Why do any of us still have to fill in paper forms to deal with banks and mortgage lenders?

The debate around digitalisation often centres around those people left behind, and rightly so. The elderly whose local bank branch closed down, the offline household that can’t get the best deals, the digitally disinterested who simply prefer to discuss their affairs with a human.

But there is another question looming for financial services providers and that is why their digitally fluent customers still hoard so much paperwork.

With the news that NatWest is to launch the UK’s first entirely online mortgage – one where applicants can get a mortgage in principle within 24 hours – more consumers than ever are questionning whether we still need to take time posting paperwork and filling chunky filing cabinets instead of digitalising our admin.

Online lives

It’s easy to assume that even the most enthusiastic digital native still wants the option to sit down with a human in the real world and discuss their affairs but the truth is many do not.

Research carried out by messaging solutions company LivePerson show that more than a third of Generation Z and Millennials say they prefer to bank by app, while more than a quarter prefer using a bank’s website.

And 43 per cent of those respondents said they would consider using a bank that existed only online. Many industry insiders are now suggesting that going paperless could be an easy way to attract tech-savvy, convenience-minded customers, particularly given that digital storage takes up vastly less space than a clunky filing cabinet.

Neil Robertson, CEO of Compleat Software, thinks the end of endless paperwork is in sight. Just as the ‘please think before you print this email’ notes sound slightly dated now that printing email is so rare, it could be that paper copies will become increasingly unacceptable.

He says: “While there remains a generation or two that will never give up their paper (in part because of their inexperience with the technologies), for the rest of us, being given a paper copy of anything is already an inconvenience and rapidly becoming just unacceptable. It will not be long before the use of paper will become politically incorrect, wasting our planet’s resources and our time for no good reason.”

And if environmental concerns aren’t a good enough reason to ditch the paper, commercial ones could be. Eva Weber is senior manager at ABBYY, a company that provides document scanning and capturing technology. She believes that inefficient, paper-based procedures are going to be a serious stumbling block for banks as they compete with more agile fin-tech firms.

Weber says: “The financial services sector is renowned for having to deal with thousands of documents every day - everything from signed account openings and mortgage contracts, to statements and application forms.

“Digital technologies will help make customer-facing processes become faster, better, and smarter. Inefficiencies can be removed by using a variety of modern technologies. Banking institutions must be able to automatically collect, read, and process customer information using the data provided by the customer to improve the service – even without customers physically entering the building.

“With the rise of challenger banks and FinTech firms, traditional banks need to be responding directly to consumer demands. Customers want simple processes, paperless transactions, and app-based customer support. With those who demand physical contact and paper-based documentation now few and far between, banks need to work towards this digital future to retain and attract customers in the long-term.”

Human behaviours

Some commentators believe that people are not ready to move entirely to digital yet and that financial service providers should offer a choice. Andrew Morrison, managing director, Xerox UK and Ireland, points out that the ‘paperless office’ has been talked about for years yet currently more than 15 trillion pages are printed worldwide each year.

“At a consumer level there are human behaviours which will take a long time to change,” he says. “Whilst digital information – such as emails and web pages – is growing at more than 600 percent per year, people fundamentally trust paper. A classic human behaviour is purchasing a ticket digitally and then printing a physical copy to take with you.

“Rather than aiming for one extreme or the other, we should be ensuring that people can move between their physical and digital worlds with ease.”

And not everyone believes it is as clear cut as younger people wanting digital innovation while older people feel reassured by having hard copies. Richard Stone, chief executive of The Share Centre, says: “There is a misunderstanding of the appetite for more mature savers and investors to use technology. There is a generation which did not grow up with computers or even use them at work, and they often find the PC, its screen, keyboard and various software packages confusing and daunting.

“However, digitalisation through a tablet is far more appealing. The technology is intuitive and easy to use, while apps are simple to download and generally accessible. Many of the more off-putting aspects of PC technology have been stripped away and the more mature investor is very willing to engage in a digital experience.

Greater security

Some people may be concerned that moving to digital storage for paperwork will make their personal information less secure. We’ve all heard about major hacks putting consumer data at risk, most recently with Equifax.

Yet some industry experts suggest digital storage could actually be safer. Chas Moloney, director at global printing firm Ricoh UK, says: “Not only is paper harmful to the environment, costly to the institution and outdated to the customer, but it is also typically not secure. Many paper forms are filed or couriered around the country, but also, more often than desired, thrown away into bin bags having not been shredded or disposed of properly. This could leave customers’ personal information at a significant risk.

“By securely storing data through digital channels, banks will not only save on printing costs, but will also protect valuable customer data, which can help promote and sell additional services.”

Jo Gibson, operations director at cloud-based direct debit payment provider First Capital Cashflow, agrees: “Unlike paper, hosting financial data on the cloud eliminates the potential threat of data being affected by incidents that may arise in an office environment– such as burglary, natural disasters eg floods or human error – which could see paper-based information being lost forever.

“One of the biggest advantages that the cloud has to offer is the ability to host information in an outsourced, offsite data centre. Data centres provide a cast iron level of security, they are the highest quality environment possible for data storage, with experts in their field on hand to tackle any unwanted incidents.”

Robertson concludes: “The most basic printers provide high quality scanning, so everything of importance that still arrives as paper - and there is very little of it - can be digitised and filed, with endless options for automated cloud backups so it can never be lost.”

Digitally sharp consumers may be moving faster than the financial services that cater to them. With fintech innovators snapping at the heels of the big providers, maybe the bleakest future is reserved for the firms that make filing cabinets.