W H I T E PA P E R l The True Paperless Branch

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1 W H I T E PA P E R l The True Paperless Branch Trudy Lotter Solution Market Manager, Financial Institutions Joe Pitzo ECM Product Manager Doug Turner Product Line Manager July WAUSAU FINANCIAL SYSTEMS, INC. All Rights Reserved. All other copyrights cited herein are the property of their respective owners.

2 WHITE PAPER l The True Paperless Branch l Page 2 The True Paperless Branch Despite all the talk about banking via remote deposit capture, the Internet, ATM, telephone, or most recently, mobile device, bank branches continue to be popular with commercial and retail customers alike. No other banking channel has proven itself as a replacement for the branch network. A drive down any major U.S. thoroughfare bears out the strong presence of branches. And this isn t likely to change any time soon. A 2008 study by Needham, MA-based TowerGroup predicts that the number of teller transactions in the United States will total 9.8 billion in 2010, with the volume of branch sales and services transactions on the rise. In its own study, Aite Group found that an estimated 60 percent of U.S. retail banking customers still would prefer to go to the branch in 2010 to apply for or open an account*. While the branch network remains important to commercial and retail banking, it is also the most expensive banking channel to operate, according to Forrester Research. The firm notes that branches are heavily human resource dependent. Undeniably, the combination of high employee turnover and the wide array of sales and services programs available in branches require continual staff training. But other factors drive up the cost of branch operations as well. Chief among them is the fact that branch operations are centered on paper and the repeated handling and transportation of paper items. Branch employees waste a lot of time on these non-value added activities -- time that could be spent interacting with customers or cross-selling bank services programs. Errors in how these documents are handled not only effect downstream operations, they can also have a major negative impact on the customer experience. And all of this paper makes it very difficult for financial institutions to monitor and comply with audit and regulatory guidelines. It also leaves the branch vulnerable to bottlenecks, service issues and errors during inevitable fluctuations in volume. 70% 60% 50% 40% 30% 20% 10% 0% *Percentage of US retail banking customers who prefer to go to the branch to apply for or open an account Financial institutions are challenged to increase deposits, reduce cost, and improve transaction processing efficiency -- all of which are significant benefits that can lead to a meaningful return on investment. To contain the costs of operating branches, many financial institutions have deployed some form of branch capture at the teller line or the back counter. But most of these initiatives have left the banks wanting. The reason? Branch capture doesn t address the other paper-centric, labor-intensive processes in the branch, such as account opening and loan servicing. Key Benefits 65% 63% 60% Source: TowerGroup Minimizes the amount of paper generated and handled at the branch Eliminates the need to transport new account and loan documents Improves tracking and elimination of lost or misplaced files Provides instant access to signed documents across your financial institution Increases productivity with validation and auditing 2009 WAUSAU Financial Systems, Inc. All rights reserved.

3 WHITE PAPER l The True Paperless Branch l Page 3 The Business Case A true Paperless Branch offers financial institutions four primary benefits: Increased revenues Reduced risk and fraud exposure Decreased operational costs Enhanced customer service Increased revenues A Paperless Branch drives increased revenues, decreasing the amount of time its takes new branch employees to become revenue generators. Longer term, it increases the time staff can spend with customers on value-added activities such as relationship building and cross-selling branch services programs. Reduced training also speeds a bank s time to market with new services programs, and reduces its cost of market expansion both key to future growth plans. And the increased efficiency provided by the solution accelerates funds availability. Reduced risk and fraud exposure Taking branch capture to the next level also enables bank branches to mitigate risk and fraud exposure, and improve compliance by adhering to a consistent application process. Through the electronification process, identity verification documents can be made immediately available at the teller line. Banks also can achieve better tracking and control, improving upon the limited audit trails provided by paper processes, and allowing for easier access to information necessary for audits. This approach increases approval and audit productivity by 50 to 70 percent and improves the validation process by 60 to 80 percent. Additionally, electronifying branch functions virtually eliminates lost documents due to mishandling and misfiling and mitigates the security risks (identity theft, fraud) associated with ad hoc document routing. Decreased operational costs By reducing the number of times documents are handled, the solution also lowers operational costs and makes branch processes more productive. Users can capture a variety of document types and formats without leaving their desks. This means opening new accounts or originating loans becomes a faster, easier process, requiring significantly less paper output, and 50 percent less paper handling. Statistics show that the average document is copied 19 times through its lifecycle; for instance, many loan officers make a shadow copy of a loan for their records. Making document images available across the branch network eliminates this need. Additionally, electronifying branch documents dramatically reduces the odds that they will be misfiled, sent on incomplete (requiring the customer to return to the branch or to forward additional information) or misplaced; studies show that three percent of all documents are lost at some point in their lifecycle. The Paperless Branch also lowers branch FTE requirements (critical in light of high branch turnover) and greatly reduces the need for centralized document scanning. Electronification reduces the expense of buying, distributing and storing internal branch documents. For instance, a financial institution that adopts the Paperless Branch concept can reduce requirements for select paper consumables by more than 50 percent, and slash courier costs between branches and centralized processing centers by 60 percent. While every case is different, going to a paperless loan application environment can help financial institutions reduce the time to prepare documents by two minutes (no more printing, retrieving and organizing documents). That might not seem like a lot of time, but it quickly adds up when you consider the number of loan applications the typical branch network handles in a day. It s also two more minutes that you can spend in front of the customer WAUSAU Financial Systems, Inc. All rights reserved.

4 WHITE PAPER l The True Paperless Branch l Page 4 Enhanced customer service A true Paperless Branch also transforms the customer experience and enhances customer loyalty. Branch personnel can spend more time in front of customers (cross-selling branch services programs or relationship building) and less time on non-value added activities such as trips to the printer or photocopy machine. The streamlined document handling results in fewer errors, improved processing quality, and reduced wait times for customers. It also significantly reduces the validation cycle for new account opening or loan origination. The Solution To realize the true value of branch capture, and significantly reduce the inefficiencies and cost associated with handling, transporting, distributing and archiving customer documents, financial institutions must establish a framework to address their entire branch operation. The Paperless Branch approach focuses on evolving the paper-centric nature of the branch and automating tasks in order to operate each location as efficiently as possible. This positions the branch to compete in the evolving multichannel banking environment. teller line, but the entire branch, to truly reduce the amount of paper handling and document transportation the branch requires. In the past, most banks would pick up documents from the branch once or twice a day. By automating teller capture and reducing the document pickup to just once a day, the bank can t make a significant dent in its costs. Only by addressing document handling throughout the entire branch can banks achieve a large reduction in transportation and paper costs. A successful Paperless Branch framework begins with pushing document and data capture to the point of presentment, whether it s at the teller window or at the desk of a loan officer or customer service representative. Business logic then determines how to handle each document, automating decision points to streamline customerfacing business processes. By leveraging imaging, workflow and Enterprise Content Management (ECM) capabilities, documents can be presented real-time to approved users. Behind the scenes, this electronic document management approach can link legacy applications and provide financial institutions the ability to clear items electronically. There are three primary applications in a Paperless Branch framework: By providing an end-to-end, integrated framework, the Paperless Branch addresses the needs of the entire branch, from automating over-thecounter transactions to streamlining the document workflow associated with new account opening, loan origination, and other customer service processes. The same framework can also be applied to documents created for internal purposes such as human resources or accounts payable processes. Beyond the teller line there are branch activities, such as account opening and loan origination that generate a significant amount of paper. Once again, the Paperless Branch addresses not only the Teller Line Capture Back Counter Capture New Accounts, Loan Origination & Other Customer Servicing Teller Capture A growing number of financial institutions have implemented teller line and/or back counter capture to initiate the processing of over-the-counter transactions in the branch, rather than in a far-off operations center. Capturing items at the teller line enables check images to reach the back-office far 2009 WAUSAU Financial Systems, Inc. All rights reserved.

5 WHITE PAPER l The True Paperless Branch l Page 5 sooner, in turn, speeding the transmission of image cash letters (ICLs) and accelerating the clearing of transit checks. Processing images, rather than paper, also eliminates the need to transport the items to a centralized operations center for rescanning. This timesavings provides banks with the opportunity to extend deposit cut-off times, which speeds clearing and improves customer service. Teller capture also alerts branch personnel to potentially fraudulent items while the presenter is still in the branch. Capturing images at the teller line, instead of in the operations center, results in a significant reduction in back-office personnel. And it allows branches to substitute images for internal documents (paper tickets), meaning there s much less of a need to purchase, store and transport paper forms, such as cash and counter tickets. Back Counter Capture Back counter capture provides many of the same benefits as teller capture. Paperless Branch technology can track over-the-counter work real-time as it moves from the branch through downstream workflows. In a back counter environment, if electronic batches of work are lost or out-of-balance for any reason, bank personnel are alerted immediately. In a traditional paper-driven branch environment, these problems may not be discovered until end of day. This automated tracking is critical as financial institutions grow their branch networks, and tracking and balancing becomes exponentially more difficult. New Accounts, Loan Origination & Other Customer Servicing While many financial institutions have implemented teller line and/or branch capture, a successful Paperless Branch framework must also address new accounts and/or lending. In this scenario, electronic documents stay electronic and supporting paper documents are imaged at the point of presentment. For instance, when documents are printed from a bank s new account platform, the solution can intercept documents normally sent to a printer, convert each form to an image document, classify the document type and then apply configured business logic to determine if a document needs to be printed, signed or stored directly in the bank s archive. The bank does not retain any paper copies of documents, except those that are required by law. This approach reduces the cost and risk involved in the handling of documents, and offers immediate availability to documents across the branch network (eliminating processing delays and information float). What s more, because all of the necessary index and classification information is extracted during capture (without manual keying), the chance of misfiling is eliminated. Electronic signatures are appended to the document images using signature pads that create a biometric key for each signature. This eliminates the need to print signature cards, loan documents or any other form that requires a customer signature; customer copies can be printed at any time. Encryption of the electronic signatures ensures document security. After all of the required signatures have been applied, the captured documents are archived and made immediately available to authorized users for retrieval, approval and validation. Images of IDs and supporting documents, as well as printed transaction receipts or digital photos, also can be appended to the electronic documents using scanners or Web cameras. Capturing personal IDs and digital customer photos can help banks prevent identity theft by making the captured documents available across the institution, including all teller stations for extra verification during high dollar transactions. Case Studies To better understand the value of the Paperless Branch, consider the case of a financial institution with over $10.6 billion in assets, more than 260 branches, and 3,000 employees WAUSAU Financial Systems, Inc. All rights reserved.

6 WHITE PAPER l The True Paperless Branch l Page 6 Before deploying the full solution, this financial institution generated more than 2.5 million pages of paper per year through its new account process. Every business day, almost 600 new files were routed manually between 29 associates. The process required courier runs five days a week, and an eyepopping 50,000 courier runs per year. As a result of all this paper shuffling, the financial institution s account validation process took five days. After implementation of the solution, the institution reduced its paper output by 40 percent representing over 1 million printed pages per year. It also slashed its courier runs to just two days per week a 60 percent reduction in transportation. Most impressively, Branch Optimization enabled the institution to improve its processing productivity by more than 70 percent, and achieve next-day validation of new accounts an 80 percent improvement in turnaround time. Overall, the institution lowered its costs while enhancing service. And this isn t an isolated example. A not-for-profit, member-owned financial institution had a process that required the image capture of branch documents both internally and through an outsourced provider. The duplicate efforts were inefficient and costly, and didn t position the institution for the paperless environment it was striving for. As a result of implementing the solution, the financial institution was able to eliminate duplicate processes, reduce float, simplify access to document images, and strengthen customer relationships. The Bottom Line The Paperless Branch concept offers a solution that addresses the challenges of one of the major bank delivery channels and the significant expense associated with it; it does more than improve individual branch activities. It transforms the branch into an interactive customer experience. Additional Information on The Paperless Branch For more information or to schedule a private demonstration, please John Gustafson at jgustafson@wausaufs.com or give him a call directly at (800) ext About WAUSAU Financial Systems WAUSAU Financial Systems is a premier provider of payment and remittance processing solutions, serving businesses of all types to develop strategies that move money faster. With its products, services and consulting, WFS works with customers to speed check processing, electronic presentment, ACH payments, transaction processing, distributed capture and enterprise content management. WFS innovative solutions provide results for a wide range of organizations, including financial institutions, insurance companies, utilities, retail businesses and governmental agencies. Find more information about WAUSAU Financial Systems at 2009 WAUSAU Financial Systems. All rights reserved WAUSAU FINANCIAL SYSTEMS, INC. All Rights Reserved. All other copyrights cited herein are the property of their respective owners.