Finance: A Consistently Strong ECM Market

I don’t pretend to understand the world of high finance. I don’t dabble in the stock market. I don’t invest in real estate. Heck, I can barely make heads or tails of my 401(k) statement. Math and numbers have never been my bag (that’s why I write for a living). However, what I do know is the financial industry has been a hotbed for ECM technology spending ever since the first document scanners hit the market more than a decade ago.

While other vertical markets ebb and flow in their consumption of ECM technologies, finance has been a consistent buyer. Why? Well, in the words of Jason King, senior manager, financial services/banking for Hyland Software, “Financial institutions, by nature, deal with paper-intensive processes, including loan origination, new account enrollment, credit card applications, claims processing, and check imaging. Many of these business processes are extremely complex and involve not only paper, but electronic data, spreadsheets, e-mail, and XML [extensible markup language]/metadata as well.”

These characteristics clearly illustrate the need for content management in financial circles. However, one might think that with its long history of implementing solutions, the financial industry would be largely saturated by ECM technologies, and new opportunities for VARs in the market would decline. Instead, the opposite has proven to be the case, particularly over the past few years. This continued surge in ECM spending can be primarily attributed to the introduction of new legislation with which the financial community must comply, as well as the industry’s adoption of new unstructured capture technologies to automate business processes.

New Regulations Create A Need For Compliance

Several new regulations (e.g. Check 21, Gramm-Leach-Bliley, PATRIOT Act) have emerged over the past few years that directly affect the document management processes of financial institutions. Industry regulations such as these will continue to feed the need for ECM technologies to aid in compliance. Standards-setting and regulatory bodies for financial services exist at many levels — international (e.g. the Bank of International Settlements), national (e.g. Securities and Exchange Commission, Federal Securities Administration), and regional.

“Regulators and legislators want to ensure high standards of behavior from the financial industry, so they establish standards for business processes and monitor content to ensure compliance,” says Bill Forquer, executive VP of business development for Open Text. “It is inefficient for a financial institution to depend on uncontrolled e-mail systems and shared network drives as a repository for corporate knowledge. Doing so could put the organization at risk of litigation and noncompliance with industry and government regulations. ECM enables financial services organizations to foster a knowledge-sharing culture that facilitates information flow company-wide in a compliant manner. ECM solutions are needed within the financial sector in order to address internal controls, initiate a records management program, improve accounts payable and receivable processes, and address stringent requirements for risk reduction, operational efficiency, and IT consolidation.”

The Financial Industry Wants To Put Unstructured Data To Work

Financial institutions aren’t only implementing ECM technologies to facilitate their compliance efforts. They have also shown a profound interest in many of the new unstructured data capture products that now exist on the market. Financial institutions see a substantial potential ROI in being able to apply these technologies to automate specific business processes.

For example, according to Wayne Ford, VP of strategic alliances and channel development for EMC/Captiva, mortgage lenders can greatly benefit from IDR (intelligent document recognition) and classification technologies that make it possible to quickly and accurately capture semistructured and unstructured documents. Mortgage loan origination requires a collection of documents to accompany every paper loan application. A typical file for a mortgage includes documents ranging from structured application forms to unstructured documents such as verifications of employment, credit reports, and legal documents. The ability to transform every document type — regardless of its degree of structure — into useable electronic data enables mortgage bankers to leverage ECM systems that will better manage the information as it moves through the organization.

In other words, document management solutions tailored for mortgage lenders enable the organizations to scan all the documents related to the loan process, create a virtual file, and then automatically route that file throughout the organization for review and approval. The auditing, tracking, and workflow capabilities of ECM systems enable mortgage bankers to monitor and control workflows as documents move among individuals and departments during the approval process. The more efficient and faster processes allow customers to receive loan approvals faster, which results in increased customer satisfaction.

Educate Yourself On Vertical Market Processes To Maximize ECM Sales Success

VARs will need to be much more knowledgeable than I am about the world of finance in order to maximize the success they have selling ECM solutions in the financial community. “If a VAR/integrator wants to increase its chances of winning a deal in the financial services space, education is essential,” says King. “The most successful VARs are subject matter experts on not only the technical solution, but also on the vertical markets they serve and the unique needs of those verticals.”

If you have an opportunity with a mortgage lender, for example, educate yourself on the lending process. Numerous Web sites (www.mbaa.org) have training materials that discuss the lending process. You should also read industry-specific publications (e.g. Bank Technology News, Mortgage Banking Magazine, Mortgage Technology Magazine, National Mortgage News, and U.S. Banker) to stay on top of the latest trends.

VARs and integrators may also find it helpful to lean on vendors that have expertise in specific financial services areas. These vendors can provide valuable assistance with RFP questions, conference calls, proposals, demo creation, on-site meetings, and solution delivery.

Finally, VARs should be careful not to get too wrapped up in the technical aspects of a solution. “VARs that lead customer discussions not with technology, but rather with the business benefits of ECM solutions are most successful,” says Ford. “VARs who can track where documents originate, who touches the documents, and what the costs are for that business will capitalize the most, because those VARs help prospects understand the complete information lifecycle and how these solutions benefit the financial organization.”