Green is good…as far as it goes

I was just interviewed for an article in Smart Money magazine on the economic impact of green initiatives in financial services and other industries, and that got me thinking of broader issues related to sustainability and our industry. The good news about the elimination of paper in our paper intensive industry is that any move to reduce the amount of paper in a customer’s relationship improves the profitability of that account for the bank. Clearly there is a sea change underway and the momentum is rapidly shifting away from paper based and into electronic forms of communication and information management at the customer level;

• Electronic bill pay continues to ramp up steadily

• Online banking has achieved critical mass

• Debit card usage is overwhelming both credit and check transactions

All good stuff and all beneficial to the bank AND the environment. But there’s still a huge amount of paper generated within financial services because the standard for permanent and safe storage of important information remains the officially signed, paper document. Every mortgage requires a small book’s worth of paper to document the minutiae that the lawyers and regulators require. Insurance policies are generated in paper and then stashed in file folders or safe deposit boxes. And a large number of people still insist on paper statements and physical bill payment no matter what.

So, we’re in a limbo land where we are supporting two different information streams for customers. While there are efficiencies in the short term by converting the easily converted to electronic, at the end of the day we will be forced to support two systems which will limit the cost savings that moving to electronic will create.

What’s missing, and what’s going to be necessary to ultimately move all of financial services to a paperless environment is an accepted form of online storage and digital signature. Both exist, but neither has the level of acceptance that will be needed to generate mass acceptance. There have been several attempts in the past to deliver virtual safe deposit boxes, and there are few out there, including The E-Safe. The problem with the existing offerings is that they are for profit ventures and the value proposition isn’t strong enough for a mass market adoption.

What’s needed is a ubiquitous, free (read Ad-supported) safe deposit box capability that is universally trusted because it’s offered by a universally trusted brand like Google, or PayPal and hung off of FaceBook or MySpace. Another option would be for the card associations to offer this as a free benefit to their issuer bank customers. Once there is a ubiquitous free secure storage capability, the migration to electronic documents will increase and with that, the demand for and acceptance of digital signatures will follow.

The banks are making good progress on moving to a paperless environment, but without ubiquitous, online secure storage, the conversion won’t be complete. Someone ought to be working on this.