The Devastating Environmental Impact of Paper Processes in Financial Services

Many financial services organisations such as banks, building societies, and investment firms are undergoing digital transformation, embracing technological advancements to streamline operations, save costs and enhance efficiency. 

However, despite the shift towards digitalisation, paper and post processes continue to persist in many financial organisations, not only costing a company time and money, but also costing the environment. 

In this blog of our series, we look at the environmental consequences of paper-based processes in financial services, and what firms can do to reduce their ecological footprint.

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The Imperative of Sustainability in Financial Services 

In the face of escalating environmental challenges, sustainability has emerged as a fundamental pillar of ESG (Environmental, Social, and Governance) strategies capturing the focus of companies worldwide. 

Emphasised in the World Economic Forum's Global Risks Report 2023 as a critical concern for the upcoming decade, the urgency of addressing environmental risks calls for immediate action from governments, corporations, and businesses globally. 

Notably, the financial industry, with its significant environmental footprint, finds itself at the centre of this global conversation.

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The Persistence of Paper in Financial Services 

Despite advancements in technology, the financial industry remains heavily reliant on paper correspondence. From printing customer statements to generating physical copies of contracts and forms, paper usage persists throughout various facets of financial services operations.

Although there’s growing awareness of the need to cut down on the use of paper, too many banks and building societies continue to churn out huge volumes of regulated paper documents to customers. In fact, only a mere 32% of UK retail banking customers are considered paperless, highlighting the slow progress towards firms offering customers digital alternatives within the industry.

The persistence of paper in financial services not only hampers progress towards a more environmentally friendly industry but also reflects a missed opportunity for innovation. As technology continues to advance and consumer preferences evolve, financial institutions must prioritise digital transformation to remain competitive and meet the expectations of modern customers.

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The Toll of Using Paper Modern Business 

The environmental toll of paper usage in financial services is indeed staggering, evidenced by the fact that financial services firms collectively dispatch over 5 billion paper documents to their customers each year. Coupled with environmental statistics revealing that one tree produces around 8,000 sheets of paper, the magnitude of the issue becomes even more apparent. Despite this, it is reported that the average employee still prints between 8,000 to 10,000 sheets annually, effectively consuming one tree per person per year. 

However, it is not just the environmental cost that negatively impacts financial services firms. According to EY, financial services companies could save over £1.3bn a year if they, and at least 80 per cent of their customers, went paperless. 

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Opportunities for Reduction and Efficiency: Embracing Digital Solutions

Financial institutions have ample opportunities to mitigate their environmental impact by embracing digital alternatives. By transitioning to digital communication platforms and applications, firms can begin to implement paperless workflows, therefore enhancing  operational efficiency and reducing carbon emissions and environmental harm linked with traditional paper-based methods. This shift towards digital solutions fosters a more sustainable operational framework for financial services.

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Nivo Verified Identity Messaging – Introducing Sustainable Digital Workflows 

One digital solution that is eliminating paper-based processes and transforming workflows is Verified Identity Messaging (VIM) by Nivo. Verified Identity Messaging is the new leader in digital banking solutions, allowing firms to modernise customer interactions and document management, with one, easy-to-use app.

VIM introduces an environmentally conscious approach to customer authentication and communication in the financial sector. By harnessing advanced biometric facial recognition technology, the platform offers a secure and seamless identity verification process, and provides document submission and e-sign capabilities, therefore significantly reducing reliance on paper-based documentation.

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Conclusion 

In summary, paper processes in financial services pose a significant environmental burden, despite the industry's push towards digitalisation. However, solutions like Verified Identity Messaging (VIM) offer a promising avenue for reducing paper usage and enhancing sustainability. By embracing innovative digital

 alternatives such as biometric authentication and e-document management, financial institutions can mitigate their environmental impact while improving operational efficiency and staying competitive in the modern landscape.