Automated Bank Statement Data Extraction using OCR Technology

This article is written by Jennifer Biddle, Marketing Head at KlearStack. KlearStack streamlines invoice reconciliation and data integration, boosting efficiency and accuracy. With our AI-powered software, we have assisted companies worldwide in boosting their business by automating manual document processing.

In today's fast-paced world, one needs to be smart about money management, whether for a business owner or somebody managing personal accounts.

Bank statements are necessary but challenging documents to analyse and process. They contain a lot of useful information, such as account holder name, account balance, and loan, but manually gathering this information can be very tiring and time-consuming.

That is where automation steps in with the help of OCR technology.

Now, let's discuss in detail how technology is making things happen regarding data extraction from bank statements.

What is OCR Technology?

OCR stands for Optical Character Recognition, a technology that can read and transcribe different types of documents, such as scanned paper documents, PDFs, or images, into editable and searchable data. OCR can scan the text in an image or another document and convert it into a format readable by a computer: a Word document, Excel sheet, or plain text.

Unlike the manual method, OCR automatically extracts information directly from bank statements and converts it into a usable digital format with high precision and speed.

Due to the fast-paced nature of the business world, ensuring compliance with KYC regulations has become very important. Also, with emerging technologies like artificial intelligence, people have started creating fake KYC documents to avail themselves of various offers and benefits.

With automated KYC verification, you can save more than 80% on document data entry and auditing costs, providing a significant return on your investment.

The Need for Automating Data Extraction from Bank Statements

Why automate the data extraction process from bank statements?

Here is how the traditional method works: You receive bank statements in paper or digital PDFs. You or someone on your team manually enter these details into accounting software. It's slow, error-prone, and, frankly, tedious!

Now, consider a business that has to process hundreds or even thousands of these statements monthly. The manual method is rather time-consuming and increases the risk of inaccuracies, such as misentered numbers - accounting errors. Accounting errors eventually become big financial problems.

There are various documents involved in data extraction in lending to process a loan application. Loan application forms ask for various personal and financial information to verify the identity and creditworthiness of the loan applicant. These documents serve as the foundation for assessing risk, making informed decisions, and ensuring compliance.

With automation—primarily via OCR technology—you have a real game-changer at your fingertips. By automating this process, you can drastically reduce the time spent on extraction. More importantly, you enhance accuracy, reducing the possible risks of manual data entry.

How OCR Technology Automates Data Extraction

Now, how does this OCR function effectively to extract data from bank statements? Let me break it down in simple steps:

Scanning of Documents:

First of all, if you haven't already, scan your bank statement into digital format, such as a PDF or image. One of the reasons OCR is so strong is that it can work on clean digital documents as well as those scanned from physical copies.

Text Recognition:

Your document is now in digital format, so OCR software will further analyze this content. It discovers and "reads" the text within the document, recognizing every character and number. That's really where the magic happens because state-of-the-art OCR is advanced enough to make a difference between many fonts and layouts.

Data Extraction:

After the text has been identified, OCR software identifies relevant data. In the case of bank statements, it could be a date, details of the transaction, the amount, or the account number. The software can usually be tuned to set specific fields or patterns on which it has to focus.

Data Structuring:

The last step is to structure this data in a format that is useful to you. OCR can literally output data in spreadsheets, directly into your accounting software, or in whatever format might be required.

Advantages of Using OCR for Bank Statement Data Extraction

OCR technology offers several clear advantages that make it invaluable for extracting data from bank statements.

High Accuracy:

OCR software is designed to recognize text with high accuracy, reducing the risks of errors that come with manual entry. This means fewer mistakes in your financial records.

Time-Saving:

When you automate the extraction process, you save a great deal of time. What used to take hours is now done in minutes, and you can let yourself or your team work on other important things.

Cost-Efficient:

Automation minimises the requirement of large teams to enter data, which helps save labour costs. It also saves money by reducing the risk of high-cost mistakes.

Scalability:

Whether you are handling a few hundred or thousands of bank statements, OCR technology can manage the workload. As your business continues to grow, it will remain as efficient.

Flexibility:

OCR will work with several formats and documents, making it adaptable to the various bank statements you will likely find. This is not limited to any particular layout, which adds to its flexibility.

Apart from these four advantages, there are additional benefits, some of which are listed below -

• Streamlined Workflows

• Real-Time Data Access

• Better Resource Allocation

• Reduction in Paper Usage

• Simplified Audit Trails

• Customizable Extraction Rules

• Enhanced Decision-Making

• Reduced Risk of Data Loss

Use KlearStack for High Precision, Speed & Efficiency

Manual processing of bank statements is not just time-consuming; it can become a significant burden on your team and a potential danger to your overall business. The pain of dealing with out-of-date data, trying to stay ahead of deadlines, and always racing against the possible threat of compliance violations can yield serious and expensive results. Move beyond all the worry with intelligent OCR from KlearStack.

Our state-of-the-art solution ensures 99% accuracy in data extraction for precise and quickly processed records for efficiency. KlearStack takes impurities from human error out of the picture and provides process efficiencies, thus creating a space for your most valued team members to reach their full potential and drive your business confidently into the future.

Our ability to convert even the most complex formats into an organised and usable structure surpasses basic OCR technology. Say goodbye to endless manual entry, time-consuming reconciliations, and the tension of errors with KlearStack.

Stay ahead with the most recent data extraction trends and techniques. Book a DEMO call now to troubleshoot your problems, which increases productivity by up to 500% and brings cost savings of up to 80% on receiving entries and audit expenses.

Conclusion:

In finance, where accuracy and efficiency reign supreme, OCR technology is essential. Automating the data extraction process from bank statements with OCR isn't just a time-saving mechanism for a business; it means fewer mistakes and simplifies scaling without the headache of manual keying. To run smoothly in the rapidly changing financial industry, firms must adopt OCR and comparable technologies.

So, with OCR working as part of your data extraction, you get your work done much faster, you manage your time better on things that matter, and you make sure your financial data is accurate and current with consistency.

This advanced OCR technology is being employed by KlearStack with unmatched efficiency and accuracy in data extraction. Automating bank statement processing with KlearStack eliminates manual errors, boosts compliance, and reduces operational risks. This empowers your business to run smoothly and confidently in today’s competitive market.