The author is a Director (Data Engineer) in Eucloid. For any queries, reach out to us at: contact@eucloid.com
LinkedIn From OCR to IDP: The Transformation of Lending Document Processing
The world of lending has come a long way in terms of document processing. From archaic paper-based methods that were slow and error-prone to OCR software solutions with its own limitations, to more advanced intelligent document processing technology — the industry has indeed seen a massive transformation.
Until recently, OCR has been the go-to solution for document processing. But its limitations in handling various document types and formats have paved the way for intelligent document processing. Unlike OCR, which relies on templates, intelligent document processing uses advanced technologies such as machine learning and natural language processing to extract and analyze data from a variety of documents.
This has been a game-changer for the lending industry. Tasks that were once time-consuming and tedious, such as retrieval of personal information documents, completion of multiple applications, and error identification in documents, can now be completed in a fraction of the time with a higher level of accuracy and increased ROI.
However, the benefits of implementing this technology in the lending sector go far beyond just increased ROI. Here’s what more it offers.
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1. Improved Efficiency and Speed
Document processing can be a time-consuming and tedious task for loan officers and underwriters. With the help of automated document processing software, these repetitive tasks can be completed at a fraction of the time, allowing the staff to focus on more important tasks such as decision-making and customer service. In fact, as per study, deploying IDP results in better employee productivity, as 70% of data entry tasks can be automated. This ultimately leads to faster loan approvals, reduced processing time, and an overall increase in efficiency.
2. Accuracy & Data Security
Manual data entry is prone to human error, which can have significant consequences in the lending process. Automated document processing software uses AI and machine learning algorithms to accurately extract data from various documents, reducing processing time by 50% along with zero errors and flaws. This also ensures that sensitive customer information is securely stored and protected, minimizing the risk of data breaches.
3. Better Customer Experience
In the lending sector, customer experience is crucial in building trust and gaining repeat business. Automated document processing allows for a smoother and more streamlined application process, eliminating the need for customers to fill out multiple forms and submit numerous documents. This not only makes the process more convenient for customers but also leads to quicker loan approvals, improving their overall experience.
4. Cost Savings
By automating document processing, lending institutions can reduce their operational costs significantly. With less manual labor required, there is a reduction in the workforce and human error, saving time and resources. It also eliminates the need for physical storage of documents, reducing the cost of paper, ink, and storage space.
5. Compliance and Audit Trail
Automated document processing software ensures that all documents are accurately processed and stored, providing a comprehensive audit trail. This not only ensures compliance with regulations but also makes audits easier and more efficient.
Here’s how IDP automates end-to-end loan originations processes
Let's walk you through the various steps involved in loan processing and how document AI can significantly improve the efficiency and accuracy of each step. These steps are crucial for lenders to assess the creditworthiness of loan applicants and make informed decisions.
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Step 1: Documents Classification and Indexing
In the lending industry, documents classification and indexing play a crucial role in loan processing. With the help of advanced Document AI, lenders can now automatically identify and categorize various types of documents such as income statements, bank statements, credit reports, and tax returns. This not only saves time and effort but also ensures accurate and consistent classification of documents. The system can also create a centralized database of all the loan-related documents, making it easier for lenders to track and access them whenever needed.
Step 2: Data Extraction and Entry in the System
Data extraction and entry are important steps in loan processing as it involves extracting crucial information from complex and lengthy documents. With advanced document AI, lenders can extract data from tables, images, and free-text paragraphs with ease and accuracy. This reduces human error and speeds up the loan processing time, leading to a more efficient and streamlined process.
Step 3: Data Fields Comparison across Documents
Lenders need to ensure consistency and accuracy in the information provided by their customers. With data fields comparison, lenders can easily identify any discrepancies in the data fields across various documents. This helps in maintaining the integrity of the loan application and mitigating any potential fraud or misrepresentation.
Step 4: Completeness Check of Documents
It is crucial for lenders to ensure that all the necessary documents are complete and signed before approving a loan. With the help of document AI, lenders can automate the process of validating complete and signed forms, reducing the risk of missing important documents. This also ensures a smoother and faster loan approval process.
Step 5: Business Rules Validation on Document Data
Document AI also helps lenders in verifying the accuracy and authenticity of the information provided by customers. By using specific checklists and rules, the system can validate the data and detect any potential errors or discrepancies. This helps in making informed decisions and reduces the risk of approving loans with incorrect or false information.
Step 6: Document Summarization
Creation of summaries and commentaries on loan documents is an essential step in the loan processing system. With the help of document AI, lenders can automatically generate summaries and commentaries on the loan documents for review or approval. This not only saves time but also ensures consistency in the decision-making process.
Transforming Lending Businesses with IDP
The implementation of intelligent document processing technology in the lending sector has transformed the way document processing is done. Here’s how:
1. Expedited document processing through AI-based automation
Integration of AI in document processing eliminates the delays and inaccuracies associated with traditional manual methods, thereby enhancing operational efficiency and accelerating loan approval processes. The ability of AI systems to operate non-stop, without the limitations of human fatigue, further enhances the speed and efficacy of document processing.
2. Facilitated space for innovative solutions and business advancement
By streamlining essential document processing tasks, AI enables loan officers to redirect their efforts towards value-adding activities such as customer service and risk assessment. As a result, businesses can focus on identifying and developing new financial products and services, as well as enhancing risk assessment models, leading to greater competitiveness and growth in the market.
3. Enhanced accuracy and compliance
AI-powered document processing systems possess advanced data processing and analysis capabilities, leading to improved accuracy and compliance with regulatory requirements. By minimizing human error and ensuring adherence to legal and industry standards, AI can mitigate the risk of non-compliance and costly penalties.
4. Personalized loan processing experience
By leveraging AI, loan officers can gather and analyze vast amounts of customer data, allowing for a more personalized and tailored loan processing experience. This not only enhances customer satisfaction but also increases the likelihood of successful loan approvals and customer retention.
With AI taking on the tedious and time-consuming tasks, loan officers can focus on more important aspects of their job, resulting in faster loan approvals and ultimately, a better experience for both lenders and borrowers. This advanced technology has undoubtedly set the bar high for document processing and has paved the way for a more innovative and customer-centric lending sector.
At Eucloid, we use intelligent document processing technology to provide fully automated loan application processing solutions for our clients. With our customizable and scalable IDP solutions, we help lenders stay ahead in the game with improved efficiency, accuracy, and customer experience. For more information on how we can support your business goals, please contact us at contact@eucloid.com.
Posted on : July 17, 2024
Category : Data Engineering
About the Authors
Selvakumar Krishnamoorthy
LinkedIn
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