Market Watch, April 2009 – No. 114

Can a financial-banking institution function without an integrated document management solution? Probably yes, but according to specialists, the number and quality of services offered would be somewhere in the 50s and 60s. Which, at present, would mean a very low level of efficiency and difficulties in keeping customers and attracting new ones.

Statistics show that 8% of written documents are lost each year due to filing errors; that a manager spends a considerable percentage of his or her working time on document management and that an employee spends, on average, between 3 and 5 hours per week searching for information.

If we were to apply all these “statistical verdicts” to the financial-banking sector, the result would be an institution of chronic inefficiency by today’s standards. And the current economic context makes efficiency at all levels a major priority. Even if the impact of the global crisis is not as deep in this vertical (compared to the earthquake suffered by financial-banking institutions overseas), the priorities are the same: operational efficiency, low cost of services, preservation of profit margins, a higher level of services offered to customers, in order to retain them, and attract new customers. An extremely delicate aspect, if we are to believe the BMC Churn Index Survey (conducted in 2007 on a sample of 12,000 Europeans in 12 EU countries), according to which the financial-banking sector has the lowest degree of customer loyalty.

You can do without, but… better not!

Under such conditions, the idea of a financial-banking institution operating without a Document Management (DM) solution integrated with the rest of the existing IT system does not seem viable.

“Of course, banks could operate without a DM solution, but it would probably be at the level of the 1950s and 1960s, when there were no computer systems and everything was done on the basis of typed or handwritten ledgers. (…) But think what chaos would be created without a DM system: inconsistency in client data, documents that cannot be found, documents lost in physical archives, much slower access to information, long response time for different approvals, etc.”, says Catalin Iosif, sales director of XOR IT Systems.

A point of view supported by Alexandru Baciu, technology sales consultant Oracle Romania, but argued from the perspective of the type of information conveyed: “More than 80% of the information used by a user in the banking environment is unstructured (stored in e-mails, Word documents, images, multimedia formats, etc.). Add to this the fact that this unstructured content is growing at a rate exceeding 200% per year, and we can begin to understand how important a DM solution is to an organisation and what real management problems its absence creates.”

But there are also opinions that a financial-banking institution can function without a DM solution integrated with the rest of the applications, but not very efficiently: “Yes, you can do it without it and there is no hint of irony in what I say. But we are at the point where banks and financial institutions have managed to implement ‘core’ applications, so they are now very interested in controlling and streamlining document flows. The financial and banking institutions we have worked with to implement such solutions have been the ones with whom we have built business cases, and the post-implementation benefits have been obvious. Once these benefits are proven, the managers of those institutions ask the rhetorical question: “How could we operate without such a solution?”, and they give the answer: “With difficulty, with high costs, with a service quality that leaves something to be desired and even with a reduction in market share”, says Adrian Paraschiv, sales manager Financial Services & Telecom Star Storage.

Why a DM solution is needed

“A bank operates just like any commercial company, it needs procurement, internal “bureaucracy”, information distribution, both internally and with subsidiaries, task transmission and tracking, recruitment processes, internal logistics, management and tracking of development projects, etc. Document management is not only about efficiency, productivity and saving paper”, says Alin Nita, FivePlus® Solutions CEO.

According to Alexandru Baciu, Oracle Rominia, the implementation of a DM solution, or even more completely Content Management, is usually based on the bank’s decision to address one of the following business and organizational problems:

  • Disparate systems that manage document or digital content information and make it cumbersome to retrieve, hindering business decisions, often duplicating content and making it unusable;
  • Inability to share this important information to the entire organization;
  • Lack of security mechanisms and control of access to this information;
  • Existence of documents containing outdated and expired information and lack of archiving and retention policies for important documents;
  • Inefficiencies in activity and high costs caused, in general, by manual searching of information and also by the need to mass print documents and deliver them to locations with wide geographical reach;
  • Increase in the number and complexity of national and European banking regulations and rules.

“Just like any other organization, financial-banking institutions are subject to a set of rules and needs, translated into various business processes that work together to adapt internal document flows to the needs of customers, whether internal or external customers. In order to improve operational efficiency, these institutions need to reduce the costs of document management and content management by integrating into an electronic document management solution”, argues Theodor Dumbrava, BPS manager Xerox Romania and Republic of Moldova.

Specific requirements

In the opinion of Adrian Paraschiv, Star Storage, the main requirements of a customer for a DM solution are directly related to financial indicators: “The requirements derive from the project owner’s objectives, but the main objective remains the improvement of financial indicators: profit, ROI, etc. And this can be achieved through solutions that bring real benefits in terms of competitiveness, operational efficiency and cost reductions. From our experience in selecting and then implementing such solutions, we can say that we look for those technologies and solutions that have incorporated “leading practices”, from leading vendors, and we look for those local partners that have implementation experience and can be a reliable consultant in implementing the DMS/BPM vision.”

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