Annual cost savings of over £1 billion if UK financial services firms go paperless


Substantial cost savings, estimated at £1.3bn annually, could be available if UK financial services firms and 80% of their customers, go paperless¹, according to a new survey from EY. This is in addition to the huge environmental benefits of reducing the paper flow between banks, insurers and asset managers and their customers.

Some 5.2bn paper documents were estimated to have been sent by the industry last year alone. The study, based on responses by leading UK financial services businesses², reveals only just over a quarter (28%) of customers are deemed paperless, despite the rise of apps and online platforms to manage people’s finances. Although many people click onto apps to check balances and make transactions, a large number of customers still receive paper records such as policy documents and statements.

Nick Gomer, Managing Partner at EY in the East, comments: “It may come as a surprise to many that financial firms are still some way off from being fully digital, despite the widespread use of apps and online banking. Becoming fully paperless though, is not as simple as clicking a few buttons. There’s still a number of hurdles that need to be overcome both from a firm and customer perspective. Considering the cost savings available, the positive impact it would have on the environment and the potential to improve customer interaction, it should be a key focus.”

Key hurdles

EY’s research has identified three key hurdles that are hampering UK financial services organisations from going paperless. These are legacy systems, customer demand and the introduction of new regulation.

Legacy systems constrain new digital models

Many financial services firms are still operating legacy systems in conjunction with newer digital ones. While there are cost and logistical reasons for this it does make for inefficiencies. Even though firms are able to integrate some of the different services available to customers, for example, online, in a branch or by phone, scope is limited. This means that in some areas firms are still reliant on traditional systems that produce paper. Investment is needed in order to fully integrate digital experiences that will tackle inefficiencies, reduce long term costs and improve the overall customer experience.

Customer demand for paper

Nearly three-quarters of customers (72%)still receive paper documents such as policy documents and statements, sometimes while also using banking apps and/or online banking. This is due to a variety of factors such as habit (that’s how they’ve always had it); design (they want to have a physical record or reminder and/or may not have access to digital channels); or inertia (they haven’t selected to opt out because they’re unclear of the value of alternative digital channels or may not have realised they can opt out).

Regulation doesn’t have to be a barrier to innovation

38% of paper documents sent in 2017 related to regulation. Many firms have interpreted the recent swathe of new regulation relating to more transparency in things like fees and charges and financial marketing to mean they have to send more paper information to customers. However, authorities are looking at how digital communication tools can be used to ensure the principles are adhered to, while also looking at how the customer experience can be improved.

Nick Gomer continues: “Firms can do a lot more to help customers in this move to digital. It’s not just about putting the same pdf document on an app, it’s about re-imagining content and designing information which is more engaging for customers. As for regulation, while new rules require firms to become more transparent, it doesn’t have to mean sending more paper. Closer collaboration between the industry and regulators is needed to agree what firms need to do and how best to do it in this new digital world.”

Paper flows remain high

The study reveals the retail banking sector sends the most paper; with 4.2bn documents sent in the last year. This compares to an estimated 1bn documents sent last year in the insurance, life and pensions and wealth sectors combined.

In contrast, however, the retail banking sector has the highest percentage of customers deemed to be paperless (32%). This compares to 28% in the wealth and life and pensions sector and 18% in the general insurance sector.

Nick Gomer concludes: “Being paperless represents a key metric for digital maturity, and is clearly a target for many financial services organisations, but there are a few sticking points at the moment to widespread adoption. Old legacy systems need changing – often requiring hefty investment – and some consumers need to be convinced of the reasons to go fully digital. Firms need to help customers with this transition and innovate with new ways to really engage, based on preference and their ability to access different channels. Clearly there’s no quick fix, but what this report shows is the huge benefits on offer. It should be something that all financial services firms should continue to work towards.”

The 5.2bn paper documents estimated to have been sent by the industry last year alone is the equivalent to 2.4 million trees. To put this in context, only around 850,000 trees were planted in the UK in 2016.

¹ Paperless is defined as not sending or receiving paper documents. Communications are conducted by voice and/or digitally, across a customer products or service holdings.

² The study is based on responses from financial services firms across retail banking, insurance, wealth and life & pensions.



EY is a global leader in assurance, tax, transaction and advisory services. With over 400 employees in our Cambridge and Luton offices, our teams provide a range of services to a variety of sectors, including manufacturing, life sciences, consumer products and retail, technology, real estate and construction, health, and the public sector. The broad array of companies across the East allows us to bring real, relevant and key insights to our clients.