Can digital banking save the world?
Maybe not, but we might at least have a few more trees.
When did you last send a fax? You remember faxes, those paper documents you could send to the numbers that still appear on the bottom of some business cards? Most people would probably say they haven’t sent or received once since the mid 1990s. That is unless you are a premiership football manager trying to get a last minute signing in on transfer deadline day: or, closer to home, a transaction banker.
Despite the industry’s race to embrace the digital era, behind the scenes things have been more sluggish in terms of ditching physical documentation. Transaction banks are happy enough to give mobile apps to their corporate treasury clients to confirm high-value payments, but are a little reluctant to make the move themselves.
Concerns about security, document tampering in trade finance or working with overseas partners that do not have the same level of technology available to them are all, to varying degrees, legitimate arguments for banks dragging their feet. A range of new technologies have tried to force the change in trade finance in particular, moving it away from couriering reams of paper around the world. Swift tried once before to little effect, with its bank payment obligation (BPO), but the new global payments initiative seems to be gaining ground. Also the arrival of blockchain is supposed to herald a reduction in the amount of paper used, as every step of a transaction is done digitally.
These are industry-wide developments, however; what the banks themselves have been doing to force a change is often less impressive. Some argue they could simply refuse to accept paper and force their customers to go digital, but that argument is often drowned out by a combination of the problems mentioned above. Moving banking on from how it has been done for centuries has proven to be just too difficult. So far.
But now, 17 years into the 21st century, something seems to have changed. Pushing towards making banking digital was a big theme last year, going by the pitches for this year’s transaction banking awards. Around the world, banks were eager to explain how they have changed their internal processes.
One scenario involves paper documents being scanned on receipt, meaning that there was no need for multiple copies to be made for distribution within the bank. Another bank has introduced a digital-only supply-chain finance programme to push any company that wants to use it into going paperless. Another told how it has managed to reduce the number of pages in account-opening documentation by half, cutting the amount of duplicate information it was recording and the amount of paper used.
In particular, one bank quoted how it had reduced the number of faxes it sends each year by 650,000, simply by switching to electronic means. That is a lot of paper. But how much paper exactly? According to San Francisco-based paper advisory service (yes, they do exist) Conservatree, by rough estimates one tree makes 16.67 reams of copy paper, equivalent to 8,333.3 sheets. So for 650,000 faxes, assuming no recycled material is used in the paper, that’s 78 trees a year being saved by a switch to digital. Across all the international banks, that’s not going to save a patch of rainforest the size of a European principality, but it’s enough for a nice bit of parkland somewhere.
Is this ability to help the environment with one simple change something that banks have realized? The level of enthusiasm that goes into banks pitching for the CSR award shows how seriously they take their responsibility to the wider community and environment. Or, at least, how seriously they think their stakeholders take it.
Is this switch away from paper part of a growing environmental consciousness? Will we see measurement of the move away from using paper included in next year’s pitches for the CSR award?
Because if we ignore a few other things, like the amount of international travel involved in the industry, the number of taxis taken between meetings, and indeed the number of air miles that will be racked up by people travelling from around the world to attend the Awards for Excellence itself, the digitization of transaction banking is practically saving the planet, one fax at a time.