FinServ Positioned To Pioneer The Digital Migration

Xerox built its empire on paper. But times are changing and so is the company. Xerox announced last month that it would be splitting its operations into two, enterprise-facing units: one helping businesses migrate from paper to digital documents and the other aiding in payment processing and printing.

In the wake of the announcement, Xerox set out to give its digital documentation half a boost with companies that have yet to ditch paper.

Part of the initiative, a research report published earlier this month, uncovered how far behind organizations are in even beginning the migration and why that lag is particularly threatening to financial areas like payments and procurement.

Xerox’s conclusion in its “Digitization at Work” report was poignant: “Surely, we can do better.”

PYMNTS decided to speak with Xerox about its motivations behind creating the report and to discuss one type of enterprise that can especially benefit from the digital migration: financial services.

“Paper-based processes are core to financial services companies,” said Xerox Vice President of Global Marketing Kerry Sanders in a recent interview with PYMNTS. “However, there is a huge opportunity to improve efficiencies and operations through automating key business processes.”

In Xerox’s report, researchers examined three populations of companies: financial services, public sector and corporates. Sanders explained why FinServ was singled out from the other business types.

“We wanted to see where the financial services industry stood in their digital transformation because it is a very paper-dependent industry,” he said. “We found that there are some big opportunities for companies over the next few years.”

The key word in that sentiment, perhaps, is “years.”

Digitization may lead to automation, efficiency and all-around faster work processes, but the migration from paper to digital documents won’t happen in an instant for any business and can quickly lead to an overwhelming initiative.

Sanders reiterated findings in Xerox’s report that corporations must approach this effort in phases — first, by identifying which specific areas of business operations can benefit most dramatically from going digital.

“By identifying specific departments or processes that can benefit from automation first, organizations can then take the best practices learned and apply that expertise to other lines of the business,” he explained.

In financial services, banks, FIs and FinTech players are likely to target a few processes first, according to Sanders.

“For example, accounting and accounts payable will likely achieve an almost paperless process sooner than the mortgage industry,” he said.

“Financial services companies can benefit from improved security, improved accuracy in processing simple or complex transactions and valuable insights from data,” Sanders offered. These are areas that often hit close to home in the FinServ industry. “The focus on security isn’t going anywhere,” he added, “and automating processes can safeguard company information better than paper-based processes.”

Government pressure for financial services to improve security and accuracy is also likely to play a role in these firms’ digitization efforts, especially as innovators and disruptors face the uncertainty of compliance.

“As financial institutions weather regulatory pressures, we can expect to see more investments in financial technology and other non-banking companies that are focused on digital financial services innovations,” the executive added.

An emphasis on the state of paper versus digital within the financial services market has broader implications: Businesses in any vertical need to go digital, and the financial aspects of their organizations — procurement, invoicing, payments, accounting and the like — are likely the first areas to be identified as gaining the greatest benefit from automation.

Identifying bottlenecks, accessing data to more adequately service customers and real-time analysis of performance are, naturally, achievements any kind of business wants. But, as Sanders mentioned, it’s an overhaul that will take time.

“Moving away from paper-based processes can be a challenge for any organization — not just financial services companies,” he said.

Xerox’s research found that, despite a significant lapse in the number of businesses that said they have begun the process of turning away from paper, the majority of firms have at least identified areas of their operations that could benefit from digitization. Seventy-eight percent of financial services companies have done so, and that’s a promising finding, said Sanders.

“I have high hopes that automation will continue to transform the financial services industry over the next few years,” he added.

“In my opinion, every organization is dealing with this transformation, so it’s something that has been on everyone’s radar,” Sanders said, noting that FinServ can be a pioneer for the rest of the economy in this evolution.

“I believe the financial services industry will make huge strides over the next five years, but transforming the process to a completely digital experience will require more work to shift from mostly paper to mostly digital workflows,” the executive explained. “It’s the way the world is evolving, and it’s up to financial services companies to adapt to this new way of work.”