Paperless Transactions: The Competitive Edge

Executive Summary¹
Reduced margin spreads, decreased differentiation in financing products, too much capital chasing too few deals - everyone is looking for the next competitive advantage. For early adopters, going paperless will be that competitive advantage and eventually, it will become a way of doing business, just like cell phones and e-mail. Can you afford to be left behind?

Replacing existing paper-based systems with secure and efficient electronic systems to automate credit processes, speed financing communications and improve transaction efficiency is expected to result in marked gains for those industries willing to "go paperless." As companies look for ways to continue to attract and retain customers, effectively compete, and improve margins, adopting and leveraging technology should be foremost on the minds of industry leaders.²

The legal infrastructure is in place and the technology is readily available. However, as in other business sectors reviewed for this study, there are a number of reasons for a slow adoption rate, including the lack of a significant industry participant applying pressure to transition to the paperless transaction; the lack of regulatory or judicial guidance; market participants not perceiving the benefits of the first mover advantage, and the lack of broadly accepted industry-wide standards.

Experience with other business sectors has shown³ that the most efficient path to the paperless transaction is to have industry leaders commit to work together to develop electronic transaction standards on an industry-wide basis. Rather than companies taking a "wait and see" approach, resulting in each company investing substantial resources to automate within their own parochial environment and then having to invest the resources again once industry standards develop, a collaborative effort will reduce costs, flatten the learning curve, hasten the adoption rate and reduce legal and business risk.

1 This Study does not constitute legal advice. You should consult with qualified counsel before initiating any electronic business processes. In addition, standards-setting activities should be planned or undertaken with consultation with qualified antitrust counsel. [back]

2 According to a recent report, a company's ability to adopt and leverage technology is a consistent attribute of "OutPerformers." See Equipment Leasing and Finance Foundation, Business Differentiation, What Makes a Select Few Companies Consistently Outperform their Peers? (Oct. 1, 2006). [back]

3 See SPeRS Standards in Appendix H; NAVA Standards in Appendix I. See also the discussion in Part 5 regarding other industry standard setting efforts (both technology driven and behavioral). [back]

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