The digitization of the financial services industry has transformed the way individuals bank. One key trend is paperless banking. Financial technology advancements, such as mobile banking, contactless payments, and digital currencies, are making physical paper superfluous, even for paperwork and money. Some market analysts predict that paper in banking will be “extinct” in the next decade. Below, we analyze the impact of the paperless trend and its benefits.
Since its inception, one of the key characteristics of banking has been the ability to handle large volumes of information recorded on paper, which in the past few decades were necessary. Now, almost all aspects of the management and delivery of products and services can be fully digital. If the financial sector committed to a complete transformation to paperless banking, the face of banking would forever be changed for the better.
An important benefit of the elimination of paperwork and physical currency is the reality that any banking process could become virtual, taking place at any place and time. This could even eliminate the costly need for physical offices and allow banking services to reach places where they have never been before, thus expanding financial access for all.
This rise in virtual banking raises many questions as it relates to data security and authenticity. Paradoxically, the answer is more technology; digital tools, such as biometric identification, e-signatures and digital identities using blockchain applications, and other security controls using Artificial Intelligence (AI), could make banking safer than ever before. But, of course, this requires serious investment in the part of the financial entity.
Another fascinating benefit of the paperless transformation is the new ability to aggregate all customer data through data analysis. This tool uses AI and Machine Learning to organize, classify, and analyze large volumes of data, enabling the discovery of key customer preferences, market trends, and other strategic insights. This, however, is only possible when all the bank data is digitized.
As discussed, the benefits of a paperless transformation outweigh the disadvantages. It opens up a new banking reality centered around all customers, even reaching those historically unable to physically reach a bank. Paperless makes banking more automated, functional, and open. And even though to many, more technology brings concerns of security and authentication, a rise in the paperless trend will also stimulate more best practices and technological innovations, and greatly minimize these risks.
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