The world is currently going through a digital transformation wave. As such, customers expect fewer obstacles, especially when conducting online transactions. Additionally, they require this increased efficiency to be paired with enhanced security. It can be a challenge for banks that have traditionally relied on a manual workforce to provide these services quickly. The main obstacle for the financial industry is to transform the manual document verification process. The total cost of document verification can cut into the profit gains due to manual data entry, document auditing, and review. Luckily, technological innovations have enabled the production of AI-enabled document verification processes that ensure increased efficiency and security. This article discusses the critical use cases of such a solution in the banking industry.
In 2021, the global market for digital banking stood at around $850 billion. If it continues its upward trajectory at a CAGR of 8.7%, the total market value will reach $1400 billion by 2028. These reports indicate a cultural shift in consumer behavior as well. People are increasingly turning to digital banking, which provides convenience and ease of use. However, as mentioned, it can be challenging for traditional banks to keep up with the rising demand for their manual workforce. As a solution, it becomes imperative to implement a modern document verification process to automate the data collection and entry process. Besides, these solutions provide an online portal replacing the need for customers to come in for physical verification of documents.
Identity theft is becoming an increasingly serious issue for financial institutions. In 2019 alone, fraudsters stole $16.9 billion in identity theft and fraud cases. An inadequate document verification process is the primary cause behind most of these cases. For instance, manual verifications result in data entry errors that cause a loss of millions of dollars to a company. Moreover, manual processes are often marred by inaccuracies due to human negligence. However, such instances can allow politically exposed persons (PEPs) and fraudsters to open bank accounts. This can indirectly implicate banks in money laundering activities.
Processing loan applications has always been a challenging task for banks since it requires thorough background through document verification. However, the problem with the traditional documentation verification process is the lack of accuracy and validation. Due to these issues, in 2021, fraud in Auto Loans jumped by 105%. Since the Covid pandemic, banks have witnessed an increase in loan applications as most people are struggling in the receding economy. However, banks must also devise a system to protect themselves from fraud while entertaining such requests. In such a scenario, an automated document verification process enables banks to verify documents with unparalleled accuracy and efficiency.
Data Integrity and Security
One thing that is common to all banks and their operations is data entry and storage. It’s important to note that banks deal with numerous invoices, checks, applications, and other paper-based documents. The manual workforce is typically responsible for updating the data on the bank’s cloud servers. However, manual data entry can result in data discrepancies and integrity issues. For instance, typos and data duplication are common issues that can result in significant accounting problems for banks. An automated document verification process uses AI-based optical character recognition to ensure the utmost accuracy in data collection. Similarly, the online document verification process stores data on encrypted cloud servers to provide enhanced security for confidential data.
Customer onboarding is not the only challenging process for banks. Account closure represents another critical area that an automated document verification process can streamline. The important thing to note here is that identity theft is not limited to account takeovers. Instead, scammers can use fake documents to get bank accounts closed as well. One primary reason for doing so can be to hurt business competitors. Banks must invest in robust solutions that utilize AI-based features and tools to curb such activities and protect their customers. To do this, the modern document verification process first authenticates the validity and originality of documents. Then, it ensures through enhanced verification that the original owner initiated the request for account closure.
Key Highlights of the Document Verification Process
Traditionally, banks utilize a manual workforce for the document verification process. It can be a time-consuming and error-prone task. Banks must rethink their digital transformation strategy to ensure efficiency and accuracy in the modern age. For this purpose, an AI-based document verification process is the most viable solution. These tools use advanced AI and machine learning features to extract and collect data from physical documents. Moreover, originality checks are performed on the documents, such as identifying security features and data discrepancies. Customers are only onboarded if the documents check out to be valid.