Paper-heavy financial industry will go from 10 to 50% digital in 3 or 4 years

Financial Independence Hub.photoBy Anthony Boright

Special to the Financial Independence Hub

We live at a time when electronic communications is making rapid advances in many walks of life, but surprisingly, the financial-services industry still has a long way to go.

Incredible as it may sound, less than 10 per cent of documents in the industry are delivered electronically today. I refer to client statements, trade confirmations, bills, and a variety of other disclosure documents needed for regulatory requirements. Indeed, the industry and those who work in it are drowning in paper.

From my vantage point, three prominent trends in the industry right now are:

  • The migration from paper to electronic communications
  • An ever-increasing environment of regulation
  • A growing need for technology innovation and the cost savings that brings.

I have worked in the technology side of financial services for 20 years and been involved in lots of innovations. This includes providing Internet and custom web solutions for the industry, developing products that address what were then new Point of Sale (POS) regulations, and in the late 1990s creating the Fund Library, which was Canada’s online mutual fund resource centre, and also f/A Connect,  the Internet workplace for financial advisors.

The benefits of digital

The next three to four years will see an opportunity to increase digital communications from the aforementioned 10 per cent to 50 per cent. The benefits of going digital are too good to pass up and are effectively a win-win for everyone involved.

For example, consider asset managers and mutual fund advisors. Electronic communications not only adds to efficiency, accuracy, immediacy and convenience, it also reduces their costs for print, mailing, typesetting, and manual work.

What about dealers and other financial services companies? Electronic communications helps them with an ever-increasing compliance-and-regulatory environment by putting disclosure documents online. What’s more, they will be able to provide better service to their customers with online communications that can only improve the financial literacy of the masses.

Our company assists banks, insurance companies, asset managers and investment dealers in creating and distributing their investor communications online, and while we also offer print production and fulfilment capabilities, our bias is digital. In one case we identified $3.5 million in annual savings for a mutual fund company with an e-strategy. We have also helped asset managers reduce their large and obsolete print inventories and destruction costs by moving to email delivery, and leveraging print-on-demand technologies.

May 30 deadline looms

This is especially important right now. On May 30, mutual fund dealers and their advisors will be required to deliver the Fund Facts document to a purchaser before accepting an instruction to purchase a mutual fund. The reasoning behind this is to give investors better disclosure information before they make their purchase, and not after the fact, as has traditionally been the case. For all the reasons just cited, it makes a lot more sense to do this electronically than with paper.

The move to digital is not confined to the younger crowd like Millennials. Increasingly, older people are also embracing technology as they see the obvious advantages. However, it’s likely that the May 30 deadline will still catch many by surprise, and that goes for investors and industry players alike.

While I don’t see the industry going paper-less anytime soon, there is definitely a move afoot to reduce paper, and it’s clear the consumer wants this too. People just don’t read those huge prospectuses sent to them because these documents are unwieldy and full of jargon that many in the intended audience don’t understand. Making communications immediate, more accurate, up to date, and easier to comprehend is a good strategy for all going forward.

Photo.Anthony BorightAnthony Boright is President and co-founder of InvestorCOM ( which leverages technology to address the evolving regulatory disclosure and communications needs of the financial services industry. InvestorCOM helps its clients create and distribute their communications online, as well as through traditional print/mail channels. Clients include banks, asset managers, life insurance companies, and large and small IIROC (Investment Industry Regulatory Organization of Canada), and MFDA (Mutual Fund Dealers Association of Canada) dealers and advisors serving investors.

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