By Sunil Prabhu, Banking and Insurance Consultant at Lexmark International
Money, as they say, does not grow on trees. Balance sheets must balance, and capital requirements must be met. Next year will see the implementation of the new European capital regime – the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR).
Essentially, banks will be required to hold higher ratios of capital in relation to their lending. And unless banks want to see their balance sheets suffer, they will need to find ways of freeing up extra capital in order to satisfy the regulations.
One of the quickest and easiest ways to free up capital is to improve operational efficiency. In today’s financial sector, manual processes such as data entry still take up a huge amount of time and resources. What’s more, these processes are often outsourced to countries beyond the UK, raising issues of data security and customer privacy. By implementing simple data capture solutions, banks can eradicate the time-consuming, error-prone manual processing of electronic and paper documents, and eliminate the need to transfer sensitive information overseas. This greater efficiency ultimately drives down costs.
As the amount of data generated by the global population increases exponentially, the need for smart, integrated information policies has never been more apparent. Yet paper continues to be one of our primary tools for consuming and interacting with information. How can banks reconcile the versatility of paper, with the regulations and demands of today’s digital economy? The answer, quite simply, is data capture.
So long as paper remains a key component in our information architecture, solutions that extract data and direct it into workflows will be invaluable for financial institutions across the globe. Furthermore, data management tools such as these create visibility over the entire spectrum of information within a business. Due diligence procedures are simplified, potential pain points are identified earlier, and overall operational efficiency is increased. As capital is squeezed under the new 2014 regulations, banks will either need to explore solutions such as these, or else start explaining to shareholders why their bottom line is disappearing.