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What Is Paperless Banking?

What Is Paperless Banking?

How the Financial Services Industry Is Shifting Towards Digital Banking to Improve Customer Experience

Financial institutions are always looking for new ways to make transactions easier. Paperless banking, until recently, has only been associated with paperless statements produced by a bank. And this is right to some degree, but it’s only a small part of a much larger equation.

Paperless banking encompasses the entire banking institution, from online banking to account management, including account opening. When we say ‘paperless banking’, we are talking about all the practices we can automate and make available online to create more productive, environmentally friendly and user-friendly service interactions and transactions.

Customers are happier because there are less forms to fill, an improved sense of security and services are delivered in a much faster time frame.

Benefits of Paperless Banking

While some of the benefits of paperless banking may seem obvious, others are harder to envision at first. Productivity is one of those evident benefits resulting from paperless banking. Going paper-free can improve project productivity by 30-40% with investments in paperless technology showing payback within 12-18 months.

productivity benefits of paperless banking

Figure 1

Embracing the Shift to Digital Leads to Innovative Business Models

In the current environment, churn is occurring more frequently than ever. Customers choose and switch, based on convenience, quality of service and price and are therefore expecting ‘banking without boundaries’.

With millennial buying power set to reach $1.4 trillion by 2020, it’s critical that businesses adjust their services to reach the incoming demographic. Right now, according to a report by Jumio, 90% of all millennials are using mobile banking and expect an online experience from their banks. When mobile functionality misses the mark, millennials are quick to abandon their transactions (including the opening of accounts).

The new digital feature set will increasingly progress towards a much richer set of banking offerings for the end customer, going beyond technology, security and infrastructure capabilities- opening up new business models (that at times include the adoption of FinTech), propositions, redefining customer experience and enabling new potential from employees and business networks.

At the Heart of the Customer Connection is Data

Financial organizations are highly regulated, often needing to keep, store and process huge quantities of personal data. This is required by many regulations, but also serves to give banks a platform to leverage and analyse data. More data allows for more insights to be made, providing personalised products and services (at times at an advantage to their competitors) and in turn, turning in to a more suitable and appropriate offer for each customer interaction, thus generating customer loyalty, long-term relationships and profitability.

Paperless banking allows organizations to meet compliance objectives much more easily. One of the ways it does this is by creating a digital audit trail that auditors can more easily analyse. Document workflows can be tracked from initial inbound documents to the headquarter’s workflow into the organization’s archive. This allows an electronic ‘chain of custody’ to be demonstrated to an auditor.

Customer Relationships as New Sources of Value

Customer service and satisfaction should be one of the primary goals of any financial institution. Making transactions easier enhances the customers' experience, promotes retention and they are therefore likely to spend more money within an organization.

Paperless banking allows for a seamless and efficient user experience that can reduce the time of a transaction ten-fold as we will see in the next section. This easy functionality of service needs to translate seamlessly from desktop to mobile to tablet as well as to the communications channels, which will need to be multi-channel as some customers still have a requirement to interact on the phone, email, paper, through social media and at times in person.

Digital technology and good data workflows allow institutions to share and update information on customers and support cases on all of these channels and have them update quickly enough for it to be visible to all relevant employees. Ensuring that the case is handled at the same speed on all channels is also vital to making sure customers are satisfied.


Keeping paper out of the equation speeds up response times. Document printing, ink, admin, envelopes and postage are all costly to a business (both in time and money). Improvements with speed of response based on reductions of paper-based workflows can be huge.

 paperless banking benefits - improving the speed of response

Figure 2

Natwest Launches UK’s First Paperless Mortgage

To share an example of paperless banking in use today, Natwest introduced the UK’s first paperless mortgage service. Customers of Natwest can apply for a mortgage online and using secure technology, they can have their credit checks and documents signed and mortgage accepted without a single piece of paper being sent to their house.

A mortgage can be offered in just 24 hours, 10 days faster than before.

  In advance of a call with a mortgage adviser, customers will be able to upload the documents required for an application, such as a driving license, passport or payslips through a secure online portal. A telephone call with a mortgage adviser will then be arranged at a convenient time for the customer, to guide them through the process. It will be possible for the adviser to highlight key parts of text in documents and help the customer with any questions. The customer will be able to sign the final documents electronically using a mouse or tablet.

It All Starts With One Project

To make a financial institution as paper-free as possible, time and money need to be invested. In something like Natwest’s example, development needs to be built into the mobile banking app that allows identity documents to be captured on the smartphone and sent securely over the internet to the bank’s servers. These systems need to be connected to email marketing tools so that customers get notifications to tell them their ID has been received and their application has been accepted/denied.

A good place to start is with awareness. How can you spread awareness of digital progression such as paperless banking projects in your business? Who can you talk about starting a new project like Natwest? Get the gears rolling across your organization by talking about how going paperless can benefit your company. It all starts with one successful project that benefits a single transaction and with a proof of concept, you will quickly find that everyone in the business is looking at how digital banking can work for them.  

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