Various factors are driving digital transformation and document automation in banks: internal drivers are cost reduction and minimizing sources of error, external drivers revolve around an improved customer experience.
So as a decision maker in a bank or financial services provider, you may be asking yourself, “What technology can we deploy that is both secure, easy to integrate, and has a significant impact on the efficiency of our banking operations while also reducing costs?”
This is where Intelligent Document Processing (IDP) comes into play: the advanced technology uses artificial intelligence (AI) to extract unstructured data from a variety of documents. As such, IDP has the potential to revolutionize your bank’s business processes.
In this post, we explore,
- what challenges banks face,
- how Intelligent Document Processing works
- how you can use IDP for your bank,
- what the benefits of IDP are, and
- what to look for when choosing an IDP provider.
1. Current challenges in banking
As a bank or financial service provider, you are facing some challenges. Not only are there the neo-banks, but the threat of fraud is omnipresent. In addition, many banks rely on legacy systems that provide very limited document management support to employees.
For you as a bank, processing large volumes of documents is a time-consuming and error-prone task that can lead to compliance risks. Manual data entry errors, misinterpreted information, and lost documents are just a few of the problems you face with document processing:
Unstructured data in unstructured formats: In addition to standardized and structured documents, your business processes require you to extract a significant amount of data from unstructured formats. This means processing the information you need by means of manual entry by your employees.
Manual processes instead of automated ones: Traditional solutions cannot cope with the variation in document types. The same goes for poor quality scans or uploaded photos. If you use traditional automation solutions, they already fail here.
Large effort to set up new document types: Legacy solutions are hugely inflexible. However, as a bank, you need to process hundreds of different document types. With a legacy solution, this means extensive and expensive setup and training time – and that’s for every single new document type.
2. How Intelligent Document Processing works
Intelligent Document Processing (IDP) is a combination of advanced technologies in one system. This system is based on artificial intelligence (AI) subsets: machine learning, deep learning, natural language processing (NLP), computer vision, and optical character recognition (OCR).
Simply put, Intelligent Document Processing uses machine learning algorithms and NLP to automatically extract and process data from a variety of documents. Critical to you as a bank are document types such as bank statements, contracts, pension statements, income-expense statements, and many other forms. IDP technology can quickly, accurately and automatically extract relevant data and pass it into your bank’s systems.
IDP requires no templates, no rules and hardly any configuration. This makes the solution extremely flexible, making it perfect for automating documents in unstructured formats. IDP does not simply extract the data from the documents, but understands the context.
The process steps of IDP after document input are as follows:
Document separation: documents are separated from each other (e.g., from batches).
Classification: what type of document is received? Is it a tax return, an ID document, a wage statement, a payroll, etc.?
Extraction: What relevant data is hidden in the document and needs to be extracted?
Validation: A so-called human-in-the-loop validates the extracted data, if necessary. The structured data is output to your downstream systems for further processing.
3. Concrete use cases for Intelligent Document Processing in your bank
Wherever your employees need to review documents and extract data from them, automation through IDP comes in handy. Since much of banking processes revolve around documents, IDP comes in handy for several use cases. We’ll address three below:
Mortgage process: You receive thousands of mortgage requests a year with hundreds of document types and hundreds of thousands of pages. The challenges here are not only the sheer volume and the different document types. It’s also the fluctuating quality of the documents and the fact that they are received in batches. By integrating IDP, you can massively reduce both turnaround times and costs.
In the blog series for banks and financial service providers, we go into detail about the different types of documents in the mortgage dossier (here the land register extract).
IDP automatically classifies hundreds of different document types out of batches. Finally, with IDP you can automatically extract all the relevant data you need for the review of a property and for the review of the loan applicant from this multitude of documents.
Onboarding and Know Your Customer (KYC) process: For new customer onboarding and Know Your Customer (KYC) processes, you need to extract data from ID documents or from contracts to verify people. Instead of your employees doing this in slow and expensive processes, it’s done with IDP. Machine learning algorithms classify documents by type and check for completeness and data consistency. Then, relevant data is extracted and the information is checked against a database to verify accuracy.
Bank check processing: The power of IDP and excellent understanding of context of information can be well seen in the example of a bank check:
- Different form: Bank checks vary from bank to bank
- Digital text: Pre-printed text on the bank check (e.g., the bank’s logo).
- Handwritten text: Amount entered
- Amount in numerical form: $500
- Amount in text form: Five hundred US dollars
Since IDP understands the context of the information, just as a human does, the technology interprets correctly: ‘$500’ and ‘Five hundred US dollars’ mean the same thing. Moreover, thanks to machine learning algorithms, the solution learns based on the data and thus continuously improves.
4. The benefits of Intelligent Document Processing for your bank
Improved efficiency, lower costs and increased accuracy are just some of the benefits. By automating document processing, you can free up your staff for high-value tasks, reduce manual data entry errors, and ensure regulatory compliance. The Parashift IDP platform provides you with additional benefits:
- An exceptional customer experience: When choosing a bank, the primary focus for first-time homebuyers in the U.S. is to have an exceptional customer experience. With IDP’s efficient automation of the mortgage process, you get those very resources back: with less data entry and faster processes, you can differentiate yourself on service quality and price, and increase customer satisfaction.
- Bank-specific document types are ready for immediate use: Hundreds of bank-specific document types are pre-trained and ready to use. Thanks to the large number of standard document types, you incur up to 3.5x lower costs for use cases. In addition, IDP reduces the workload for your employees by around 1.5 hours per mortgage application. Across several customers, this makes a considerable difference and has a positive impact on costs.
5. How to choose the right IDP provider as a bank
When selecting an IDP solution, you as a bank need to include numerous factors that will meet your specific needs and requirements. These include the type of documents, the level of automation, and consideration of integration and functionality with your existing systems.
In addition, there are other essential requirements that you need to pay attention to and want to cover with the right IDP provider:
- Security & Compliance: High requirements for compliance, fraud detection and anti-money laundering law make this area one of the most important for you as a bank. With Parashift, you get enterprise-grade OCR API security and compliance. The modern cloud infrastructure is of course fully EU GDPR compliant. Customers worldwide use Parashift for their most sensitive data and documents. EU GDPR and data security are therefore two of Parashift’s most important features.
- Clear focus of IDP provider: Parashift focuses exclusively on document separation, classification, data extraction and validation. This means you get a state-of-the-art Intelligent Document Processing solution that can also handle handwritten data. Parashift IDP has also been designed to read document types across the board. One of the platform’s greatest strengths is that it allows you to process any type of document automatically. This makes it the perfect solution for your document needs.
- Easy-to-use platform: In addition to the hundreds of pre-trained and ready-to-use standard document types, your employees can easily create additional ones themselves. Thanks to the no-code platform, you don’t need to involve IT specialists for this, but business users click together new document types by drag & drop.
- Modern technologies: Parashift uses state-of-the-art AI technologies to ensure best-in-class extraction performance. With a cloud-first approach, Parashift provides you with a globally scalable service with the highest level of security and continuous software improvements.
- Innovative and forward-thinking approach:Parashift’s core concept is Document Swarm Learning. The innovative approach enables global, platform-wide learning. Technological advances are shared across the network through all documents processed in the cloud (only the learnings and never the actual data).
Thanks to the technology partnership with Parashift, our customers can significantly optimize document processing and reduce process throughput times. Parashift combined with BSI is the perfect match for intelligent document processing in customer management. – Kai Jesse, Community Manager Retail at BSI
In summary, Intelligent Document Processing has the potential to revolutionize your banking processes. By automating document processing across multiple use cases, you increase efficiency, reduce costs and improve the customer experience.