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Benefits of a document management system for financial firms – and how to choose the best one for you

Summary

We share why more and more financial firms - from banks to insurance companies, and everything in between - are choosing digital document management systems (DMS).

Read time: 6 minutes

The popularity and use of digital document management systems continues to increase with financial firms and all across the world of finance.

A big reason for this shift certainly involves the increased adoption of digital signatures and electronic documents. But it isn't the only one. Other factors that have driven the move to digital document management include:¹

  • The volume of documents

  • Regulatory and compliance demands

  • The need to deliver an exceptional customer experience

  • Reduced physical workspaces in a more digital world

Let’s take a closer look at each.

Financial firms face a mountain of documents

A secured, cloud document management system - simplifies the handling of the mountains of documents gathered, indexed, and stored by banks as they manage accounts, and insurance companies as they process claims.

For financial firms, the challenge lies in handling the tremendous volume of sensitive PII (Personally Identifiable Information) that includes payment methods, account numbers, social security numbers, and transaction histories, to name just a few.

How this information is managed is critical. Loss or theft of highly confidential personal data causes significant damage, often resulting in costly fines, customer attrition, and irreparable reputational harm. It’s no surprise more and more insurance companies and financial institutions view records management as a top priority today.

Industry regulations and compliance requirements demand secured data and auditable access

After healthcare, financial services is perhaps the most highly regulated and monitored industry in the world due to the potential for fraud and theft. Plus, financial services firms are a top target of cyberattacks.²,³

Strict federal security and compliance laws govern information privacy and records retention. Compliance certifications such as HITRUST and PCI have been established to reassure businesses and consumers alike that a company has taken steps to keep information and data protected and secured. Low-code, AI-powered DMS often meet these standards and provides compliance leaders with the ability to access information quickly and easily, facilitating compliance, as well as a readiness for a regulatory agency audit.

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Article: HITRUST Certification Explained

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Well-organized digital documents can improve the customer experience

Documents stored digitally and searchable by unique customer data simplify the recall for account managers and customer service representatives.⁴ Customer and client questions can be answered when they are asked, documents can be shared securely, and system backups can ensure that location specific disasters won’t cause the loss of these documents and their vital data.

Physical workspace limitations have increased

Physical office needs have decreased as many firms have downsized as more and more employees work remotely or in the office part-time.⁵ Real estate consolidation, for example, means less space to store large volumes of paper, and firms aren't looking to pay for square footage to house paper.

Benefits of a document management system (DMS) for financial firms

Whether the need is to pull up a client portfolio while discussing wealth management strategies in real time or preparing for an annual compliance audit, there are multiple reasons for financial institutions of every size to go with a DMS.

Document security. DMS systems allow administrators to track the location, version, and status of every stored document, and usually offer robust security and encryption features to protect sensitive data.

Disaster recovery. Effective DMS solutions offer document mirroring, storing a digital copy of mission-critical records in a separate location to quickly recover from an unplanned outage or cyberattack.

Simplified lifecycle management. Financial records must be stored for years, but not every document has the same retention schedule or is entered into the system at the same time. A good DMS will track document life by type and implement the proper retention and destruction schedules to maintain legal compliance.

Instant accessibility. Once entered into the DMS, documents can be retrieved with permissions restricted access from anywhere to quickly respond to customer inquiries, with the ability to see a history of who accessed it previously.

Increased productivity.  A DMS can increase productivity by creating workflow rules that keep documents moving through an organization. Automatic indexing and routing of digital documents speeds approvals. For example, documents such as invoices and purchase orders can go directly to appropriate decision makers for review.

Audit preparation. A centralized digital document repository with time stamps of when each file was entered into the DMS makes audit preparation simple.

Client retention. Fast and easy access to data improves customer satisfaction, builds trust, and ultimately creates long-term relationships.

Cost savings. Electronic document distribution reduces printing, postage, and storage costs, and speeds delivery to recipients.

Many of these benefits fall under the umbrella of compliance. A DMS aids in compliance by securely holding all critical data in a digital vault, allowing access only to authorized users to keep information private, thereby insulating the institution from exposure to a breach and potential damages from violations.

Learn about the top priorities, technologies and challenges in banking and investment services for 2023. Download the Gartner®️ infographic.*

View infographic

Choosing the right document management system

There are many different types of document management systems commercially available, and several that have been optimized for use in financial services. The best DMS solution for you will bring multiple services together and manage all facets of a document’s life from creation to archival and destruction.

Choosing the right one for your business may seem like a chore, but you can simplify the process. Start by making a list of needs and priorities for your DMS. Consider these factors:

Scalability. How much documentation do you need to store? Will the volume grow exponentially? How much digital space will you need today? In ten years?

Data streams. What kinds of data and file formats will you be storing?

Interoperability. Will different departments, subsidiaries, or third parties need to enter or access data in the system? Find out if your DMS will need to integrate with SAP, Oracle, Sage, and other ERP systems.

Document access. How frequently are documents accessed? This may affect the decision to host your DMS on-premises (on-prem) or in the cloud. Many cloud service providers charge egress fees each time a document is accessed, which can add up quickly.

Security. What level of data protection for compliance is required? What regulations must your organization meet? Security may also impact your decision on where to host the DMS, as on-prem solutions typically offer greater control over data stored in the cloud.

On-prem or cloud-based? As referenced above, DMS can be managed on-prem or from the cloud. In many cases, the cloud may be a more affordable alternative to building out an entire DMS infrastructure where none exists.

Technology budget. Do you have the resources to implement and provide ongoing support for an on-prem DMS? Do you know what it is going to cost?

Technology expertise. Do you have the skills internally to design document workflows and indexing schema? Do you need a partner to assist with workflow development?

With the answers to these questions, you can now begin to do some research on DMS platforms that meet your criteria.

Don’t forget about paper

While an increasing number of documents today are created digitally, paper documents still play an important role in business.

There are hardcopies of receipts, expense reports, customer correspondence, and shareholder proxies that must be scanned into the DMS, and there are customer statements, loan documents, and stock certificates that must be printed from it. All with the utmost security.

Therefore, the chosen DMS must encompass all stages of the document lifecycle from input to distribution to disposal.

Building a DMS ecosystem for finance

The main component of a document management system is the centralized repository. This is where the files reside, even when being shared. DocuWare is an example of a DMS with built-in workflow functionality specific to financial firms.

Some organizations may need a centralized repository while others may have a system of some sort in place already. These organizations may need on-ramps or services that serve as on-ramps.

For example, multifunction devices – both black-and-white and color – can act as on-ramps by digitizing hardcopy originals when it is time to email, fax, or archive.

Alternatively, for paper-intensive enterprises, capture & conversion services and AP/AR processing services can provide document specific scanning, storage and distribution, to relieve the effort on your staff, allowing them to focus on core competencies.

A claims management solution helps insurance providers speed claims processing for faster resolution and improved financial performance through fewer errors and automated workflows.

Cloud faxing solutions can act as an on-ramp and streamline the capture, storage, and routing of incoming faxes to a centralized repository.

Even outsourced mail services can become an on-ramp for documentation into a secured repository for fast and simple delivery to employees working in the office or around the world.

Perhaps one of the biggest benefits of document management systems for financial firms is that they can be customized with scalable solutions to meet your unique needs.

In need of a centralized repository with workflow functionality or on-ramps and services to speed document processing?

Our document management professionals can help unlock the value of your data, free staff from mundane tasks, and maintain regulatory compliance through automated document management workflows that manage sensitive information from creation to disposal.

*Gartner, Infographic: Top Priorities, Technologies and Challenges in Banking and Investment Services for 2023, 17 October 2022, Nicole Sturgill, Pete Redshaw. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

  1. 1. https://www.fortunebusinessinsights.com/industry-reports/digital-signature-market-100356
  2. 2https://www.picussecurity.com/key-threats-and-cyber-risks-facing-financial-services-and-banking-firms-in-2022#:~:text=From 2015 through 2020, finance,institutions in 2021
  3. 3. https://www.ibm.com/downloads/cas/ADLMYLAZ
  4. 4. https://www.forbes.com/sites/forbestechcouncil/2021/05/11/the-sustainable-impact-of-a-paperless-office/
  5. 5. https://fortune.com/2021/05/21/fortune-500-ceo-survey-post-pandemic-profits-revenue-cybersecurity-risk/

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