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What are the biggest pain points of paperwork processing for large insurance companies and financial services providers?
Hello and thank you for using Wonder for your question about paperwork pain points for large insurance companies and financial service providers.
In short, paper itself is the biggest culprit when considering the challenges of financial paperwork, affecting data accuracy, process speed, and storage capacity. Most experts agree that streamlining and digitizing the documentation process is not only the most recommended solution to the problem, but it would eliminate most of the issues prevalent with the current manual process in general and would improve customer experience as well.
Please find our methodology and a summary of our results below.
METHODOLOGY
During our research, we mostly looked through industry reports and trusted media sites to summarize what the biggest difficulties are when it comes to financial paperwork at larger insurance companies and financial service providers.
We tried to focus on companies that have 500 or more employees or a revenue of at least $25 million. While many of our sources won't necessarily differentiate between smaller or larger firms, this is because the issues outlined within the sources are widespread, affecting businesses of all sizes.
That being said, we assume that the larger the firm, the more paperwork they have to handle effectively — more clients mean more accounts, signatures, legal documents, contracts —, thus a good documentation solution will probably prove to be much more valuable for a larger company than a smaller one.
Pain Points
When researching the question of pain points in paperwork, we found several articles that discussed the general issues of slow processing in case of financial services and insurance. Almost unanimously, the single greatest challenge that these companies face is the paper itself.
Many of the articles emphasized a few major points about how paper, and the required manual labor to handle it, affects the documentation process:
1. The problem of storage
"In the insurance industry, the majority of pain points focus on optimizing the client experience and supporting regulatory compliance. [...] In a paper-only environment, this can mean boxes of disorganized, unsearchable and sometimes inaccessible information that either take up valuable real estate on-site or are expensive to store offsite."
"For many insurance companies, claims processing represents a major labor and cost pain point because of the scope of information that needs to be managed. Processing a claim often requires a large number of forms and supporting documents."
"Life-insurance companies are still selling the old-fashioned way, broker to customer, instead of empowering people to make their own decisions and participate in the process. Moreover, insurance-policy sales are still laden with excessive face-to-face interaction and mountains of paper."
An article by Flowfinity, a business app developer, notes that "Insurance firms are surrounded by paperwork: domestic and commercial claims, appraisals, sales documents, and application forms fill their inboxes every day. These forms are used both in the field and in the office, and pose a challenge to any organization."
2. The problem of manual data entry
An article by Zerion makes it an important point to describe the probability of human error in manual data-processing
"Assuming you complete inspections using a pen and paper, what happens next? Chances are, that information is manually entered into a digital format. This means the room for error is great; the more times data must be entered or transferred, the higher the chance of error."
"For many healthcare insurers, claims processing remains costly and inefficient, primarily since it is based on paper files, associated attachments, and manual workflow processes."
3. The problem of speed and time
DELL-EMC says "a 2008 industry survey shows that approximately 25 percent of claims submitted are still paper-based, contributing to an average processing time that is nearly twice as high as the average for electronic claims."
A study by The Financial Brand revealed that surveyed customers, when not satisfied with their bank, cited "reducing paperwork and documentation (27%) [...] and shortening the duration of the process (13%)" as areas to be developed to increase satisfaction.
An Appway article, while discussing the results of a round table discussion with businessmen, emphasized the following:
"Relationship managers are spending up to 80% of their time on administrative work and frequently need to bother their clients with documents. Despite all this extra effort, data quality is still not good enough to fulfill compliance standards."
Last, but not least, an article by Ezidox mentions the problem that paper-based documentation poses for financial brokers:
"Despite the fact that it is the client who wants to borrow money, it often ends up being the broker who has to chase down all the paperwork. For clients, the task of gathering ID, bank statements, employment history and tax returns can take weeks. This makes keeping track very difficult. [...] Clients taking forever with documents has the flow on effect of wasting your time and increasing the amount of work you have to do before getting paid."
Solutions, case studies
When facing the problem of paperwork, the most widely recommended solution so far has been to eliminate paper itself and go digital. Benefits range from fewer errors, faster communication between parties, and less waste and storage.
Many of our articles are by companies offering digital documentation solutions to combat the problems outlined earlier.
We gathered a few case studies that detail the process and potential success of digital documentation management.
1. Signer Case Study — UBS
The study details how UBS introduced digital signatures to streamline its banking process, citing that "the added benefit is the financial and environmental costs of managing millions of paper documents are drastically reduced."[...] Going paperless cuts gives customers the flexibility to conveniently conduct business without the need to call or visit the bank branch while increasing security and efficiency."
The study also notes that "going paperless for a bank the size of UBS with millions of contracts signed on a monthly basis is naturally a big step in the right direction," and should positively influence company effectiveness and user experience.
2. Digitizing Client Onboarding for Fortune 500 Insurance Company
The undisclosed company had major issues with their onboarding process, described as "unguided, lengthy, and manual."
After digitization, the company reportedly saved $3 million annually on operating costs. Since the previous system also had many errors and security issues, the security provided by the new digitized system enabled the company to add a new value statement for their clients.
3. 3 Examples of How Businesses Got Ahead Through Digitizing Their Documents
"Their former process required thirty-two personnel to sort through approximately 35,000 purchase orders and financial invoices from over 10,000 unique vendors per month."
[...]
"By converting the paper invoices into electronic documents, specialized software would then recognize critical information fields and automatically process the information, removing the dependence of manual labor from staff.
The thirty-two employees were freed for reallocation to other areas of the organization where they could provide more value following the implementation of these new processes."
4. The "paperless" bank
"Hello Bank!" is a fully digital bank, created by BNP Paribas Fortis group. While the linked case study is more about how they revitalized their website, it provides an example of a fully digital financial service that does not require people to enter a physical location to use their services. We can assume that all or most of the documentation will be digital first, and physical only if special circumstances arise.
CONCLUSIONS
To sum it up, the biggest hurdle to overcome when doing financial paperwork is streamlining the documentation process and eliminating potential sources of error.
One significant issue is the physical nature of paper and the challenges this poses for storage, efficient data entry, and travel-time for information between parties.
The most recommended solution for this problem is going digital. This eliminates unnecessary manual labor, frees up storage space and workforce energy and significantly reduces waste.
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