By Shivam Singla
In the digital era, banking is moving toward digital platforms, making it essential to address the reliance on traditional paper-based documentation. With India’s paper consumption predicted to reach 30 million tonnes by FY27, there’s an urgent need to cut down on paper usage in banks through digitalisation. Digital banking has revolutionised the way we manage our finances, providing anytime, anywhere access to a wide range of banking services. Digital banking in India has seen remarkable uptake. National Payments Corporation of India (NPCI) data shows that digital transactions reached 7.82 billion in December 2022, indicating increased digital platform usage.
On the one hand, while we can see a rise in the adoption of digital banking, the reality is that many of our country’s banks still rely on traditional paper-based documentation processes.
The Barrier of Traditional Documentation
Traditional documentation poses several challenges like manual processes, storage issues, and security risks. A PricewaterhouseCoopers(PwC) report indicates that workers in India dedicate about 40% of their time managing non-critical business documents. These challenges obstruct the integration of digital banking services.
The New-age of Paperless Documentation
Paperless documentation, using digital signatures, digital stamping, electronic records and cloud storage, can provide substantial benefits:
- Improved Efficiency: Digitising processes reduces manual tasks and accelerates document management. For instance, HDFC Bank digitised its lending process using a cloud-native platform, significantly reducing processing time.
- Cost Reduction: Shifting to paperless practices reduces operational costs for banks by eliminating printing, storage, and transportation costs.
- Enhanced Security: Digital documentation uses encryption, digital signatures, and secure cloud storage to protect against unauthorised access and ensure data integrity.
- Sustainability: Paperless practices contribute to environmental conservation. For example, ICICI bank’s digital initiatives in 2021 saved over 9 million sheets of paper.
- Improved Customer Experience: By streamlining processes and eliminating paperwork, banks can provide a more seamless service to their customers.
Transitioning to paperless documentation can therefore enhance the overall efficiency and effectiveness of banking operations.
But with paperless documentation comes the doubt of legal compliance amongst the general public. It is obvious to have such concerns, and that’s why it is crucial to address concerns regarding the legal validity and regulatory compliance of paperless documentation. In India, the Information Technology Act 2000 provides the legal framework for electronic signatures and electronic records. Additionally, the RBI has issued guidelines and directives to ensure compliance with industry standards and safeguard customer interests. This means that all digital and paperless documents are valid and legally recognised in many jurisdictions, and there should be no hesitation in adopting paperless documentation over paper-based documents.
A Holistic Approach for a True Digital Banking Experience
Transitioning to paperless documentation poses challenges such as infrastructure requirements and resistance to change among stakeholders. These hurdles can be overcome through concerted efforts from technology providers, banks, and regulatory authorities. Banks are reinventing themselves to meet changing customer needs through technology adoption, leading to an increasing need for collaboration with digital infrastructure companies to build robust digital flows for critical processes. For example, South Indian Bank(SIB) collaborated with a leading digital document infrastructure company to reduce their TAT for home loan documentation to minutes by choosing digital paperwork. This collaboration also led to more productivity, increased transparency and trust for SIB.
Paperless Documentation is the Future
Embracing paperless documentation is a key step in fully realising the potential of digital banking in India. While it’s a significant transition with its own challenges, the benefits are undeniable – from enhanced efficiency and cost savings to improved security and customer experience.
Stakeholder resistance and infrastructure requirements are challenges that must be tackled strategically, with a focus on education, training, and awareness initiatives. These efforts, combined with the continued collaboration between banks, digital infrastructure companies, and regulatory bodies, are crucial in driving the adoption of paperless documentation.
As India moves forward on its path to digital empowerment, paperless documentation will be instrumental in fostering a more seamless, efficient, and secure banking ecosystem.
The author is founder and CEO, Leegality
