The Flaw in Paperless Statements

Good observation! I'm seeing more and more cases of banks, telcos and government agencies rejecting the electronic medium. 

While claiming a tax refund from the UK HMRC, I found out that, while I could file the return via Internet, they refused any communication by email. Only snail-mail was allowed.

During my several year-long ordeal to collect my social security refund from the federal authority in Germany, they accept signed letters sent by fax, but their letters are always sent by snail mail, which takes 10-14 days to reach me in India. Citing EU data protection laws, they refuse to talk about any personally identifiable information on the phone and refuse email altogether.

I've begun wondering if the near-obsolete fax machine is making a quiet comeback!

There are two primary questions from here.

Why such disconnects occur when bank originates communication and ask for something which they dont share ?

How these can be circumvented from Bank's point of view ?

The reason for failure like this is due to the fact that normally Bank's policy executions are done through different disconnected departments and during policy formulation either all departments are not considered as impact points OR complete life cycle analysis was not done. It is quite possible that there is subsequent improvements in some departments (Digitization of statement) which was not known to other stakeholders (KYC department).

Now, possibly the solution could be bank should have asked only for existing bank account # rather than statement, so that what all data bank wants to validate as part of KYC can be done (including customer direct/voice contact) with their database rather than asking customer to provide statement. Banks should even think of (keeping apart competitive data sharing), sharing customer KYC information. In such cases, irrespective of primary accounting bank, the bank identifier and account identity can be included as additional identity data.

One open question then emanating will be this kind of trusting single point of information(existing account info), will result in single point of failure in CIP (customer identification program). Falsfied documentation at first stage will successfully take customer to all banks and everything will have a domino effect, if the falsification is unearthed at a later point.

Will be interesting to know if bank responded back to you on this issue with a possible alternate solution.

Thanks

I suspect KYC is an industry process, going paperless is the individual institution's decision. Naturally if benefits their "green" image but more importantly, cuts cost significantly.

Some FIs have woken up to the mismatch and will issue statements as one off actions. However, that's a bit of a bind if you're trying to hire a car tomorrow and you're waiting for an envelope to arrive.

Off the top of my head there are at least three simple solutions but only one of them is cheap to the end user. I'm sure you can work them out. If not you'll find my rates are very reasonable.

Noticed such problem 2 years ago. Solution: don't move everything. Council tax is one, you need just another one.

(As posted in response via my blog today at javelinstrategy.com)

Amidst the rather obvious fact that the cyber-realm generally hosts the most ever-changing, voluminous and simply ingenious methods of crime, people often overlook the fact that paper also equals risk. Pick up any Frank Abagnale book and you’ll read page after page about check fraud, even though his comments about cybercrime get the headlines. The point is that data is inherently risky regardless of what medium (paper, ether, iPhone apps, stone tablets, etc) it travels on. I’m inspired to write this blog due to a small thread occurring on Finextra about the problem of online-only statements not meeting banks’ own requirements for authentication, which reminds me of two other trends I’ve witnessed.

1) I’ve twice been asked to authenticate myself by faxing paper statements to providers (one a PtoP lender and the second a fee-based Identity Protective Services Provider). In both cases I abandoned the process due to concern over the companies’ reliance on this inherently easy-to-foil method. Given today’s variety of methods for copying GIFs and fonts, you don’t have to be smarter than a fifth grader to convincingly mock up a bank or utility statement, so such a practice favors criminals while only foiling bank and billers’ efforts to turn off the paper statement.

2) While consumers who discover fraud clearly have lower damages (a perennial finding from our annual Identity Fraud Survey Report), another disturbing trend is seen in our data every year: more consumers actually discover fraud every year via paper statement (versus the electronic counterpart). Given that electronic statements arrive earlier and can be viewed from anywhere with an online connection I attribute this lost opportunity to one process issue: when putting statements online companies failed to update a format which was originally designed for print.

As we collectively try to get the laggards to drop paper for online methods we face the twin challenge of education about the startling risk of the electronic world while battling the false perception that paper is somehow a safe refuge. Private data is risky via any medium, and criminals will gladly take advantage of any false perception