A complete digital future for BFSI ahead

Despite FIs and banks having digitalized most processes like KYC, origination, payment, customer Support and more. Digital journeys hit a snag when paperwork needs to be signed!

The process for getting even a single document signed is onerous – scanning paperwork, couriers, office boys running to get physical signatures, verifying signatures and communicating approvals.

Finally storing the documents in a secure physical space. The document can also be difficult to trace/retrieve at a later date, especially when it becomes necessary for enforcement or for an RBI audit.

BFSI organisations repeat this process countless times each day in order to ensure smooth operations. Depending on the size and the nature of the organization, this can easily mean hundreds, thousands and even lakhs of documents a year! Paperwork moves from being a mere annoyance – to a terrible drag on business.

Can we digitize this last mile of paperwork for the BFSI industry?

India had long been restricted to using only USB-token-based electronic signatures as acceptable digital signature formats. However, acquiring USB tokens for digital signatures was a complex process requiring high level of tech literacy. Hence, these tokens could not function as a mechanism for digitizing signatures for 1.3 billion people in our country. Token based signatures stayed confined to professionals in very niche fields (you probably have heard of your CA using these unwieldy devices!)

Aadhaar eSign was introduced in the Information Technology Act of 2015 as a means of electronically signing legally binding documents. With an Aadhaar number and a mobile Internet connection, any Indian can now affix an electronic signature!

BFSI companies were given a powerful tool to help them eliminate the final barrier to going paperless - the signature - when Aadhaar eSign was launched. However, it is not enough to take signatures online. Digitalizing several other steps is required for the full execution of a document at a compliant level.

This enables all paperwork processes for BFSI institutions to be digitized in a scalable and compliant manner. It's reminiscent of India's payments ecosystem - where the deregulation of UPI unlocked an explosion of product and application innovation among Indian banks and fintechs.

The benefits of digitalizing BFSI documentation are manifold

Timely completion of financial transactions: Eliminating paper eliminates the need for printing, scanning, couriering, or sending a runner to collect signatures. It now takes minutes to close documents that once took seven to ten days. Customers have an easier time signing up, opening accounts, etc.

A more inclusive financial system: Financial inclusion is primarily driven by micro-credit and microtransactions, but the costs of servicing these operations prevent expansion of the financial system to lesser banked groups.

Electronic document communication reduces latent costs of paper, making onboarding procedures cheaper, and thereby reducing the cost of servicing small tickets. Digital paperwork allows DSA/Business Correspondents to expand their networks in rural areas much more quickly than paper paperwork.

The simple act of processing one single agreement (preparing zero-error documentation, ensuring a secure document lifecycle, and securing data) places a large burden on teams. With digital paperwork – these touchpoints either get eliminated or become completely automated – allowing employees to focus on more productive work.

Documents that are electronically signed are inherently tamper-proof, and multiple backups can be created to ensure their safety. Any natural disaster is not a risk. In fact, our legal system favors digital documentation.

Perhaps the most important benefit is enhanced customer experience. Providing KYC and digital paperwork services allows BFSI institutions to provide an unparalleled customer experience. It is no longer necessary for customers to interact physically with agents.

The BFSI sector is a key contributor to the growth of the Indian economy. COVID19 has accelerated a digital transformation in many industries, and financial services are no exception. Embracing digitisation to its fullest will ensure that this industry can only grow to provide extraordinary service to customers.

This article has been written by Shivam Singla, Founder and CEO, Leegality