Cost reduction has been a priority for all banks in recent years. Leading cost reduction programs focus on streamlining workforces, optimising resources, simplifying technology and improving virtualisation. In this regard, could data security be a solution to drive cost reductions? How can FinTech companies enable banks to implement more flexible digital technologies and security solutions to reduce costs and increase revenues?
Although not immediately obvious, paper-based communication and processes represent an extremely large operational cost for banks. Printing documents, customer statements, and other paper-based communications result in huge fixed costs for the financial services industry. For example, a 2013 study from Forrester Research reported that mailing a paper statement to one customer costs on average US$0.60 a month. If you consider the number of clients per bank and the time it takes to prepare and send statements, it can quickly reach tens or even hundreds of millions of dollars per year. In fact, it is estimated that the global annual cost of printing and mailing paper-based customer communications for financial services companies totals US$20 billion. Furthermore, this function doesn’t provide any real strategic value.
Adopting a digital solution for customer communications is therefore imperative in order to reduce the amount of paper being utilized. Less paperwork enables banks to work more efficiently (e.g., less reliance on printers or intermediaries) and save on paper costs or mailing charges (e.g., postage, envelopes). FinTech solutions like APrivacy allow banks to securely push e-statements to customers as a regular email attachment or over preferred messaging or social media channels, without the need for passwords or cumbersome log-in routines and in compliance with the various regulatory requirements.
In addition to the cost savings, there are also many benefits from a reduction in operational risk (e.g., risk of statements sent to the wrong person, mail getting lost, clients changing address) as well as environmental benefits (e.g., less paper, improved CSR).
Another example where data security solutions can help to reduce costs relates to call centres. Calls from clients to request historical statements cost about US$4 per request while conducting the same transactions online has far lower costs: US$0.10 to US$0.15 (according to a June 2016 McKinsey & Company report). Enhancing self-service options or conducting onboarding on a smartphone with a secure platform (e.g., clients take photos of the required KYC/onboarding documents and securely upload them) empowers financial institutions to simplify processes and cut costs as well. A PwC report showed that if banks could shift up to 20% of their call volume from phone agents to websites or automated phone services, they could save up to US$25 million a year.
In summary, data security should be viewed as a key driver of not only the bank’s cost cutting strategy but also in reducing operational risk and enhancing user experience. If you would like to learn more about how APrivacy can help, we look forward to hearing from you.
Digital Security Perfected – APrivacy Ltd. is an award-winning company which combines military-grade data security with a seamless user experience on any platform, any device, anywhere. APrivacy Ltd.’s enabling technology now allows the financial services industry to confidently communicate with clients using their favourite channels leading to increased revenues and reduced costs while meeting the strictest regulatory requirements.