When you ask large fax users why they continue to use fax as a preferred communication channel one answer you will get – in particularly in the finance and insurance industry – is the “legally binding” character of fax communications . It is assumed, that fax guarantees the delivery of a sent message to the recipient based on the underlying point to point protocol. So if you successfully sent a fax, the transmission report printed by your fax machine or the delivery confirmation in your fax server solution should serve as legally acceptable proof that the recipient has received your document. In consequence fax is accepted by many companies as a way to send contracts and other legal documentation while it is not permissible to send these types of documents by email.

Fraud Resistance

Users who stress the legal characteristics of fax also often mention that it is a more secure medium than email. Actually a non-protected textual email or editable attachment such as Microsoft Word documents can be easy to tamper with and even a format such as PDF can be manipulated with only a modicum of special knowledge whilst deploying readily available tools.

The main difficulty with manipulating fax messages arises from the point to point nature of the connection between the sending and the receiving party. All data is immediately transferred through the public switched telephone network (PSTN) without being stored temporally on other devices. A second argument for the more fraud resistant character of fax is the format in which the documents are transferred: Faxes are transmitted across the public telephone network in a graphical format called TIFF (tagged image file format) which literally encodes all data in bunches of black/white dots. This format is much harder to manipulate than the character based content of email messages and would require highly specialized skills and manipulation tools particularly in connection with the real time nature of the transmissions.

With email encryption, which can rely on public key infrastructures, an even higher degree of confidentiality and authenticity could theoretically be achieved compared with the security provided by fax. However, this technology has not achieved widespread adoption and is therefore not really applicable for the communications used by companies with hundreds or thousands of customers, suppliers and other business partners when compared with the already well-established fax communications.

Established Service

Once a reliable and cost efficient fax service is established based on an enterprise fax server solution and well integrated into the application landscape of a company it becomes – like other successful technologies – resistant to change. Even if more advanced technologies exist the major question remains: Why should a company make major investments and take operational risks to replace a smoothly running document delivery system with a more complex and potentially more cost intensive new environment?

In only 5 of the 34 cases covered by the INTERCOPE study has fax transmission been partly replaced by either email delivery, Web based interfaces or structured data exchange. In each of these cases the driving factor for this change was either strong customer requirements or the very high processing cost related to the manual extraction of data form received fax images.

In other cases however fax volumes are still expanding due to one or more of the following reasons

• Increased business creating more messages
• Additional departments of a company, or companies of an enterprise appreciating the convenient and secure characteristics of fax and wanting to use the service
• Deployment of additional application integrations

 Working habits

While most users reviewed in the INTERCOPE study are large corporations with high fax volumes their correspondents include a significant number of small and medium-sized businesses. In these organizations the usage of traditional fax machines or standalone multi function devices is still widespread. People find it simpler and more convenient to dial a telephone number and feed paper into a fax machine instead of dealing with cryptic (and easily miss-spelt) email addresses and scanning and emailing attachments. This seems to correspond to the affinity for paper based work processes and the still overwhelming significance of document transmission by mail – in spite of the long promised move to the paperless office.

• A company specializing in the handling of credit card transactions offered their customers a new web based interface to key in the required data online for these transactions. However the acceptance was very poor and the vast majority of all transactions are still transferred by fax. Many of the customers using the credit card service are small branches of saving banks and their employees obviously feel more comfortable filling out handwritten paper forms instead of using computer based graphical user interfaces.
• The IT department of a large hypermarket chain tried to deliver information to the hypermarkets by email instead of fax. The results were massive complaints stating that this change would lead to more workload as now mailboxes would have to be monitored and the received documents had to be manually printed instead of using the intuitive process of just picking them up from the fax machine.

With larger organizations the majority of fax traffic is no longer handled by individual fax machines but by fax server solutions providing tight application integration and allowing a high degree of automated fax processing. A typical example is the usage of computer based fax in conjunction with printing systems. Traditionally these systems physically printed thousands of letters, invoices and other types of documents, which were enveloped and sent by mail – a laborious, cost and time intensive process. A fax server using printer emulation technology can electronically grab these printouts, extract address information such as a fax number from the print data stream, convert the original message into the required TIFF fax format and send the information to the recipient in a fraction of the time required for mail delivery and for a fraction of the associated cost. In addition the successful receipt of the documentation can be verified and recorded automatically.

Individual business messages

After people became used to sending text messages and desktop documents as email it became somewhat cumbersome to print documents for fax recipients, collect the paper from a printer, fill out a fax form, dial and feed the paper into a fax machine. Soon computer based email to fax functionality became a popular remedy allowing fax messages to be sent transparently from the user via an email client. Advanced solutions automatically selected appropriate cover pages depending on the ID or department of the sender and could feed data into these forms from the email address book entries of the sender and the recipient such as “To” and “From” lines. In addition the sender could be immediately notified about the transmission results and react to failed transmission attempts.

Also for incoming fax messages email became a popular delivery medium. Today all enterprise fax solutions can determine a specific recipient for an incoming fax depending on criteria such as a dialed number or number extension and deliver the received facsimile automatically as an attachment to the mail basket of the recipient.

So today email to fax and fax to email is a widely used tool within a great many organizations. In the INTERCOPE customer study mentioned above the email interface is one of the most popular integration modules and is used by about one third of all users covered by the study. The fax volumes processed through email integration have decreased over the last few years mainly because more messages which were initially sent to fax numbers are now transmitted directly to email addresses. However, the vast majority of all users still see fax functionality integrated into their email system as an indispensible component of their business communications requirements due to the following factors:

•  Customers request the delivery of specific information as faxes instead of email
• The delivery of critical documents may require fax delivery due to corporate standards and regulations
• Letter style documents with cover pages are required while attachments to emails are not acceptable.
• Fax transmission is real-time and difficult to tamper with

Enterprise Resource Planning

A third relevant source (and destination) for fax messages employed in business processes are Enterprise Resource Planning (ERP) systems such as SAP. SAP had quite early identified the necessity of integrating external communication channels into the business processes handled by SAP applications and developed a state of the art interface for such systems based on remote procedure calls (RPC) called SAP Connect. This interface is widely used in the fax server industry and enables individual SAP users as well as automated processes within SAP to easily send and receive fax messages as well as to trace the transmission status for outgoing messages.

Some 15% of all INTERCOPE customers recently reviewed are using the SAP fax integration functions. However the contribution to the overall fax volumes is significantly higher as the SAP installations typically process high message volumes from automated business processes. The following two examples illustrate the significance of fax processing for different areas of Enterprise Resource Management:

• A large hypermarket chain sends information by fax from SAP including orders for suppliers, pricing information, special offers and broadcast messages to the markets. These messages add up to more than half a million each month and volumes are continuously rising. Fax is a preferred medium of delivery for most of the recipients and attempts to use delivery by email have been given up after receiving very bad feedback from external suppliers as well as from the hypermarkets owned by the company.
• The financial service arm of a large car manufacturer built a Customer Relationship Management application based on SAP CRM, SAP Netweaver and other SAP components which provide customer advisers with all the data required to work efficiently on customer requests and enquiries at one glance. Data is accessed from various sources such as host based banking and contractual systems and the platform integrates all relevant communication channels such as phone, mail, fax, and email. As part of the overall communication flow this system processes some 700,000 fax pages each month.

Enterprise Content Management

As described previously modern fax server solutions can route received fax messages according to criteria such as the dialed number or a dialed extension to mail baskets or users of ERP systems. However, when these documents are associated with specific business processes, instead of individual users, this approach has its natural limitations. An insurance company could e.g. provide different fax numbers for car insurance, life insurance and health insurance. The company could try to further fine tune this approach by providing a specific dial extension for e.g. new appliances, claim related documentation and general inquiries. In practice however this will not work as intended since senders will often ignore or confuse such numbering schemes and a high portion of documents will end up in the wrong place.

Facsimiles is basically unstructured content in the form of images and this is hard to process automatically by means of software. The typical place where such content is handled are Enterprise Content Management systems designed to deal with unstructured text, images including facsimiles, audio and video data.

• A large government agency in the US handing disability claims stores mountains of claims documents for the millions of people who apply for disability benefits each year. Each claimant has a folder in one of the largest Content Management repositories ever set up in the world. One important source of input data for this system is fax messages sent by applicants, doctors, hospitals and other parties involved in the claims process. Each month 1.4 million fax messages are received and processed by this system.
• In insurance companies and in particular within claims handling the deployment of ECM systems as a basis for workflow driven business processes is widespread and inevitably involves large volumes of facsimiles in addition to other sources of documentation. An example is a company focusing on specialty products, such as mobile homes and motorcycles. In this company all information related to a claim is stored in folders in a Content Management application and is immediately to hand together with the customer record when e.g. a customer calls. Some 100,000 fax messages are received and processed each month.
• Credit card transactions are often sent from branch offices as facsimiles to specialized service providers. One of these companies in Germany automated the processing of these messages to a high degree by means of optical character recognition (OCR). The OCR component extracts all relevant data from the fax images and the fax server solution forwards this data in XML format to the workflow management system of the company where the actual transactions are executed. Some 40,000 transactions such as credit card applications, cancellations, blocking of cards and various changes are processed each month using this architecture.

Distributed Systems

In 15% of all installations reviewed in the INTERCOPE study customer written applications running under Windows or Unix use fax services. Most typically these applications serve industry and customer specific requirements.

• The business of a leading mobile telecommunications company is based on extensive communication with customers by phone, email, fax, and web interfaces. This communication is handled by a proprietary application tailored to the specific business requirements. Fax processing is included in many processes such as e.g. invoicing, SIM activations, number changes, provision of billing information and other aspects of customer interactions resulting in a monthly message volume of more than 300,000 facsimiles.
• A financial group serving more than six million customers with special focus on household accounts and small and medium enterprises developed a workflow application based on Microsoft SharePoint. Through a web service interface some 280,000 fax messages are processed each month as part of a highly efficient communication infrastructure.

Fax as a means of business communication has been said to be dead for more than a decade. And there are some good reasons for this assessment:

• For many of us email has become a more convenient and easy way to exchange personal and business information
• Digital signatures, Public Key Infrastructures (PKI) and protocols such as https allow a secure exchange of information via the internet
• Web based applications provide online interfaces for keying in data which previously had to be mailed or faxed based on paper forms
• Methodologies and standards have evolved for exchanging structured information such as invoices or orders via a secure file exchange between businesses instead of sending them as letters, facsimiles, or email attachments

Given these technology innovations it is amazing how much fax is still used for business communications by small and medium sized companies as well as the largest multinational enterprises. Some examples taken from a study which INTERCOPE recently conducted among its customers illustrate this:

• An airline transmits information related to air traffic via fax including weather charts for the pilots, airplane loading calculations and diagrams for balancing the undercarriage weights for the airplanes. In addition fax has become the backbone of many back-office operations. In total 63,500 fax messages are processed each month by this company.
• A multinational chemical and pharmaceutical company uses fax services integrated with a large SAP infrastructure to send and receive 164,000 messages each month across most business areas served by the SAP applications.
• A large financial service provider processes 418,000 fax messages monthly solely in their SWIFT messaging infrastructure complementing international financial messages sent and received through the SWIFT network.
• An insurance group processes 468,000 fax messages each month through integration with their email infrastructure, large mainframe batch processes and SAP applications.
• A government agency processes 1,440,000 fax messages monthly relating to disability claims processes handled through one of the largest content management systems in the world.

Fax is often perceived as an obsolete, out of date technology which may still be used by some older people in small business who do not know better, but as irrelevant for the mainstream of business information which is expected to be handled by modern web based technologies, structured data exchange, and email. As the above examples indicate the reality is actually quite different and fax still plays an important role in the exchange of structured, semi-structured and unstructured information even by the largest and most technology-aware multinational enterprises.

In the subsequent parts of this article we will try to shine some light onto this paradox, discuss in more detail where and why fax is still seen as an indispensible method for the exchange of business information and what the future of this technology might be.

The Standardized Corporate Environment (SCORE) allows corporates to use SWIFT’s messaging platform to access services provided by their financial institutions, for example, cash management services. SCORE is based on a Closed User Group that exclusively handles financial messaging between corporations and banks, and does not allow corporate-to-corporate or financial institution-to-financial institution messaging. SCORE, which is available in most countries throughout the world, is used by major corporations including Microsoft, General Electric, Caterpillar, T-Mobile, and Novartis to secure and streamline financial transactions with their banks.

A Relationship Management Application (RMA) is a security component used within SWIFT communications to allow granular control of messages sent to and received from any correspondent. RMA was first introduced for FIN messages replacing the former BKE mechanisms. With the advent of SWIFTNet 7 RMA also became available for the FileAct services offered by SWIFT.

A corporate is eligible for SCORE if

• The corporate is listed on a regulated stock exchange of a country that is a member of the Financial Action Task Force (FATF) or
• The corporate is a majority-owned subsidiary of a listed company as defined above and fulfills additional criteria or
• The corporate is recommended by a financial institution that is located in a FATF member country and participates in SCORE.

Until May 2011 corporates who are recommended by a Bank (non-listed) to join SCORE could only use RMA-enabled services, and were therefore restricted to using FIN. With release 7.0 of SWIFTNet the use of RMA for FileAct became available on an optional basis on June 1st 2011 with the result that recommended corporates are allowed to join the SCORE FileAct (real-time and store-and-forward) services as of that date.

With SWIFTNet 7 it is now possible to create an RMA bootstrap authorization for each corporate. If the corporate has no authorization in the RMA data base of the bank, its file will be rejected on receipt. However, the exchange of RMA authorizations within SCORE will only be available with the SWIFT standard release 2012. At that time RMA will also become mandatory for InterAct and FileAct and non-authorized messages will become blocked at the sending side, transparent to the receiver.

During the migration period, the following scenarios are possible:

• Bank 7.0 / Corporate 7.0
  Exchange of RMA messages will only be possible when RMA becomes mandatory. In the meantime, if both the bank and the corporate are on release 7.0 they can use bootstrap authorizations to ensure filtering of the traffic. The result will be the same as if RMA was fully implemented.
• Bank 7.0 / Corporate 6.x
  The bank creates a bootstrap authorization for each corporate it wants to do business with. If the corporate has no authorization in the RMA data base of the bank, its file will be rejected on receipt (when RMA is fully implemented, the file will already have been stopped on the sending side).
• Bank 6.x / Corporate 6.x or 7.0
  Files sent and received by the financial institution are not filtered. If the bank has a whitelist/blacklist functionality on their FileAct interface, it can use it to block files.

(See : SWIFT: ” RMA for FileAct in SCORE“).

With BOX for SWIFTNet financial institutions and corporates are well prepared for any of these scenarios as well as the mandatory use of RMA in autumn 2012. The Interact and FileAct messaging services of BOX for SWIFTNet are already fully qualified for SWIFTNet 7 together with the RMA interface including SCORE in 2011.

(See: SWIFTNet 7.0 Qualification Register).

ATTENTION: There is updated information available regarding RMA for FileNet

Then in many cases the received fax pages are printed, manually sorted according to  transaction type, issuing bank, region and other criteria and distributed, again manually, to operators who finally type all relevant data into back office systems.

CardProcess GmbH, a company handling 3 million credit cards for the Cooperative Banking Group in Germany, recently undertook a major project to accelerate this laborious process and to make it much more secure and cost efficient. Facsimiles are now received and stored electronically; all relevant data is extracted from the images automatically by optical character recognition (OCR), forwarded to a workflow management system and finally safely stored on non erasable media meeting all compliance regulations.

“With MessagePlus/Open we have a powerful tool which really streamlined, automated and secured the former manual work processes to a very high degree. Currently we process some 36,000 transactions per month without problems and the solution is perfectly adopted to our specific business needs” states Patrick Lenz, the responsible project manager with CardProcess.

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