UK financial services failing to go paperless

UK financial services firms are failing to communicate the benefits of swapping traditional paperwork for digital communications, with only 28% of customers electing to go paperless and missing out on around £1.3bn of cost savings annually, according to research by EY

EY’s study found that despite the rise of apps and online platforms to manage people’s finances, some 5.2bn paper documents were sent by the industry last year alone.

Anita Kimber, head of digital, UK financial services at EY, said: ‘Becoming fully paperless is not as simple as clicking a few buttons. There are still a number of hurdles that need to be overcome both from a firm and customer perspective. Considering the cost savings available, the positive impact it would have on the environment and the potential to improve customer interaction, it should be a key focus.’

EY’s research has identified three key barriers hampering UK financial services organisations from going paperless: legacy systems, customer demand and the introduction of new regulation.

Many financial services firms are still operating legacy systems in conjunction with newer digital ones, which makes for inefficiencies.

Nearly three quarters of customers (72%) still receive paper documents such as policy documents and statements, sometimes while also using banking apps and/or online banking. The factors driving this include habit, the desire for a physical record, and inertia. 

EY’s research found 38% of paper documents sent in 2017 related to regulation, as many firms have interpreted the recent swathe of new regulation relating to more transparency in things like fees and charges and financial marketing to mean they have to send more paper information to customers.

The retail banking sector sends the most paper, pushing out 4.2bn documents in the last year. This compares to an estimated 1bn documents sent in the insurance, life and pensions and wealth sectors combined.

However, the retail banking sector also has the highest percentage of customers deemed to be paperless (32%). This compares to 28% in the wealth and life and pensions sector and 18% in the general insurance sector.

Kimber said: ‘Firms can do a lot more to help customers in this move to digital. It’s not just about putting the same pdf document on an app, it’s about re-imagining content and designing information which is more engaging for customers.

‘As for regulation, while new rules require firms to become more transparent, it doesn’t have to mean sending more paper. Closer collaboration between the industry and regulators is needed to agree what firms need to do and how best to do it in this new digital world.’

EY points out that the 5.2bn paper documents estimated to have been sent by the industry last year alone is the equivalent to 2.4m trees. To put this in context, only around 850,000 trees were planted in the UK in 2016.

Report by Pat Sweet

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