These days, document management software is becoming increasingly common in all types of industries. Companies of all shapes and sizes need ways to store files electronically, go paperless, collaborate on projects via the internet, and more. Go back 20 or 30 years, though, and the demand for DMS use was close to nonexistent. Indeed, not so long ago, businesses were content to keep all of their documents in physical file cabinets. Even as the internet grew increasingly popular throughout the 1990s, DMS wasn’t exactly something that businesses were demanding.
The Signing of the Gramm-Leach-Bliley Act
Looking back, it’s easy to see 1999 as the year when a need started for document management systems. That year saw the Gramm-Leach-Bliley Act—also known as the Financial Services Modernization Act (FSMA)—enacted as Federal law in the United States. The main thrust of the bill was not to require new document management technologies. On the contrary, the FSMA was primarily passed as a means of eliminated long-standing rules that barred different financial institutions (including banks, securities companies, and insurance firms) from merging.
However, this decision to remove the barriers to mergers in the financial world did, indirectly, lead to the evolution of electronic document management. Because the Financial Services Modernization Act made it possible for the financial world to create larger, more multi-faceted, and more powerful institutions than ever before, it also needed to impose new rules and regulations on those institutions.
Specifically, the FSMA created new rules regarding customer privacy. By allowing huge banks, insurance companies, and brokerage firms to merge into even bigger entities, the Financial Services Modernization Act was giving those combined institutions access to a massive bulk of personal customer information. As a trade-off, certain FSMA rules directed financial institutions on how they needed to safely and securely store personal customer information, inform clients about how their information might be used or shared, and allow customers to have a choice in whether or not they were comfortable with having their information shared between different institutions.
A Summary of FSMA Rules
Among other things, FSMA rules demanded that financial institutions have a written plan for how they would safeguard private customer information. Since financial institutions have access to sensitive information like names, addresses, credit card numbers, and social security numbers, the FSMA called for protective measures to keep that information from falling into the wrong hands.
FSMA rules imposed a number of privacy standards that were difficult to comply with if a financial institution was using a paper filing system. For instance, the FSMA called on institutions to limit access to sensitive client information to only the employees who needed access to it. The act also called for encryption of any information transmitted electronically, measures for keeping ex-employees from accessing sensitive customer information, and seamless organization that allowed financial institutions to know where they were storing private customer data at all times.
How the Pursuit of FSMA Compliance Pushed Financial Institutions Toward DMS
In trying to reach compliance with these rules, it’s hardly surprising that financial institutions developed a need for document management software (DMS). For huge financial firms, organizing the personal information of hundreds or thousands of clients—and knowing how to find that information at any time—was a task that couldn’t be done with paper filing systems. With electronic storage and text-based search options, it’s a breeze.
Similarly, back in 1999 when the government enacted the FSMA, there really wasn’t a good way to transmit files electronically in a safe fashion, as email was not (and still is not) considered a safe method. With built-in encryption and secure client portal technology, DMS like eFileCabinet makes it possible to transmit sensitive information to clients safely, securely, and quickly.
The role-based security functions included with eFileCabinet can also help financial companies comply with the FSMA. These features control who can and cannot access certain files, and can even track who has viewed or edited a document. In turn, companies are able to keep track more closely of who is accessing information. If a client’s personal information is compromised, a financial institution using DMS would theoretically have a very short list of employees who could have been responsible for the leak.
This summary of DMS features and how they tie into the FSMA rules show how the Financial Services Modernization Act essentially brought about the need for DMS technology in the 2000s. Document management software, in making it much easier to protect client privacy and organize customer information, made it possible for financial institutions to comply with the lofty rules set forth by the FSMA. In turn, companies from countless other industries have benefited from DMS and its privacy and organization features.
Are you interested in learning more about DMS or about eFileCabinet in particular? Contact us today.