Using to document management systems to completely digitize operations workflows

By Katie Kuehner-Hebert

For years community banks have been routinely imaging and archiving documents to save space, time and money. Now an increasing number are taking the next step in document imaging—creating electronic documents from the get-go to eliminate paper workflows altogether.

The document management system embedded in the core process system provided by Data Center Inc. in Hutchinson, Kan., for example, allows examiners to review electronic files either on-site at the bank or via any remote secure access, says Sarah Fankhauser, the company's executive vice president. Matt Bowen, senior vice president and general manager of check and document imaging solution at FIS in Jacksonville, Fla., adds that it's much easier to safeguard customers' confidential information by storing documents in centralized electronic systems.

Pursuing paperless

However, even document vendors say community banks should not expect to transition overnight and become completely paperless—the "Golden Nirvana." Instead, banks should consider taking progressive, interim steps in archiving documents to migrate their workflow processes to an electronic format. Often aiming to transform the most tech-savvy department first is the best approach, several imaging vendors say. Afterward other departments can be steadily brought along.

"When looking at imaging systems, a lot of times there is a narrow focus—for HR, loans, etcetera," says Brian Love, director of professional services at Westbrook Technologies, a document management software provider in Branford, Conn. "But one system can be an image repository for all paper processes of an organization."

One Westbook Technologies bank client uses document management software for accounts payable, purchasing, human resources, legal department and loan origination. The bank's accounts payable department scans invoices and uses the system's workflow capabilities to jumpstart the approval and payout process. The system notifies the designated department head that there is an invoice awaiting approval. Once approved, the payables department receives notification that payment can be released to the vendor.

Document imaging solutions have been available for nearly a decade, following the 2004 enactment of Check 21, or the Check Clearing for the 21st Century Act. Adoption rates for these systems began to rise after the financial crisis spurred banks to explore more ways to reduce overhead costs.

Bowen says that many community banks are adopting second-generation document imaging systems to integrate multiple workflows in various departments. Other community banks are using new systems accessed from off-site "cloud" servers, says Tim Bray, product manager for CenterDoc, a software-as-a-service solution from Computer Services Inc. in Paducah, Ky.

One hot pursuit is paperless branches, Bowen says, where banks look to use document imaging to eliminate courier routes between branches and central operations. "Now that checks are out of the courier bag, they are looking for a way to automate scanning of the rest of the documents," he says. "It may not involve any type of workflow, but it's still much less costly to scan and archive, than to transport to back-office locations."

Workflow workarounds

Many community banks begin the implementation process to expand document imaging by first scanning and indexing a "less sophisticated" workflow—such as accounts payable—rather than a loan origination process, Bowen says. "Piloting, versus entire enterprise rollouts, generates momentum in order to successfully implement the project."

However, when it comes to bankwide document imaging, one early step is implementing electronic signature applications that use signature pads or boards, says Stacey Zengel, general manager for the imaging solution, Synergy, for core processor Jack Henry Banking in Monett, Mo. "Electronic signature requires little to no indexing," she explains. "It flows through the process and eliminates obstacles for banks, plus they have documents with real signature on them."

As banks start to scan documents after customer transactions, they should consider designating employees to conduct batch scanning of documents, Love says. This process can be greatly facilitated by placing bar codes on documents, allowing documents to be automatically indexed and routed to the appropriate end-users inside the bank.

Several systems use bar-coding technology for Web-based forms, and banks can also purchase bar-code-generating solutions for their customized forms. "Many bank documents are either bar-coded or taken directly from the core system, which does all the indexing," Bray explains.

Community banks often start with document imaging and archiving with less complicated sets of documents, such as signature cards to open new accounts or rates and fee schedule disclosures that the customer needs to initial, says Tom Berdan, vice president of product management of Harland Financial Solutions in Lake Mary, Fla., which offers item processing and content management solutions.

Harland Financial's system allows banks to group documents together into logical categories arranged in a hierarchy. Documents near the top of the hierarchy have a broad classification, while ones near the bottom of the hierarchy have a more specific classification.

"One of the challenges around indexing is creating values and determining how they are going to search for those documents," Berdan says. "As banks start to broaden the scope of complexity, the document archive takes on different characteristics, and determining how to search for particular documents has got to evolve."

Even if it takes several years for a bank to become totally paperless, documents created on paper can still become electronic once imaged, enabling them be better managed to ease workflow, he says. "You can get started today and create lots of efficiencies within your organization—without having to go from zero to 100 miles an hour."  

Katie Kuehner-Hebert is a financial writer in San Diego.