Document management is crucial for compliance, litigation, and the art of the deal

Document management in financial services companies is a crucial process--governing an organization's ability to comply with regulatory measures, defend itself in litigation, and secure deals with other companies through mergers and acquisitions. Read Mark Vernon's report on the Rothschild investment firm's adoption of a new system.

In financial services, document and records management systems find a particular use when it comes to compliance. Legislation from Sarbanes-Oxley to the Patriot Act requires companies to provide full audits of their activities, decisions, and processes. The best way to do this is to capture the documents that form the content of these exchanges—"documents" include anything from paper records to e-mails, from electronic documents to voice messages—and put them in a system that not only tracks and stores them, but controls and facilitates their use too.

Some institutions have paid million-dollar fines for not being able to discover and retrieve information. Others have spent literally hundreds of thousands of dollars hiring temporary staff simply to find e-mails that the courts required.

In addition to routine compliance processes are the pressures of dealing with non-trivial litigation and damage to the brand. It is estimated that, at any one time, approximately one-fifth of the Fortune 125 companies are engaged in serious litigation, for which document location can make or break the case. And banks almost routinely have to fight the bad PR that results from press reports about information leaks and other public embarrassments.

Yet another area that makes document management crucial is its importance in deal-related activity. During complex mergers and acquisitions documents are required from multiple internal departments, multiple external departments, and third-party organizations—notably the regulators, such as the Securities and Exchange Commission (SEC). The information must be carefully managed to ensure due process but also to ensure that only the right people see the right things at the right time.

Streamlining business deals with document management technology

A case in point is that of Rothschild, the international investment bank. Not only does the bank have more than 2,000 employees worldwide, but in recent years, it has been more effective in completing deals. "You want people working in teams to have access to similar information, to be current, to know what is going on in their sector, to be aware of their own work, and you want it all to be tied together," says Jerry Kaiser, Rothschild's director of systems. Accelerating the deal cycle in this way does nothing less than increase revenues.

While Rothschild's bankers worked effectively as individual working groups, the inability to access and share financial models, agreements, reports, and market data made it difficult to collaborate on deals with others in the firm, to pass work among analysts, or simply to ensure that different product groups were coordinated in their coverage of clients. Remedying the situation required a document management and collaboration system built the way Rothschild's bankers worked. "Users these days tend to be glued to their e-mail and the Internet, so whatever system we used had to link effectively with both," continues Kaiser.

He chose to deploy Interwoven's WorkSite product, "a collaborative document management platform that was built from [the] ground up using Microsoft technologies—COM, ASP, .NET—enabling you to fully leverage existing investments in Microsoft-based applications and technologies." The system was first installed in Rothschild's investment banking division in 2001, extended in 2002 to aid collaboration with realty and asset management, and is now being run to extranets that share information with clients, partner companies, and investors. By capturing deal and client information in a single repository, WorkSite helps manage risk and meet regulatory compliance standards.

Kaiser believes that the system not only keeps them compliant, and equips them to deal with investigations when they occur, but also adds to their competitive advantage. "I asked our analysts how they'd feel if I took WorkSite away. Their response was, 'you can't!'", he says.

This, then, is a happy marriage of two worlds—compliance and strategy. For at its best, document management should not only help a bank to tick off the necessary boxes, but should make for a better run business.

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