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AI-Based OCR Technology Revolutionizing the Banking Sector

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The advent of technology has brought convenience to life. Believe it or not, survival without technology is one of the darkest thoughts that can cross your mind in the digital era. The world has become a global village thanks to rapid digitization, but it has also opened doors for many fraudsters to step in and terrify people.

Organizations in every sector are unsafe due to increasing ransomware and data breaches. Considering the increasing number of frauds, companies opt for robust verification systems with OCR technology to only onboard legitimate customers. These systems allow enterprises to filter fraudsters before becoming a problem for the customers and the company.

The banking sector works like a goldmine for fraudsters and faces huge losses due to money laundering, identity theft, and several other frauds. The governments of different states have also enforced stringent know your customer and anti-money laundering regulations.

Complying with these regulations is a challenge without a sound verification system. For the same reason, organizations are adding OCR technology for efficient data extraction. Complying with the ever-growing regulatory burden and seamless customer onboarding is becoming simpler for the banks now.

The question is, what is OCR, and how does it work? How are banks benefitting from it? Keep reading to find out the answers to your questions.

What is Optical Character Recognition (OCR)?

Optical Character Recognition (OCR) is an advanced technology that helps businesses and individuals extract document information more accurately and in a matter of seconds. An OCR software helps individuals extract data from documents and convert it into a machine-readable format that can be further used.

OCR has been in action for a while now, but organizations have started to recognize its need for the past few years. It has become an essential part of organizational operations now for the sake of convenience. According to some reports, the global OCR market will reach $70 million by the end of 2030.

Undoubtedly, this is the result of technological advancements. Enterprises are significantly benefitting from OCR technology and providing a remarkable experience to their customers. Furthermore, companies are using this technology for verification purposes and fraud prevention.

How Does AI-Based OCR Technology Work?

Previously, extracting data and converting it into machine-friendly language was a challenging job. It used to take hours to verify one document and gave the workers a hard time. Guaranteeing the accuracy of the job was impossible due to human errors.

With optical character recognition, the scenarios have changed with the time-efficient process and accurate results. An artificial intelligence-based OCR technology works for fetching data and converting it into a machine-friendly language.

Pre Processing

Preprocessing aims to ease the character distinguishing process for the OCR. OCR comprehends images in a multidimensional array; therefore, the document image is optimized with techniques like deskewing, normalization, binarization, etc., in preprocessing.

Once techniques are applied for differentiating the text from the background, the OCR extracts texts from the fed image. It fills the form using AI algorithms that identify the document template.

Data Extraction

Afterimage optimization, data from the document is extracted in two parts – segmentation and feature extraction. For segmentation, the deep learning neural networks are used for detecting templates and defined segments from the document. After identification, the software extracts features from the document.

For example, in an online bank registration form, segments for the name, date of birth, etc., are identified and filled with respective data.

Post Processing

Once data extraction is complete, organizations have to comprehend whether the extracted data is correct or not. The extraction of wrong data can be lethal for companies dealing with sensitive information. For instance, incorrect extraction of account number can result in a loss for the bank. Hence, the post-processing stage deals with data verification through NLP techniques.

Advantages of OCR for the Banking Sector

The banking sector is prone to financial crimes, like money laundering and account takeover fraud. OCR technology can significantly help the banking sector identify fraudsters because the software checks for any unauthorized documents. Here are the most compelling ones with numerous benefits of optical character recognition software in the banking sector.

Brings Convenience to the Verification Process

The world of technology is bringing convenience to every industry, and AI-based OCR simplifies the verification process, especially in banks. Employees do not have to invest the effort to extract data from every document and verify it for legitimacy. Everything relies on the software, and employees oversee any discrepancies in the technology. While manual processes consume days for one customer’s verification, OCR takes a few minutes to do the job.

Optical Character Recognition Optimizes Time

In the manual data extraction and processing method, verification requires at least a week. An employee has to cater to the queries of the customer first. Then, it checks the documents carefully and extracts relevant data. Once extracted, it is converted into machine-readable language.

However, an AI-based optical character recognition fetches data, converts it into machine-friendly form, and completes the process in seconds. Hence, employees can optimize time for verification.

Reduces Cost of Verification

Previously, firms used to hire a team for verifying every customer for onboarding. Furthermore, the equipment required for verification purposes was uncountable. With the introduction of artificially intelligent OCR, banks have saved many costs for hiring and acquiring equipment. Hence, OCR not only saves time, but it is also cost-efficient, especially for the banking sector.

Legitimate Customer Onboarding

Getting in touch with fraudsters is easier since they are also using sophisticated methods for their evil desires. Forged documents are common these days, and manual verification cannot identify tampered documents. Hence, banks need something more stringent than simple document analysis. This where optical character recognition steps in and saves the day for the banking industry.

The technology can detect forged documents in seconds, making it simpler for banks to filter fraudsters before they cause any trouble. Moreover, onboarding legitimate customers is not a problem anymore, and the customer experience is not compromised.

OCR Technology Makes Fraud Prevention Easier

Money laundering, account takeover fraud, open banking, virtual currencies, and tax evasion are some of the frauds that the banking sector faces every year. According to Statista, the UK has closed two-thirds of bank branches in the last 30 years, the US has closed nearly 9000 branches, and Europe has shutdown 6000 branches due to banking frauds, especially in digital banking.

Preventing fraud is becoming a challenge for all banks globally. Combating these crimes is now possible with OCR. Banks can now onboard legitimate customers, and verifying everyone means there are no fraudsters to increase hassles for the banks.

Complying with KYC/AML Compliance

States worldwide are enforcing stringent KYC/AML regulations, and complying with these regulations is nearly impossible without a robust verification system. An optical character recognition technology is enabling banks to comply with these laws in a better way.

Wrapping It Up

Frauds in the digital world are rapidly increasing, and fraudsters’ primary target is the financial institutions. Protecting banks from account takeover frauds, identity theft, and data breaches is becoming complicated since criminals enhance their strategies.

Moreover, regulatory authorities across the globe have enforced strict laws for KYC and AML, and complying with these regulations is another big hassle. The traditional verification method is time-consuming and costly too. The introduction of optical character recognition technology has made it convenient for banks to prevent fraud, comply with the regulations, save time and cost, and onboard legitimate clients only.

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AI IoT Tech tech after COVID technology trends

Technology Trends that are Emerging Post-Pandemic

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Coronavirus pandemic has proven catastrophic and has shaken the world. But this viral infection has given rise to many new innovations as well. People are about to step into a new world that will be different from the world known pre-COVID-19. Here are the technology trends that are emerging post-pandemic. Grab hold of the innovation and be a part of the wave.

We all know that digital solutions are trending — but what other tech is on a roll?

In the wake of the pandemic, the movement of people is restricted and businesses are either grounded or forced to operate online so digital solutions are trending. Technology trends are gaining momentum in this pandemic.

Digital solutions will be central to this rapid shift as they have bought accessibility, convenience, and simplicity on the table for customers. 

Here are technology trends that are changing the way how we trade, how we get our work done (or not), how we produce goods and services, how we seek medical help, and how we look for entertainment opportunities for ourselves.

Online Shopping and Robot Deliveries

In 2002, when the SARS outbreak occurred it led to the tremendous growth of B2B and B2C platforms in China. Similarly, the Covid-19 pandemic has transformed the online marketplace and changed it from a nice-to-have to a must-have.

To maintain social distancing and to contain the virus online shopping is the way to go.

E-commerce has sprung up massively in this pandemic. You can get what you want at your doorstep, that too, with a robotic delivery. Cool isn’t it? With no fear of catching Coronavirus from the delivery boy.

There is a need to support online shopping with a robust logistics system to make delivery experience risk free. Moreover, e-commerce giants are also ramping up to launch contactless deliveries where they pick and drop off goods at a certain location instead of handing over to a person. 

Virtual Technologies for Remote Work

Businesses have asked employees to work from home to maintain social distancing. The technologies including virtual meetings, cloud technology, digital identity verification tools, face recognition technology, and virtual private networks (VPNs) are supporting remote work. On one hand, remote work saves commute time and provides flexibility but on the other hand, it imposes cybersecurity challenges. So to deal with all the issues cybersecurity trends are revamping too. 

Information security, privacy, and timely tech support is required to deal with Certain loopholes in their system and not to compromise confidential data of people as the Zoom app fell foul of privacy concerns earlier.

There is a dire need for HR departments to employ digital identity verification solutions to trace and tackle fraudsters and to improve the onboarding processes of businesses. HR departments can use augmented reality to create immersive experiences for training and fast-tracking employees at home.

While many businesses are counting the costs of the COVID-19 crisis, sectors that have adapted and moved swiftly on technology needs, are reaping what they have sown. These technologies are also spiking in demand in virtual learning programs due to the closure of educational institutes. 

Digital Payments or Contactless

Some people think that cash may carry the COVID-19, so digital payments like cards or e-wallets, are the recommended payment method to make purchases. To send and receive stimulus funds faster as this technology is taking over. This will help in containing the spread of the virus through cash notes. 

Robotics and Drones

COVID-19 makes the world realize that we rely heavily on human interactions to carry out work. This pandemic provides a strong push to roll out the usage of digital workers called robots for different purposes such as to disinfect areas and to deliver food to those in quarantine.

Organizations are using drones for awareness campaigns as well. Robots and drones are becoming the “new normal� for the upcoming world. Many human jobs will be replaced by robots but at the same time, new jobs will be created. 

Cloud Computing

Cloud companies are weathering the pandemic stress-test which is caused by the sudden hike in workloads and inexperienced users. According to a Microsoft report, there is a 775% spike in cloud services in the COVID-19 pandemic. 

Cloud technology received a surge in usage across all types of apps in this pandemic. Organizations are adopting work from home (WFH) strategy to maintain social distancing. With the implementation of online learning models, the demand for cloud-based video conferencing is also increasing. Businesses and educational institutions will continue to make use of this technology. As demand for this technology continues to grow, businesses are implementing this technology. 

Cybersecurity

Cybersecurity is one of the vital technologies for organizations that are based on data-driven technologies. Much of the attention is being paid to privacy and data protection as per GDPR regulations. As people are working from their homes, the data of businesses is totally vulnerable to cyberattacks; this gives another incentive to the implementation of cybersecurity practices. Cybercriminals are taking advantage of this pandemic and coming up with different techniques to exploit a system. In addition, there is a hike in ransomware attacks so every business needs to take cybersecurity into consideration. 

Blockchain Technology

The COVID-19 crisis has uncovered loops in our connectivity in our global supply chains. So there is a dire need to build transparent, inter-operable, and connective networks. Blockchain technology can improve the transparency of businesses by the seamless integration of disparate networks.

Blockchain is supporting efforts around the globe to battle the virus in many ways like tracking infectious disease outbreaks by tracking public health data surveillance, crisis management using smart contracts concept.

The surveillance is providing awareness to people about the latest research on Coronavirus by WHO, donations tracking by tracking where funds are most urgently required and by continuously tracing their donations until they are provided, and securing the medical supply chain.

VR/AR Technology

Organizations are using this advanced technology to train employees, collaborate on projects, hold conferences, and connect employees virtually. Scientists worldwide have been using VR platforms to collaborate on coronavirus research, molecular design, and potential treatments for viruses.

Moreover, people are using VR headsets to play games, explore virtual travel, and for online entertainment to spend time in their quarantine. As our new normal sets in we are likely to see more virtual conferences.  

Needless to say, digital technology trends can harness reduced human interactions, increased productivity, automation, and simplifies lives while containing the virus. By embracing emerging technologies, businesses can better position themselves in the post-COVID-19 business landscape that lies ahead.

To keep their companies on course, now and in the future, its high time businesses understand the importance of the technology trends paradigm shift. 

Image Credit: Andrea Piacquadio; Pexels

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