Going paperless is finally possible. Billon’s B4TDM is a real game changer
Even though majority of banking clients use mobile or online banking, most customers still receive printed documents — by mail or courier services. And although paper generates enormous costs, it is still a primary medium for the most important contracts and high-value agreements. The question worth billion: why is it so difficult to go paperless?
European companies from the financial sector, telco operators and utility providers spend 60 billion euro each year on distribution of documents solely. Up till now, the paper seemed irreplaceable mostly due to the durable medium requirement and sender/recipient authenticity concerns. Two European directives, PSD 1 and PSD 2, together with MiFID 2 oblige banks, investment companies, and insurers to deliver documents in a form which ensures data immutability, accessibility and longevity. Clients should have independent, unrestricted access to their contractual documents for as long as the contractual relationship lasts.
Then, there is paper in business environment. No company sends multimillion-dollar contracts via emails, nor shares them on public clouds or signs them using e-signatures. Why? Security concern over data travelling between servers and sender/recipient authentication issues prevent companies from going paperless. Current “office” technology does not allow to detect privacy threats, as there is no professional KYC procedure involved. Virtually anybody can set up an email account or send a file through file sharing service, plus there is variety of cyber risks around current IT systems.
Why are we still using outdated technologies and killing trees?
Let’s analyze some of the reasons why companies did not go paperless. Sending documents in a non-encrypted form poses a risk that communication is intercepted and critical data stolen or leaked. Therefore, managers prefer meeting and signing papers personally, often in the presence of lawyers. Face to face — that’s how they conduct their KYC. This is not a practical tool in a demanding business environment. What companies need, is a comprehensive, easily integrated system to go paperless. What are the alternatives? Let’s see.
It goes without saying that publishing or sharing documents online is the cheapest option. Yet, existing solutions do not ensure legal compliance. To replace paper one needs to develop an IT system providing the same functionality and features as paper. A paper letter or a copy of an agreement ensure data immutability, accessibility and longevity. Signature in person leaves no doubts about identity or data authenticity. It is also very difficult to forge paper — one could trick non-professionals, but not an expert witness.
What are the alternatives? There is online banking, however, simply sending out agreements, regulations or policy revisions through online banking is insufficient, as such files are stored on publishers’ central servers under their control.
According to the EU Court of Justice ruling in the BAWAG case, sending documents by email is not a solution either. E-mail servers are often located abroad, which raises GDPR concerns and e-mail does not meet the active delivery requirement. Another idea, such as dispatching documents on CD-ROM or USB stick is beyond consideration, users do not have the device to read it.
What about blockchain, the most acclaimed technology of this decade? Most of the solutions that employ blockchain technology do not fulfil legal requirements for durable medium or GDPR. They use blockchain only for document authentication and notary function, while documents are still stored in the “old” place — company’s server. Hash — a one-way unique electronic fingerprint is generated for each document and stored on blockchain. However, this system provides only a storage for the hash — the electronic stamp and not for the document. What we need is the solution where document is together with the hash on-chain in blockchain. What do we gain by that? That is in part 2.
