OCR in Banking: The Game Changer of GenAI

As writers or even individuals living in the 21st century, we have all seen the influence the internet and artificial intelligence have had on our personal as well as professional lives.

As time has passed, AI applications are becoming smarter and more human-like than ever before, especially through the branch of generative AI that uses natural language processing to generate outputs that imitate human language and emotions.

While trying to understand artificial intelligence and its newer branches like GenAI, (I had to because AI is taking over the writers' market, and as a content writer, it was important to study it!) I came across the concept of OCR and its use in banking, which was extremely interesting.

So, do you remember a time when you needed to read through an entire PDF document, especially your bank statement, to find the content you were looking for (that one entry which you do not remember spending your money on!), or as an employee, you had to do the monotonous task of data entry day in and out and feel exhausted by the end of the day?

Well, OCR is the AI technology that has eased this process for all of us.

Let us look at the various ways in which OCR in banking has changed the landscape of business operations and lifestyle processes.

What is OCR, and Why Should You Care About It?

So, when I started researching OCR, I found out that it is not a new technology (ya! I was as surprised as you are!). It was present as early as the 1920s but obviously, in a manner that was not as highly advanced as today.

So basically, OCR can be termed as a technology that reads as well as extract texts from documents such as images and PDFs (yes, you read that right!).

And when you complement OCR with generative AI, it is a deadly combination that is transforming the world of banking by converting manual processes into streamlined and efficient workflows.

The superpower that OCR has, which has made it the talk of the town after the integration of machine learning and advanced AI algorithms, is that it can make huge volumes of documents searchable, accessible, and usable within minutes.

OCR along with generative AI reads text, understands the context of the document or image, learns patterns, and automates decision-making to fight off the huge amount of paperwork that was part of manual processes.

Why is OCR a Game Changer in the Banking Industry?

Imagine you are standing in a bank, what do you see? You will see tonnes of paperwork all around you! Loan applications, cheques, know-your-customer (KYC) forms, banking receipts, demand drafts, etc. Now, imagine all these papers need to be processed!

Traditionally, or before the introduction of OCR and generative AI, these were done manually and were considered to be a very mundane and time-consuming task!

Now, by implementing OCR solutions in the banking industry, all these documents can be processed, stored as well as understood within minutes.

The various ways through which OCR, along with generative AI, can help the banking industry include:

• Automate Data Extraction - Imagine the life of the employee who has to fill in all the customer details (relating to various services) into their banking systems. They must have to be so alert that no error takes place, leading to investing more time in doing a task that resembles data entry. With OCR, all these tasks are automated, which means that employees do not need to manually enter the customer data or any other data into the system, as OCR can automatically read and input that data into the systems of the bank in a quick and accurate manner.

• Improve Accuracy - With OCR, banks have seen an improvement in the accuracy of the data that is processed. From well-written customer forms to difficult-to-read cheques, OCR is able to read and understand all the data more accurately and efficiently than the human resources of the organization.

• Reduce Costs - Another way in which OCR helps banks is that it saves huge amounts of money for the banks due to fewer errors and replacing manual labor with artificial intelligence.

• Improved Customer Experience - Imagine you as a customer who had to wait days for a banking task to be completed, whether it be clearing a cheque or processing a loan request. Now, with OCR and generative AI, the processing times have become faster which means that the customers also get quicker services, leading to an overall improvement in customer experience.

  
  

The Cherry on the Top Is That Banks Are Already Using OCR!

Yes, you read that right! Even I was a little taken aback when I read about it but then I realized that it is true that almost all the bank work is done instantly now and with almost no errors.

That made me realize that the banking sector had, in fact, started using OCR before it conquered the rest of the industries!

So, some of the ways in which the banking sector uses OCR include the following:

• Cheque Processing - The most significant use of OCR in the banking industry has been the improvement in the processing times of cheques. Where earlier cheque clearance took days, it can now be done within seconds, and the OCR technology reads and processes cheques within seconds.

• KYC Document Verification - Another banking aspect where OCR has found its place is scanning and verifying the various identity documents of the customers, such as driver’s licenses, passports, etc. As a result, the onboarding of customers has become more effective, efficient, and fast.

• Invoice and Billing Automation - Remember the pile of paperwork in banks? Well, the majority of them are invoices for either the bank or their customers. Therefore, it is important for banks to ensure that all the invoices are processed quickly for faster payments while ensuring that the errors are reduced. This is where OCR enters and becomes the savior for the bank as it automates the processing of invoices and bills, making it faster and error-free.

• Loan Application Processing - Think about the time when we had to fill out numerous forms and provide several documents for a loan application and then wait for days for it to be processed and to get the information about whether our loan application has been approved or not. But have you noticed that the processing of loan applications and the decision of whether we will get a loan or not has become quicker - even taking just a few minutes? This is because OCR automates the reading and processing of these documents, making it faster for banks to approve or deny applications.

• Fraud Detection - One of the aspects of banking where the integration of OCR has really helped the banking sector is that it has helped the banks to identify fraud applications or customers amongst all its customers. So, basically, OCR reads and understands the text of the loan application or customer information and flags inconsistencies and discrepancies that may be indicative of fraud, such as mismatched signatures, unusual contact details, or altered documents.

Now, Let’s Have a Look at How OCR Helps the Banking Customer

Let’s go back in time to possibly the year 2015 and imagine that you have a query about one of your banking transactions or want to apply for a loan with your bank. Now, do you remember that it used to take long phone calls waiting for the banking operator to solve your query or weeks for your loan application to be processed?

Now, OCR in banking behaves like your best friend who solves all your problems quickly! OCR in the banking sector saves your time by accelerating your loan application to a maximum of 2 days from application to approval. This is because, due to automation, the loan processing time has improved.

In addition to this, with OCR and generative AI, the banking sector now has chatbots that solve all your queries round the clock, saving you the time spent on the long calls with the bank operators (and remember how it was only limited to the bank’s working hours?).

So, with OCR and generative AI algorithms, the stress of the customers has reduced with respect to their banking activities as OCR has started working quietly in the background making life easier for both the banking customers and the banks.

Some Last Words!

To conclude or wrap up the blog, let us agree on one thing: OCR is one of the most impactful technological advancements that the banking sector has seen in ages. It has completely transformed the way banks operate, conduct customer interactions, and serve banking customers in an effective and efficient manner.

So, whenever you complete any of your bank transactions or get a loan approval in record time, remember that your virtual best friend OCR is silently working in the banking sector to be your and the bank’s savior!

Therefore, it is not incorrect to say that OCR in banking has actually been a game changer in the world of generative AI, and with an expected CAGR of 15.4% for future periods, OCR technology in banking is here to stay!