When signing up for a new account with a company, there’s usually a process of providing personal information. Name, surname, email, ID and more depending on the type of company and account you are opening.
In most cases, you are asked to take a picture of your ID, front and back. The process of extracting the written information from any document, whether in digital format or physical format, is called Optical Character Recognition (OCR).
This breed of technology has allowed businesses around the globe to speed-up, optimize and streamline their onboarding processes. It is one of the most underrated tools in the era of digital KYC and today we will take a look at both its functionalities and benefits.
How Does OCR Actually Work?
OCR is the process of scanning, analysing and translating a picture that contains text into actual text. The extracted text comes in a TXT or DOC, machine-readable file.
OCR usually uses an algorithm for feature detection that defines characters by assessing their lines and strokes. Alternatively, the algorithm proceeds into pattern recognition by identifying entire characters.
Optical Character Recognition: How Does It Help With KYC?
Before diving into the multitude of ways that OCR enhances the KYC process, it would be wise to say that this is the type of technology that translates into many industries and use cases.
OCR is diverse and malleable enough to improve processes in many different contexts. First, let’s take a look at some prominent use cases.
- Business documents data: checks, passports, invoices, bank statements, receipts, etc.
- Passport recognition in airports
- Scanning Insurance documents
- Create digital images of printed documents searchable: Google Books
Then, you have the different industries in which it can be applied.
- Financial services: checks
- Healthcare: medical history
- Supply chain: quality control documentation
- Legal: affidavits, judgements, filings, statements, wills and other legal documents
Now that we have established the diverse nature of the OCR technology, it’s time to look at the benefits it affords to the KYC process.
Speed
Document verification used to be a long and arduous manual process. Can you imagine the stress this would put on an organization with numerous new client inquiries per day?
This was a logistical nightmare for companies and a reason why some people would abandon the onboarding process and choose a faster alternative.
With OCR, the process is automated and instantly becomes faster and more efficient. The document is scanned, the information is stored and the verification can happen almost instantly.
Searchability
Harnessing and storing the necessary information is simply the first part of the process. OCR also allows you to have complete control over your data by converting them into searchable formats such as.doc,.rtf,.txt (simplest), pdf.
Cost Savings
Following the point made earlier regarding manual work, speed is not the only parameter affected for businesses. Having people manually work on document verification and data extraction puts a stress on your costs.
By utilizing OCR technology, businesses can either cut back on their spending, or reallocate their human resources into more meaningful tasks.
From Paper Backups To Bytes
The fact that we would be mentioning storing valuable information into paper form in 2020, is something we could have never predicted. The truth of the matter is that OCR allows you to digitize and store information in a manageable manner.
Stop looking for colour-coded files and dossiers, and start looking for servers.
Accuracy & Efficiency
Let’s start with accuracy. By removing the human element from this process, you are essentially decreasing the room for error. Automating the process using technology ensures a uniform result with no discrepancies.
When it comes to efficiency, there’s a lot to discuss. First and foremost, you are instantly solving a huge headache that is translations.
Not only did compliance departments had to manually extract information from official documents, they had to pass it on to qualified translators in order to verify what every single word accurately meant.
With optical character recognition, you are immediately afforded the luxury of searching, digitizing and translating your information in the language of your choosing.
Recap
It comes as no surprise that everyone is quick to jump on the bandwagon of artificial intelligence, blockchain and different digital intetity trends, as they are the hottest commodities in the KYC world.
Here at Identomat, while we are aware, educated and true believers in the latest technology, we never overlook any steps in the process. OCR is a core part of our offering and while it might not be as “sexy” or trendy as all the other tech advancements, it is equally as important.
Our team is always available to discuss any questions on how this technology can help your company take the next step in its compliance evolution. Do not hesitate to contact us at any point in time.
