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

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 and communication of the mountains of documents generated every day containing sensitive information like client bank account and credit card numbers, mortgage and loan balances, customer addresses, transaction histories and more.

Besides customer-facing documents, there are also internal accounting and tax records, as well as invoices, bills, receipts, and payroll data that must be processed, indexed and stored. Now multiply that by the hundreds, thousands, or millions of customers of a financial institution and the need for document management becomes clear.

And these are only a few examples of many document types that must be securely stored.

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 cyber attacks.^{[2], [3]}

There are strict security and compliance laws governing information privacy and records retention that come with sanctions, and steep monetary penalties for violations. Compliance certifications have been established to reassure businesses and consumers alike that a company has taken steps to keep information and data protected and secured.

Financial services firms also risk the loss of client trust and reputation damage from a leak of confidential information. As a result, financial institutions view records management as a top priority.

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.

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.