I agree that digitalization is not a panacea, but things did not work anywhere close to perfectly fine when everything was on paper. There are just as many ways for analog/physical processes to go wrong.
A sophisticated genius hacker in a different country can’t touch your paper records, but an absolute moron with a bic lighter can destroy records just as effectively. Hell, an irresponsible clerk can do an incredible amount of damage just by misfiling things.
Duplication literally doubles costs in the physical world, and has the downside of being very hard to keep in sync. A bank keeping paper ledgers would be absolutely fucked if they had to switch to a backup ledger that was more than a few hours old.
On net, I believe that digitalized documents are a net improvement.
Yeah, while online copies are a risk, you can make offline digital copies of important data for a thousandth the price of paper copies.
Put some desktop-size tape robots in several government building closets, and task someone with switching tapes weekly, and you can achieve more reliability than multiple huge paper archives.