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The Risks of Physical Documentation at Financial Institutions
Your financial institution probably uses a mix of physical and digital documentation.
Digital documentation has been reshaping the financial sector for years now, but physical records are still standard and expected at most financial institutions. Both forms of documentation are vulnerable to outside threats, but their weak points are different. Here, we’ll explore the unique risks of physical documentation at financial institutions so you can make safe decisions for your business and clients.
Physical Documentation Poses Increased Security Vulnerabilities
As we already mentioned, both digital and physical records are susceptible to theft, tampering, and unauthorized access. However, physical documents are vulnerable in unique ways.
Unlike digital records, which can be encrypted and safeguarded with cybersecurity measures, paper documents rely solely on physical security practices. This includes locked cabinets, restricted access areas, and vigilant staff. However, lapses in these measures can lead to breaches that compromise sensitive financial information, exposing institutions to fraud and identity theft.
Furthermore, digital records can come with security measures that hide or delete data if security is breached. Conversely, once physical documentation is in the wrong hands, it’s nearly impossible to recover it.
Mitigating Security Concerns
Despite security concerns, physical documentation is relatively easy to protect within your institution with the right security measures. Current documentation should be kept under tight lock and key, and obsolete documentation should be destroyed. Therefore, having a means to effectively destroy sensitive physical information is important and a reason why you should consider industrial paper shredders.
Paper Documentation Slows Down Operational Efficiency
Handling and storing physical records consume an inordinate amount of time and resources, which is risky in a sector that relies on absolute efficiency and accuracy. Financial institutions must allocate significant space for archiving documents, employ staff to manage these records, and invest in organizational systems that often still result in manual errors.
Digital solutions, on the other hand, offer streamlined processes, quicker retrieval times, and more accurate data management. Digital solutions are not without operational flaws, but they better enable institutions to focus on their core financial services.
Paper Documentation Produces More Waste
Finally, using physical documentation risks producing unnecessary waste. Though digital data also poses significant environmental concerns, it doesn’t leave a paper trail. Disposing of old documents adds to the waste bins and clutters your business.
Physical documentation poses several unique risks to financial institutions. However, it’s unrealistic to expect an all-digital documentation strategy. Paper forms and files are still integral to industries all over the world, including finance. Therefore, you should use this information to better protect against the vulnerabilities that physical documentation poses at your financial institution instead of replacing it altogether.