Financial Services Companies get green software-as-a-service

Today’s document management and business process automation solutions not only address business pain points but also the emerging “green” movement. The Gartner Group predicts “Environmental, or green, issues will directly affect IT decisions related to the purchase of systems, services and the selection of vendors that support the green IT movement” in their article titled “Gartner's Top Predictions for IT Organizations and Users, 2008 and Beyond: Going Green and Self-Healing” dated January 8, 2008.

Traditional View of the Value of Internal Document Management
Many factors drive banks and financial services organizations to implement document management solutions. They struggle to manage the mountains of paper that accumulates and incur high facilities costs to store paper documents for many years based on retention requirements. Distribution of mail and other business documents requires expensive couriers, postage or express shipments to transport to various offices. Additionally, many employees may be candidates for telecommuting; however, these employees sit in valuable office space simply because they need access to paper files.

Many other areas of document handling contribute directly to the bottom line but are more difficult to assign hard costs. Employees spend many hours filing paper documents and even more time locating a document once filed. Securing the paper files and tracking who can access which file requires very detailed procedures. Also, indexing information from documents such as checks, remittance coupons and invoices and posting to accounts receivable, accounts payable and cash management applications takes valuable time. Such legacy processes make timely availability of management information very limited.

Document imaging and business process automation solutions address these critical internal issues. However, traditional premised-based document management solutions require large up-front capital outlays for hardware and software and dedicated internal resources to install, configure and maintain the solution. Therefore, these solutions have been out of reach for many small to medium sized banks or organizations.

Now Software-as-a-Service (SaaS) document management and business process management solutions allow small to medium sized organizations to take advantage of the document management benefits without the traditional document management costs.

The Green View
Companies today want to understand their carbon footprint and either take action to reduce their carbon output or purchase credits to offset their output.

Washington Mutual, Inc., one of the nation's leading banks for consumers and small businesses, announced on April 25, 2008 that it reached its goal to raise $1 million for The National Arbor Day Foundation. The bank's year-long "Make a Statement, Plant a Tree" campaign pledged $1 to the Arbor Day Foundation for each customer who switched from paper to electronic statements. The Foundation will plant one million trees in America's national forests with the funds raised from this donation.

Many banks and financial institutions have introduced green strategies addressing their data centers, their employee’s personal computer (PC) and printer use, and transportation costs. Organizations use virtual meeting rooms including Web and video conferencing to reduce emissions required to meet. However, reducing employee, partner and customer paper consumption through email and document management solutions results in some of the biggest impacts to the environment.

Ever wonder how much of a tree you use when printing a document?  One ton of uncoated non-recycled copier paper uses 24 trees. A "pallet" of copier paper (20 lb sheet weight) contains 40 cartons and weighs 1 ton. Therefore:

• 1 carton (10 reams) of 100% copier paper uses .6 trees
• 1 tree makes 16.67 reams of copy paper or 8,333.3 sheets
• 1 ream (500 sheets) uses 6% of a tree (and those add up quickly!)

How can SaaS document imaging reduce your carbon footprint?  By scanning your paper files and managing these files centrally in an on-demand document management repository, you may:

• Reduce paper required for printing, copying and distributing documents
• Eliminate storage facilities for physical document retention
• Reduce fuel and emissions for internal courier vehicles, employee vehicles (telecommuting), and express shipment vehicles
• Move to central document storage to reduce data center’s footprint
• Eliminate office space for telecommuting employees

Value Statement for On-Demand Document and Business Process Management
Banks and financial organizations rely on documents, information from the documents and communication about documents to drive business processes. Retaining clients requires intensive, personalized communication. Government and industry rules, regulation and laws require retaining and tracking access to documents. Consolidation, mergers and acquisitions all affect how documents are stored and delivered.

According to research from All Associates Group, total document costs average 6.8% of bank revenue. When fully deployed, a document management system typically shaves 30% off a bank’s document and information-related costs.

SaaS document management solutions offer central storage of documents with access to these files anywhere, anytime. SaaS providers manage the entire hardware and software environment. Therefore, you don’t have any up-front licensing or on-going maintenance costs. You simply pay a monthly subscription fee.

On-demand workflow applications automate your document-centric business processes allowing you to shave days off the time required to deposit funds, originate loans, process payments, review employee applications, approve contracts, etc.

Typical Flow of an On-Demand Document Management and Workflow Automation Solution
On-Demand Document Management solutions allow you to capture, manage, store and share any type of file. Using such a system, you may:

• Capture paper files – even straight from the mail room – by scanning or faxing, converting them to fully searchable, unalterable digital images, or capture any type of electronic file even directly from existing applications.
• Manage your documents to ensure only authorized individuals can access and proper individuals review. Powerful on-demand workflow applications automate any of your document-centric business processes.
• Store any file type natively in a central, hosted repository for long-term retention using the highest level of encryption and security protocols to ensure the safety of your data.
• Share documents with others via a secure link without having to send or receive large vulnerable files via email.

Internal Business Case for Action
In these difficult economic times, management looks to reduce document-related operating costs in any way possible. Organizations may choose to go paperless in a specific business unit (mortgage is a current favorite) or to automate the mail room to capture and image all documents at the first point of entry. Either option requires a robust document management and business process automation solution.

Cost/benefit models have proved time and time again that capturing and converting a document to an image, routing the image based on workflow rules, and extracting and manipulating data following business rules allows organizations to significantly reduce costs and increase efficiency. Reengineering processes with workflow and business rules automation provides an even greater return. In order to understand the true value, you and your vendor first need to agree on the possibility. Then you need to forecast the future costs including personnel, postage, shipping, courier, space and other pertinent items and compare to your current costs. Finally, calculate the internal rate of return based on the cash flow benefit and measure the projected benefits against actual gains.

High-Value Implementations
Paperless Remittance Processing
In the current falling rate environment, community banks need to find alternative revenue sources. Most community banks primarily fund loans with CDs that typically have longer maturities than the funded asset, thereby compressing margins. Since community banks rely more heavily on revenue from margin than do

larger banks which make over 50% of their revenue in fees, community banks must develop value added services that can drive fee income as a higher percentage of total income

Many large banks already provide image lockbox services to business banking customers. The bank converts paper checks to ACH (Automated Clearing House) or Check 21 images for processing and collection. The next generation of this offering ideally suits community banks and both reduce funding costs and increase fee income.

Community banks can offer a service to capture and image all documents including checks, remittance documents, correspondence, and envelopes and index these images for later retrieval. Exceptions or “no docs” process more efficiently by making images available to appropriate personnel for proper disposition. Once a check’s ABA is associated to a customer account number, a database automatically prompts an operator the next time a check is received from this customer without a remittance document.

By targeting recurring billers and other core deposit-rich companies, a bank can offer a sophisticated check and document imaging service to these customers and provide the cost savings and efficiencies similar to those realized by the bank’s internal efforts. The bank realizes payback in lower cost deposits and/or fees for these services.

A $20 million commercial finance firm implemented such a solution and is well on its way to realizing $92,000 in annual cost reductions and over 21% productivity increase.

Paperless Accounts Payable
Moving to a completely paperless payable system has been talked about for years. Meanwhile, most invoices are still mailed via snail mail today. Companies dedicate many resources to opening and delivering the mailed invoices, sorting, manually posting payment to the accounts payable system and filing. Along the way, many invoices are misplaced resulting in late payment fees.

Using an on-demand document management solution you may automate your entire accounts payable solution. Either your employees or a business process outsourcing organization open and scan invoices straight from the mail room. The Web-based workflow engine recognizes the invoice and automatically routes it to the appropriate processor based on the vendor. Your processors can view the invoice and associated indexes directly from their AP system.

Paperless Loan Origination
A large regional bank reviewed its mortgage banking operation and determined that employee productivity needed improvement. To do so, they updated the mortgage origination system and implemented a document management system to allow paperless origination, processing, underwriting, closing and post-closing operations. The projected benefits indicate significantly higher productivity and quality of processing. Over a three year time horizon, the projected internal rate of return is over 92%.

Summary
Not often do we see the confluence of business and environmental interests. Now financial services companies both large and small can reduce their carbon impact while delivering true value to the bottom line. Solutions like paperless remittance processing, paperless accounts payable and paperless loan origination automate mission critical functions, reduce internal costs and increase productivity. They also help the environment by reducing the paper, fuel and emissions required to get the right document to the right person by delivering files electronically anytime, anywhere.

Note
InnoSource Business Solutions provides on-demand document management and business process outsourcing leveraging our SaaS platform, Docufree. Our customers use Docufree to automate mission-critical business processes including remittance processing, invoice payment, loan origination, and contract administration. To learn more about Docufree, visit www.docufree.com or call (877)362-3569.

Alicia Beers can be contacted at abeers@innosource.net.