Banking on Technology
Print Solutions Magazine
By April Hollis
April 2009
With banks dropping like flies, it can be tough to see new opportunities for distributors in today’s financial industry. But heightened security concerns about banks may open up a new market with the survivors.
A recent survey by Wolters Kluwer found nearly 62 percent of financial institutions use the internet to transmit confidential documents to customers, partners and service providers. However, only a third use a secure electronic delivery system that encrypts sensitive data so only the sender and receiver can view it.
Another third use traditional email, which does not encrypt data, and the remainder use less secure methods, such as password-protected email and websites, or are unsure of the method they use. “I think the short answer is a lot of them aren’t aware they need to be taking steps to make sure documents are secure,” says Art Tyszka, director of document services for Wolters Kluwer, an Amsterdam-based research and publishing organization.
For distributors already supplying electronic or paper forms to banks, offering secure delivery systems will show buyers they are well-versed in the latest document security technology and cost savings initiatives.
Tyszka predicts these systems will become more commonly used, in part due to “the savings in not having to print and send files via FedEx. You can save 65 to 70 percent on envelope and mailing costs. Every single institution is looking for ways to cut costs, to be more efficient. A lot of banks are struggling to sustain business today, so if they can cut costs, it’s obviously very attractive.”
One obstacle to adoption is banks’ fear of pending regulations and uncertainty in the market, he says. “Several of them are in a holding pattern, waiting to see what will happen before they make a move. A lot of regulations are vague in how you have to secure electronic communications.”
A Costly Mistake
But waiting to secure documents can be costly. In 2007, a mortgage company that left sensitive documents in an unsecured dumpster reached a $50,000 settlement with the FTC. Tyszka notes that if the firm had used a secure electronic delivery system, it may not have had paper versions of those forms to begin with.
One bank that has stepped up is Burke & Herbert, Alexandria, Va. The bank has recently been praised in the news as one of the safest banks in America. “It’s a daunting task today to ensure customer security, but we employ a secure electronic delivery system for sensitive customer data when we’re sending contractual type agreements back and forth,” says Information Security Officer Carl Pollard.
Burke & Herbert, a $1.7 billion, 20-branch bank, implemented the system after “being pressured to send things, such as real estate contracts to attorneys, in the quickest possible time,” Pollard says. “As the world moves to more messaging type services over the internet, it was a matter of being able to compete.”
To secure emails, the bank uses secure messaging, a server-based approach that encrypts an email message to a secure, third-party site. The recipient enrolls using personal identification information, then logs into the site with a password and user ID. When he or she logs in, the message or email is delivered from the secure site to the customer.
“I cannot imagine dealing in today’s world without it,” Pollard says. “I realize there are banks that are not taking the precautions, but I find it difficult to believe that if they understand the risks, that they’re willing to accept them.”
“I cannot imagine dealing in today’s world without a secure electronic delivery system. I realize there are banks that are not taking the precautions, but I find it difficult to believe that if they understand the risks, that they’re willing to accept them.”
Opportunity for Distributors
Distributors can help protect their financial customers by partnering to offer secure electronic systems. “There’s a great opportunity here for folks who want to become resellers,” says Sean Morris, sales director for Digitech Systems, which provides these systems through resellers—some from the print industry.
“We’re seeing a trend where folks in the print space realize they need to become more of a document solution provider,” he says, “But they’ve got to learn a new technology.”
Morris says banks are looking into streamlining secure access to information regardless of where the customer service rep is “and that’s where our technology comes into play.” He’s seen rapid sales increases for the company’s hosted, or on-demand model, where Digitech stores a bank’s documents online and when CSRs need access, they can log in from anywhere the bank allows, key in a customer name and account number and retrieve the information securely. Digitech uses secure socket layer (SSL) 128-bit encryption and AES 256-bit encryption.
For resellers of these systems, Morris recommends offering a hosted model. “It creates a reoccurring revenue model for them—the more customers they add, the more revenue they’re putting to the bottom line.” In addition, the acceptance of on-demand models has changed the sales cycle for the reseller, he says. An on-premise model might have a 90-day average sales cycle, but it could be about 30 days for an on-demand model. This is because the hosted model enables rapid implementation, requires no capital budget and boasts a significant ROI, he says.
Morris says that, like Burke & Herbert, more banks are moving toward digitizing more forms. “There’s quite a bit of paper documentation within financial institutions that is now being scanned and captured to a document management system. I think it’s imperative for all banks to investigate secure systems, especially in light of what we’re seeing in the media about breaches of credit card information, personal files, etc.”
And unlike Wolters Kluwer, he has not seen resistance due to pending regulations. “It’s been the opposite,” he says. “One of the things we find is that banks are really pushing to adopt technology and applications that make them more secure.”
A screenshot of a file viewed through one of Digitech’s secure electronic delivery systems.
Local Focus
Some forward-thinking members of the print industry have already jumped on the bandwagon. C.F. Biggs, a Shreveport, La., reseller of print equipment—and now secure electronic delivery systems—is one of them. CEO Rick Githens says he has sold the systems to several banks and credit unions by talking up faster document retrieval, information control, increased security and reduction of storage area.
He focuses on local banks because he likes to offer onsite service. He looks for people who are not in control of their paper or who have had catastrophic events in the past. “Those are the easy motivators,” he says. In Louisiana, because of hurricane threats, backup of files is crucial to banks. Once documents are in digital form, backup can include multiple hard drives or offsite repositories accessed through a secure internet connection.
He notes there is tough competition from software companies, but he helps position himself through credentials. Githens and one of his managers are certified document imaging architects. In addition, his techs are A+ and Network + certified.
Providing these systems could be a growing opportunity for distributors and, eventually, a requirement to keep a foot in the door. Some are looking into providing these systems; however, few are currently taking advantage of them.
Bankers Group Purchasing, Waltham, Mass., offers electronic forms for use on others’ systems, but does not provide the systems itself. The distributor uses password-protected PDFs, “but in this day and age even a fifth grader can hack into something,” says Sales and Compliance Manager Andrew Grove.
Grove sells mostly to community banks and credit unions, and hasn’t considered getting into secure delivery systems. At an average cost of about $250 a month for 2 to 3 GB of data, it may not be affordable to his clients. But he notes that some of his small bank clients do have the systems and “over the past 10 years, more and more are finding it convenient to put documents in electronic format.” Grove estimates 10 to 15 percent of his form sales are electronic.
For other distributors, the limiting factor is their awareness of the opportunity. “I didn’t know they were available for us to supply,” says Rob Fredricks, owner of DataPrint, Palm Beach Gardens, Fla. “But that would be a great selling feature if that’s something we could provide.”
http://www.printsolutionsmag.com/issues/april09/24.cfm