Paperless Banking: A Weak Link in Customer Relationships
The digital age has brought convenience and immediacy – not to mention lower costs – to the way banks communicate with customers. However, paperless banking has inadvertently created a weak link in the customer communication chain: stale addresses. Without a consistent and reliable way to send correspondence and financial instruments through the mail, financial institutions are spending time and money at the expense of their customer relationships.
Over the past fifteen years, the number of bank customers switching to paperless statements has continued to increase, with a recent Javelin survey finding that 83 percent of checking account holders access their finances online. While barriers to greater adoption still remain, it’s evident that paperless banking is here to stay.
Although online banking has many advantages for both customers and banks, the need to communicate with customers using physical addresses isn’t likely to go away anytime soon. One needs to look no further than the EMV chip-and-pin credit and debit cards that are currently being introduced. This year, more than 600 million EMV cards will be issued to replace the old mag stripe cards, and the vast majority will be sent to a physical address.
In addition to cards being delivered through the mail, so too are privacy statements, key fobs, marketing materials, personal checks and more. Financial institutions will always have an ongoing need for written correspondence to ensure timely customer communication. Because of this, it is critical to ensure customer addresses are accurate and frequently updated. Without a reliable way to communicate with customers through the mail, banks are missing out on significant marketing and other relationship-building benefits.
Financial services is one of the top mailing industries in the U.S., generating up to eight billion pieces of mail each year and accounting for ten percent of all U.S. mail volume. With an average cost of $10 per returned mail piece (including outbound and return postage, processing and re-mailing, among other expenses), return mail is extremely costly.
Beyond the return mail problem, paperless banking also leaves financial institutions vulnerable to old-school fraud methods commonly associated with a bygone era. In our next post, we’ll discuss how banks can mitigate fraud by paying closer attention to customer address changes.
Written by Jack Sundstrom
Chief Product and Marketing Officer
Jack has over twenty years of experience in building data strategies and developing advanced analytics solutions on behalf of clients across several industries including financial services, retail, telecommunications, consumer packaged goods, and automotive. He is passionate about developing products that use data to distinguish “good” from “bad” so that clients can make informed and profitable business decisions.