Online processes are more than a web-based form

Some time last century the dream of lean, efficient, profitable businesses everywhere was to become paperless. In bulk, paper documents are expensive to process and store, and present a risk to a business through loss, whether that is misfiling or a natural disaster. So it seems smart to eradicate documents altogether and move to an online way of doing business, where you can put a web-based form online and automate your key processes.

Financial services organizations probably had the most to gain from the online world. Unfortunately this dream is elusive. For example, the Bank Secrecy Act (BSA) and the Patriot Act require organizations to implement effective anti-money laundering (AML) client identification programs. Since this requires physical documents to be presented as identification and contractual papers to be signed while comparing information against a range of business systems, this one process makes the efficient processing of applications using online technologies complex.

Since there are many other examples of why a ‘paperless’ organization with fully automated, straight-through processing, may remain a dream, a more pragmatic approach is required that enables documents to become part of efficient, integrated business processes.

Click to Show / Hide rest of the post

The PC Killed the Dream

Putting a flexible PC with a word processor on everyone’s desk almost killed the paperless dream of efficiency and control. The PC gave everyone the power to produce ad-hoc documents, print them out, and store them to the shared file-system, known as the ‘P: Drive’, or any other letter that is supposed to represent a public, shared place for losing documents. And don’t even get me started on the chaos email can cause.

Since these are documents that can not be recognized and automatically processed by a machine, and typically represent an unenforceable and unauditable component of a business process, they introduce risk into the operations. The efficient and controllable dream of the paperless office has been lost.

Take Back Control

Taking back control of your business processes to replace unenforceable decisions and communications helps not only reduce the risk of things going wrong and unauditable decisions being made, but will help to reduce the technology and compliance burden of random PC generated documents and emails. Taking back control requires you to put back some structure into many business processes.

Imagine a fairly typical insurance company. Having individual underwriters creating paper correspondence directly with potential customers may be fast, but does it allow the company to ensure that they are consistently meeting the requirements of their new anti-money laundering program in assessing new customers?

An organization that is keen to reduce its cost of audit, risk of regulatory fines, or loss due to fraud, must take the most risky processes and put in place real controls. This means that you don’t just review and file documents (something rarely done well), but actually enforce them with a business process application that is part of the employee’s core toolset.


My Customers Are Not Paperless

Even in businesses with a strong online strategy, you will run across the problem that at the boundary of your organization, the interface between you and your customer, some communications are still paper based.

A primary example is the new account opening phase of a customer relationship. Customer identities are demonstrated to a company by presenting several items of independent evidence, each item carrying more weight based on the number of hoops they had to jump through to acquire it. Even tech-savvy customers are stuck with the fact that their official identities are paper- and plastic card- based, such as a driver’s license, company documents, passports, etc.

To meet their anti-money laundering requirements for their Customer Identification Program (CIP) and Know Your Customer (KYC), a bank or insurance company needs to see and record each item of evidence, and record each item of outgoing application correspondence. For anything but low-value or low-risk accounts, validated copies of the identification documents are required to be kept as part of the account records. Plus, given the lack of a better option, the account applications typically require a wet signature, written by real human hand. All of these documents and copies of evidence need to be captured and filed in the organization by following strict procedures, and best practices.

Dream On

The ‘paperless’ dream had some important features that make it worth reviving.

While paper exists, scanning paper documents removes the expense and risk of physical storage. Scanning and processing paper application forms prior to the main business process removes much of the potential for error.

A corporate document and records repository is essential for effective document usage in all business processes, and for finalized forms, paper and electronic documents, and structured data records. Where ad-hoc documents have to be produced within controlled business processes, the records repository gives you control over them. Enforcing the capture of all business communications within a corporate records repository is essential. In general the benefits and potential to save costs are huge.

By automating and enforcing business processes, an organization can achieve a far greater return than the large savings that come from reducing the cost of paper production, handling and storage alone: improved compliance, reduced risk, improved efficiency, opportunity to grow the business without increasing headcount, improved customer satisfaction, etc.

Going a step further, key business systems should be integrated into the process, to enable processing efficiency gains and improvements, as well as an improved user experience which is essential for user acceptance of a new system.

With all of the components combined, unauditable email communication trails are avoided and essential electronic documents are delivered effectively, while paper documents are no longer misfiled or slow down your customer service processes.

If It Was That Easy, Every Organization Would Have Done It

A ‘dream’ organization needs many enterprise content and business process management components:

• Records repository - to meet records-keeping requirements, and reduce the risk of lost information
  
  
  
  
• Business process management - to enforce controls and avoid the need to create unnecessary email
  
  
  
  
• Document management - to ensure documents make it into the repository while they are being used in the business processes
  
  
  
  
• Integration - to enable the process to be truly enforceable and where possible automated
  
  
  
  
• Electronic forms - starting the process electronically has to be a great start
  
  
  
  

Implementing this whole system is obviously a challenge. Only a select handful of vendors can provide all of these components in a form that really works. Choose one with a complete, integrated solution set. Otherwise you will be paying external consultants to do the integration, when you could have bought a more complete package off the shelf.

Although the organization may not achieve a completely paperless or online state, the benefits of putting structure back in to the business process are considerable. Step by step, the organizations can move towards a strategy of straight-through processing. And in doing so, it can demonstrate to regulators its commitment to compliance by design.

Done right, this system will become core to your business, and be able to help it grow while reducing risk - allowing you to sleep soundly at night.

UPDATE: I need to note that this post is based on a piece I have had floating around on my desktop for a while. In the meantime I meant to reference a great item by James Taylor, The paperless office and decisioning, which puts some of this discussion into the context of Enterprise Decision Management.