The first part of this series highlighted the transition to digital banking and its implications for legacy paper and electronic records. Part 2 will discuss some of the best practices banks can follow to safely and easily meet their legacy retention needs as they undergo their digital transformation.
Backfile Conversion Strategies
Perhaps the most important issue to confront when considering a move to digital banking is a basic strategy for paper file conversion. A bank could convert all its legacy paper records to digital, but this option does not make much operational or financial sense. As records age, they are much less likely to be used. They are more likely to sit in storage until their retention period elapses and they are finally destroyed. This low level of future use makes the cost and effort to digitize all legacy records a poor financial investment.
A far better strategy for most institutions is a convert-on-demand strategy in which legacy paper records are digitized only if they are required by users, customers or regulators. While it is possible for a firm to conduct its own convert-on-demand strategy, another option is to outsource the management of legacy paper records with document conversion services. Using this option, the legacy paper records are transported from the bank’s facilities to the vendor’s facilities. Legacy paper records’ metadata can be integrated with the bank’s new digital banking platforms to facilitate finding responsive paper records. Once found, the paper records are digitized and integrated into the appropriate workflow on your bank’s system or can be hosted by the vendor.
A convert-on-demand strategy is advantageous because it frees up valuable floor space and office space in the bank’s facilities, provides a centralized, 24/7 service to add legacy paper records to the system as required and integrates paper record destruction into the program as called for by the bank’s retention schedule. Perhaps most important of all, outsourcing the management of legacy paper records frees up the bank’s records management staff to focus on the new digital banking platform. The total lifecycle cost for convert-on-demand strategies is typically less than to convert all the backfile.
Records Retention Schedule Modifications
Prior to moving to a digital platform, banks should review their records retention schedules in two areas. First, they must ensure all required paper record types in the current schedule have a digital equivalent in the new platform. Second, for banks conducting international operations, foreign banking laws should be reviewed to ensure compliance on the new platform.
When workflows that were designed around paper are digitized, they generally require modification. It is not uncommon in the U.S. banking system for some workflows to still be paper-based and for the digitalization of paper to happen once the process concludes. When moving to a digital platform, workflows built around paper should be redesigned. This can be done through workflow digitization.
Legacy Application Archiving
When moving to new digital platforms for banking, it is not only legacy paper that must be addressed; legacy electronic records must also be dealt with. In some cases, legacy electronic records need to be converted into the new platform. In other cases, especially where future use for the records is anticipated to be minimal, the conversion of the legacy records into a digital archive is warranted. Either of these options enables the legacy application to be retired, saving data center floor space, maintenance fees and IT labor.
The banking industry’s transformation to an all-digital world is inevitable, but banks should consider partnering with an experienced vendor to make their digital transformation successful.
Missed Part 1? Read it here.