In the run up to COP26, the timing could not be better. Despite the growing awareness across financial services of the need to cut the unnecessary use of paper, too many banks continue to churn out huge volumes of regulated documents by paper to customers. A UK start-up ALT/AVE does however offer a digital, sustainable and affordable solution.

ALT/AVE has a simple solution to an age-old problem: how to reduce paper usage by offering a secure and sustainable digital solution for the distribution of highly regulated documents to customers. Indeed, the UK start-up claims that it can reduce paper usage by 95% and offer a 25g decrease in CO2e per document compared to postal delivery.

A report from EY examining digital transformation asked if paper remains the elephant in the room-and with good reason. As EY noted, the amount of paper flowing through organisations and being sent to the end-customer is still significant. A paperless world is in fact, far from becoming a reality.

ALT/AVE founder and CEO Chris Ansara speaks with RBI editor Douglas Blakey

Specifically, EY noted that a mere 32% of UK retail banking customers can be considered to be paperless. And despite the rise in digital banking and the increasing awareness of the environmental gains resulting from reducing paper usage, progress has been slow.

For example, EY notes that between 2016 and 2018, the average annual reduction in paper documents sent to UK retail banking customers declined by a mere 7%.

Across the UK retail banking sector, some 482 million paper documents were sent to customers in 2017. A significant proportion of the manual paper distribution to customers relates to regulated documents.

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Moreover, when all financial services sectors are added up, EY estimates that companies sent 5.2 billion paper documents to their customers in the post in 2017, representing an extremely significant and underreported environmental issue.

As Chris Ansara, founder and CEO of UK regtech start-up ALT/AVE tells RBI, current digital alternatives have proved to be insecure or not fit-for-purpose.

The ALT/AVE distributed ledger technology solution, docStribute, enables banks and other financial institutions to safely and securely deliver heavily regulated documents to customers via email. The aim is to provide a cost-effective and sustainable alternative to paper communication.

The City’s Hidden Paper Waste Problem

Although there have been numerous advancements in financial technology in recent decades, many facets remain outdated and inefficient, says Ansara. It is a legal requirement set out by the Financial Conduct Authority (FCA) in 2009 that “a firm must provide or make available to a banking customer appropriate information about a retail banking service and any deposit made in relation to that retail banking service: in good time; in an appropriate medium; and in easily understandable language and in a clear and comprehensible form.”

However, due to heavy regulations surrounding the method of delivery, there is currently no easy way for financial institutions to digitally distribute these documents to customers. Sending documents via email, while not prohibited, is not favourable. Including documents as attachments, for example, can lead to corruption of data, increases the likelihood of bounce backs or having an email marked as ‘spam’, in addition to creating a vector through which malware can be propagated. Supplying documents as attachments can also allow the receiver to alter the text.

ALT/AVE creates docStribute

To avoid this, many institutions resort to sending paper copies to the customer so as to ensure compliance. Not only is this costly, but results in masses of paper waste with an environmental impact.

To combat this, ALT/AVE created docStribute – a distributed ledger application that utilises a decentralised public network known as hashgraph. This is a secure, shared database that everyone can read from and write to, and a faster, more secure alternative to blockchain. Hashgraph enables all participants within a given network to access their own identical copy of an asset, while ensuring that the content cannot be altered in any way.

Ansara tells RBI: “Using docStribute, financial institutions can send secure links in the body of emails that direct the recipient to a digital version of the document in their web browser. This can then be downloaded if requested. docStribute streamlines the way in which institutions communicate with customers. This enables them to utilise ALT/AVE’s ecosystem to send important financial documents quickly, securely and, most importantly, while meeting regulatory requirements.”

Reducing paper usage by 95%

The result is not only more sustainable. Ansara says that it increases employee efficiency by improving productivity and freeing resources for value-added tasks, as well as offering customers a vastly improved customer journey.

“Once set up, docStribute will reduce paper usage by 95%, accounting for a 5% bounce back rate where the best alternative is to distribute documents in the mail. docStribute will also reduce costs by up to 70% and result in a comparative reduction of 25g of CO2e per delivery, where postal deliveries are estimated to result in 29g of CO2e per item compared with 4g of CO2e for docStribute emails.”

In addition to helping their customers reduce their environmental impact and CO2 footprint, ALT/AVE also donates 10% of its solution’s bandwidth revenue directly linked to the amount of paper saved by its clients, to tree planting charities around the world.

Ansara concludes: “The digital distribution of regulated documents for financial institutions is complicated. As a result, we tend to see many firms simply revert to paper or attempt to implement inefficient digital onboarding solutions. I started ALT/AVE because I saw this problem over and over again, and I knew that there was a better way.

“ALT/AVE has both sustainability and productivity at its heart, and we hope to see our solution help to not only reduce the use of paper, but also help organisations become more sustainable, assisting the UK in reaching its decarbonisation targets of net zero by 2050, and help businesses in the financial sector streamline working practices while ensuring regulatory requirements are being met.”