small investment firm with only 450 – 500 clients can generate a minimum of 75,000 new sheets of paper per year. This figure can be thousands of times more for large corporations such as banks.  Through the implementation of document management software, banks can realize benefits such as instant document retrieval, reduced document loss, increased document security (a must for the banking industry), and streamlined workflow. With DMS in place, banks and other financial institutions can better take advantage of available resources by assigning them to more important tasks.


Adheres to Regulatory Compliance–One of the most important aspects in the banking or financial industry is maintaining compliance with often strict regulatory bodies such as FINRA (Financial Industry Regulatory Authority).  All banks are required to comply with these regulations and keep up-to-date with changes or revisions that may occur. This can, however, turn out to be a challenge with paper-based records. Some examples of general compliance guidelines include, but are not limited to:

  • Records must be able to be retrieved on demand.
  • Records must be stored in an unalterable format.
  • A complete and accurate transfer of records must be available.
  • Documents must have an audit trail that clearly identifies the original dates that images were captured on the system.
  • The system must have reasonable controls to prevent and detect records deterioration.
  • Copies of records must be readily available to auditors.

Compliance may prove to be difficult when documents are in paper form and compliance with regulations is monitored manually.  Document managements systems already have these functions built in so compliance is rarely an issue.

Improves Workflow–Having documents managed electronically means that it is easier to set up workflows. An efficient and successful workflow eliminates the need to physically move documents from one place to another. Documents can be routed to appropriate persons by way of established protocols and procedures. Also, a streamlined workflow allows staff’s time to be used more productively and efficiently resulting in a more efficient and profitable organization.

By embracing technology and using the available tools such as document management systems, financial institutions such as banks can remain agile and flexible delivering customer service that can help them remain competitive, profitable, and relevant in a dynamic technological landscape.