Hyland Software's Document Management Blog

Want to Become a Paperless Bank? Three Tips to Consider

// June 2nd, 2011 // No Comments » // Financial Services // Michelle Shapiro

The idea of being paperless has and always will be a goal in banking. This sentiment was clear at last week’s Indiana Bankers Association Mega Conference.

The audience at the show was impressive – most had acknowledged a business pain and had at least began building a business case and strategy for enterprise content management (ECM). And to help move their ECM project along, many attended the presentation from Cornerstone Advisors, “How to Become a Paperless Bank in Only 24 Months.”

In case you don’t get a chance to dig through all 33 slides, my main take away from the presentation was this: The biggest drivers for a successful ECM project aren’t about the technology at all. Rather, the drivers are about if the organization understands its goals, technology gaps and implements against them.

These are obviously really, really big ideas with a lot of behind the scenes infrastructure and political issues that could create roadblocks. To break it down, here’s my take on the three “quick tips” to follow when creating an ECM strategy to go paperless:

 1.      Do your homework

 Are you going to target your institution’s biggest need first? Or are you looking to start small? I recommend looking at areas that will quickly impact your financial organization the most and demonstrate a quick return on investment.

Many of our financial services customers find that deposits or streamlining the lending process are great places to start, but it might be different for you. If you want to start smaller like new account opening, that’s okay. Quick wins in an ECM project will help you gain the support of other departments.

 2.       Test everything

 The pathway to truly being paperless is built on a well-documented, followed and tested ECM solution. The solution needs to be deployed in a manner that supports relevant controls and is planned out in a logical manner. Using a test environment and prototypes will ensure things are right when you go live. Test everything. Training, systems, support, etc.

3.      Measure your rollout

 Establish and follow pre-determined checkpoints along the way. You should have a benefits realization plan in place and stick to it. Measure the return on investment. For instance, what was your bank spending on courier costs before going paperless vs. after your ECM implementation? These numbers are crucial for validating your need to implement an ECM strategy. 

 Having a plan in place, testing your rollout, and tracking and establishing ROI metrics are crucial for your ECM implementation. Follow these rules and your journey to become a paperless bank will be destined for success.

The Tremendous ECM Twosome for Financial Services: Records Management and Workflow

// May 12th, 2011 // No Comments » // Financial Services // Michelle Shapiro

One of the cool things about ECM software is that there are many components, and some benefit certain organizations more than others. Looking at this by industry, Michael Croal, Senior Director at Cornerstone Advisors, has done an amazing job of explaining what capabilities produce the best results for financial services. In his recent GonzoBanker article, The Other ERM – Electronic Records Management, he focuses on two ECM technologies – records management and workflow.

As he outlines, records management is essential in financial services as information assets are only growing and becoming more complex to retain, manage and comply with corporate, domestic and international records management standards. Add workflow to the mix, and you can automate processes like declaring documents as records, ensuring records are complete, facilitating record disposition and proving compliance through reporting.

If Michael’s article didn’t convince you to take another look at utilizing records management and workflow, maybe this example will.

Take a paper-based way of managing the retention of closed accounts and paid loan documentation, then apply records management and workflow. The closed loan and/or paid account reports that are generated by your core application are COLD processed into your ECM system. The ECM system reads the reports and parses out the individual loan/member numbers and generates a unique record for each number which is added to the appropriate managed folder.

Then, the unique record automatically enters the appropriate workflow. Workflow initiates the retention process at the managed folder level while records management controls the retention schedules. The appropriate administrators are prompted for the approval to purge a folder according to the financial institution’s set retention policies.

“Ta-da!” as my two-year old would say.  The tremendous twosome of records management and workflow has done it again, yielding the best ROI for financial services investing in ECM.

Report: Technology Spending by Lenders on the Rise

// April 4th, 2011 // 1 Comment » // Financial Services // Michelle Shapiro

Mortgage lenders of all sizes are expected to increase their technology spending by 15 percent this year to $4.11 billion, according to the new MORTECH study. Why?

They’ve weathered the subprime collapse. And now, they’ve recognized that technology is a vital component in addressing the changes and challenges facing the mortgage finance industry today.

This rang loud and clear at MBA’s National Technology in Mortgage Banking Conference & Expo where I spoke to many CIOs and senior business executives who are looking for ways to use technology to their advantage. Questions about document management and workflow were at the top of their list. 

Jeff Lebowitz, president of MORTECH LLC, said that mortgage firms will be playing catch up “on workflow integration and electronic document management.”  Lenders can utilize electronic document imaging (AKA enterprise content management, ECM) with workflow to optimize and streamline the full range of mortgage operations, including origination, underwriting, post closing and audit, shipping and delivery and servicing. 

Whether it’s regulatory developments such as the Dodd-Frank Act or seeking new ways to reach new customers, enlisting document management and workflow technology will play a key role in keeping lenders compliant and in the game. 

Check back in a few weeks for a closer look at how ECM can streamline the review and routing of loan documents while integrating with an LOS. I’ll give you a guided tour on how ECM can not only shorten the lending cycle, but also how it makes the process more cost effective throughout each step of the loan – from origination and underwriting, through post-close and audit, to servicing and shipping and delivery.

Combating new compliance issues in financial services? Focus on using technology to address these three things

// March 23rd, 2011 // No Comments » // Financial Services // Sam Mazzola

Centered in our nation’s capitol, the buzz from the recent CUNA Governmental Affairs Conference was all about addressing the needs of members – as usual – but this time, it was in the context of meeting compliance demands and alleviating the associated costs.

Being part of the larger technology industry, it always amazes how much of these kind of conversations all boil down to how technology can be applied. Whether it’s regulatory developments such as the Dodd-Frank Act or seeking new ways to reach new members or customers, technology plays a key role in keeping a financial institution compliant.

Some regulations have yet to be written, but financial institutions need to stay ahead of the impending rules. To accomplish this daunting task, technology must do very specific things. From what banks and credit unions are saying, here are the three most important qualities:

• Auditable processes and content
• Security
• Flexibility to adapt to these and other new regulations

Clearly, it’s not just one core system or application that can do all these things to make sure financial institutions are compliant with Dodd-Frank and other regulations. But, here’s the perspective of how an enterprise content management (ECM) system should address these three needs.

Solid ECM solutions offer records management tools. These are in place to control the retention of all associated business records securely organized within a folder interface. Not only does this structure enable faster access to information, but it guarantees consistent and timely management and disposition of documents. This in turn facilitates easier audits, ensures compliance with internal and external standards and prevents costly legal battles.

Gone are the days where an army of people exist solely to find, track and manage paper. Instead, your team can focus on projects and roles that bring value to the organization and make a difference to members/customers.

On the security front, ECM solutions should offer specific encryption features. Encryption provides the tools necessary to meet the Payment Card Industry (PCI) and Data Security Standard (DSS) requirements, while enhancing cardholder data security. When encrypted, keyword values and electronic document files become unreadable if accessed outside of an ECM system.  The result is reduced exposure to risk, reduced costs and protected member/customer information.

Lastly, no financial institution can address the continuously changing compliance demands with a static solution. There’s no question that it’s going to be a long road with evolving compliance requirements. The good news, though, is that it doesn’t have to be too expensive, complicated or resource intensive with the right technology tools in place.

How to Keep Your Mortgage Documents Safe and Secure

// March 21st, 2011 // 1 Comment » // Financial Services, Lending // Tom Tennant

Did you happen to read The New York Time’s Bucks Blog on March 14? Blogger Jennifer Saranow Schultz ponders whether a “mortgage cloud of sorts exists” for mortgage lenders. The answer, I gathered from both the post and from reader comments, was, “Eh, kinda.”

Schultz reached out to Bank of America and Chase to see if they still handled paper applications or turned that paper into electronic documents for faster retrieval (alluding to increased customer satisfaction and a reduction in lost documents). Only Chase responded, saying it has scanned mortgage docs since 2009.

No word on how Chase handles the docs after they’re scanned, but a spokesperson says the company has a way to workflow mortgage documents and determine if a borrower’s file is missing critical pieces. And underwriters can access docs from their computer rather than by marching over to a filing cabinet.

Good stuff.

But, it would be even better if a disconnect between lenders and borrowers didn’t persist, as readers passionately commented on. Citing various financial institutions, they lamented lost mortgage documents and delays in the application process – some resulting in deals gone sour.

Delays are one thing. In some instances, you can trace that back to inefficiencies on the employee side (heavy workload, pressing priorities, extended vacation). But lost documents are quite another.

Lost documents present a security issue. If a financial institution cannot account for documents brimming with a customer’s personal information – well, that’s bad. Who has that information? Why do they have it and how will they use it? This is the kind of stuff that drives a bank’s customer service, public relations, legal department and management team nuts.

If it’s not a flat out security breach but rather the matter of an outdated and complicated filing processes, how best to retrieve the lost information? Asking the customer for duplicate paperwork – as evidence by Bucks Blog reader response – does not inspire confidence.

Many banks were early adopters of imaging technology. But, articles like this have me scratching my head. Why did they stop with scan and retrieve?

Today, enterprise content management solutions are addressing many more problems than the inefficiencies of paper. Auditability and security of documents is paramount, as is a solution that keeps pace with new and emerging industry banking regulations. An example: Payment Card Industry (PCI) compliance. Some ECM solutions are doing their part by encrypting images and index values, helping banks comply with new PCI laws.

A banking resolution: No more courier costs

// February 3rd, 2011 // 1 Comment » // Financial Services // Sam Mazzola

Yes, it’s true. Banks still use couriers – and have to deal with the costs that go along with them.

To me, couriers are to electronic information sharing as telegrams are to e-mail. They’re outdated. Ineffective. Expensive. And it’s time to get rid of them.

As Michael Croal, Senior Director at Cornerstone Advisors, stated in his recent GonzoBanker article, The Year of the Rabbit, “Shame on the bank that still has couriers schlepping interoffice mail and loan documents back and forth.”  I couldn’t have put this any better. 

It’s not a matter of the tools being available. They are. It’s more of a matter of banks making sure they’re using the right tools, the right way.

In the case of enterprise content management systems, there are many ways to do this, such as:

• Small manageable workflows to eliminate shipping costs between the branch and home office.
• Branch capture to scan and transmit check images directly from the branch to a processing site –without having to physically transport checks for processing.
• All inbound mail can be scanned, and the ECM system can automatically notify the intended recipient that there is an image of information they might be interested in. 

Going forward, the bank would only need to use a weekly FedEx type service for those high-maintenance documents that need to be signed and have the original document saved. More efficient, and less costly.

While this may seem like an oversimplified way to look at the benefits of today’s technologies in financial services, it’s not. Banks are in a time now where they’re questioning if their core and other systems are actually getting the job done. And, if these systems can’t be used to eliminate something like courier costs, their time is running out.

To that point, maybe it’s not “shame on banks.” It’s “shame on the technology providers” for not offering a flexible solution to answer the very real, day-to-day needs of banks.

Workflow: 3 ways credit unions can use it to take document management to the next level

// January 18th, 2011 // No Comments » // Financial Services // Sam Mazzola

To kick off the new year, I like to reflect on the trends and movement of financial services IT from the past year. While looking through my notes from customer meetings and tradeshows, I found one circled and starred among the scribble:

 “10 Tips for Increasing Technology and Operational Efficiency: Best Practices from the CUNA Technology Council”

 #1 suggestion: Increase efficiencies by implementing electronic workflow

This was an enlightening moment for me. In the past, credit unions have focused so much time and effort on making content electronic that they simply haven’t had the time for the process part of it. But, a couple years ago, they quickly found that in order to meet their members’ needs and stay afloat, they need to re-evaluate processes and find more efficient ways to get work done. This session clearly reflected this notion.

But that number one suggestion – Increase efficiencies by implementing electronic workflow – was just that – one suggestion. To give a bit more meat to it, and to kick off the new year right for credit unions’ process automation, here are three situations where credit unions can benefit from workflow:

1. Loan operations departments – “Paid Off” report

If you’ve ever worked in the loan operations department, you know that this Paid Off report comes daily. The team then must determine if overpayment refunds are required or collateral needs to be released or returned. Then, they must also initiate record retention periods for the loan files. Using a workflow to identify these triggers and then automatically flowing the related document(s) or information through a lifecycle of pre-configured work queues is where the power of workflow really shines.
 

2. Mortgage origination process

Here’s a great example of a process that involves lots of different systems. The mortgage loan origination system (LOS) has an internal workflow that collects data in the application phase of the process. Ultimately, it places loan requests into a status or queue for the underwriters to make their decisions.

When underwriters retrieve loans from the queue, they have access to all of the information that the originators entered. In most cases, they also receive paper loan files with the supporting documents. This is where content management and workflow can play a role. By letting the LOS do what it does best (handling data and transactional workflow) and integrating the documents and data in the ECM system to the LOS, users are able to stay in the business application they are most comfortable with. In the end, you gain efficiencies like increased productivity and happier staff. 

3. Maintaining a mortgage loan

The LOS is designed to be transactional so the images are tied to that one mortgage transaction. But, that often causes the documents to be held hostage in that system. By moving the images into the ECM archive and enabling workflow, documents can be shared with other applications – and more importantly, other departments – that may not have access to the LOS. In addition, the LOS does not have record retention capabilities, so when the loan is paid off there is no way to begin a retention period and delete the document image when the retention period expires.

The day has come: Credit unions have had the big “aha” moment: Even the best core systems can’t get rid of paper and the costs and slow processes that go along with it. Now, it’s time to put these suggestions in to practice and take advantage of workflow.

No note, no foreclosure: The records management issue in mortgage lending

// December 21st, 2010 // 1 Comment » // Document Management, Financial Services, Lending // Tom Tennant

It’s a delay tactic that might make George Bailey proud.

Rather than walk away, homeowners facing foreclosure are asking banks to show proof they owe what the bank claims. Some lenders are failing to do so, turning a follow-the-dotted-line process into both a drawn-out court battle and a tangled, twisted paperwork nightmare.

The revelation comes via a recent USAToday article titled “Homeowners use ‘show me the note’ to fight foreclosure.” Struggling borrowers argue lenders’ alleged devil-may-care attitude during the wild days of subprime lending created a document gap that’s muddying proper mortgage ownership.

Read the article and you’ll see courts are listening to homeowners who claim shoddy document management by their mortgage lender. For lenders, that means no note, no foreclosure. Or at the very least, time to rethink that denied loan modification.

But let’s nevermind the foreclosure issue for a moment. Nevermind because it’s Christmas and no one wants to see a family lose their home. Least of all, lenders. (It’s true. I have seen broken-hearted mortgage lenders do whatever they could to keep families in their homes).

Instead, let’s look at the records management issue.

At its core, this is all about customer service – big-time customer service. Smart financial services companies understand that trust is their primary commodity. All that other stuff – free checking, online banking, retirement planning, wealth management – that’s all secondary.

If a bank wants to capture the most share of wallet possible, nurturing customers throughout their financial lifecycle, from the moment they open their first checking account through retirement and generations beyond, it has to establish a trusting relationship with the customer.

How do you do that if – whoops, sorry ­– we can’t locate your loan application, you’ll have to do it again and, geez, I hope you weren’t on any kind of deadline. Or, more realistically, you can’t quickly and securely access information for a customer whose time is limited – and patience even more so. For kicks, make that customer a $10 million commercial client.

See? Scary.

The right document and records management solution can effectively manage all documents associated with mortgage, installment or commercial loan. It can capably administer retention and destruction protocols, helping out with that old friend compliance. And information can be accessed any time, almost anywhere. Maybe even in court.

More importantly, the right enterprise content management solution can help customers like those referred to in the USAToday article by allowing lenders to see a worldview of the customer’s financial situation – and offering solutions like the Home Affordable Modification Program (HAMP).

Homeowners can apply for HAMP through their mortgage servicer. The lender collects documents (like paychecks, tax returns and so forth) and submits them through its paperless workflow process. This system can expedite the approval process by instantly routing electronic documents to the right decision maker at the right time, regardless of where they are geographically. No fax machines, interoffice mail, or overnight packages.

In the end, peace of mind for the homeowner, efficient record keeping and workflow for the lender – and trust between them both.

Is it me, or did an angel just gets its wings?