The staged roll-out, which will take place over a six-year period, will transform the firm's mailroom into an automated system, handling more than 10,000 postal items a day.

Using Xerox's language recognition technology, critical inbound business information such as insurance and banking correspondence will be processed, catalogued and routed electronically.

The six-year programme will be implemented in five stages and is part of an on-going £500m investment by CFS to maximise its data manipulation and cross-selling opportunities.

The move follows the signing of a five-year, multi-million pound, business process outsourcing deal with Communisis.

CFS anticipates the system, based upon Xerox's DocuShare technology, will improve the efficiency and accuracy of it customer responses, as well as cutting the levels of paper it uses.

The deal, which was signed in January, meant the company took control of all of CFS's existing print, mail and fulfilment operations.

CFS executive director for strategy and change Dick Parkhouse said: "By adhering to the highest ethical standards, reducing our waste wherever possible and curtailing our energy usage we will significantly increase our capability and credentials."

He added: "With this new approach we will not only reduce operational costs but more importantly we will deliver improved customer service."

Xerox UK Global Services director and general manager Peter Romaine said: "We are committed to helping CFS implement new and innovative ways of working that deliver excellent customer service, meet sustainability targets and improve the speed and efficiency of its business."