Articles

IDP vs. RPA vs. OCR

IDP vs RPA Blanc Labs
Illustration by Storyset

Financial institutions deal with a lot of data from various sources like forms, emails, invoices, PDFs, etc. daily. Processing this unstructured data manually is time-consuming and requires a lot of effort. It can also be prone to errors, which can have costly consequences. This can take away from the time and energy that employees could be spending on more strategic tasks. 

Automation technologies like IDP (Intelligent Document Processing), RPA (Robotic Process Automation), and OCR (Optical Character Recognition) can take manual document processing off your hands.   

If you are wondering which one you should choose among IDP vs. RPA vs. OCR for the digital transformation of your financial institution, you are in the right place. Here we break down each banking automation technology to help you choose the best one.    

What is RPA? 

RPA is a technology that allows organizations to automate repetitive, routine tasks typically performed by humans. These tasks include data entry, document processing, customer service interactions, and back-office functions such as compliance, risk management, and accounting. 

What is possible with RPA, and where does it fall short? 

Banks are known to be heavily regulated, and compliance is a critical part of banking operations. This is where RPA can play a significant role by automating compliance-related tasks, such as KYC (Know Your Customer), AML (Anti Money Laundering), and other regulatory data management. It can also automate data migration, trade execution, data validation, data updates, and perform simple copy/paste functions.  

However, RPA in banking automation also has some limitations. RPA requires a developer or GUI window to operate. Thus, RPA can only be used to automate simple screen-related tasks. It is limited to automating tasks that are highly structured and rule-based and is not suitable for tasks that require human judgment or decision-making.  

Also, the entire automation process can break if there is an update in the user interface of a linked software. It is an outdated technology that relies on OCR and is not built for modern end-to-end integration.   

What is Intelligent Document Processing (IDP)? 

IDP is a next-generation technology designed to tackle the limitations of RPA. It is a system created to process documents just like humans. If you compare IDP with RPA for banking automation, you will find that IDP is the ideal combination of OCR, Artificial Intelligence (AI), machine learning, and natural language processing.  

IDP is independent of strict rule-based approaches. Due to its flexibility, it can reach and process unstructured data not reachable via RPA. IDP tools also reduce the margin for errors by validating the data and informing the team in cases that need human intervention. 

Here are some reasons why banks need Intelligent Document Processing.

How can IDP help in banking automation? 

IDP can be a valuable tool in banking automation in several ways: 

Account Opening 

You can use IDP to automate extracting information from account opening forms and other related documents. It can reduce the effort and time required for manual data entry and improve the accuracy of the data. 

Document Management 

IDP can index, classify and route documents to the appropriate systems or individuals. Thanks to intelligent document processing, financial institutions can manage documents effectively and quickly retrieve the necessary information. 

Compliance 

IDP can help automate extracting information from compliance-related documents for processes such as KYC, AML, and other regulatory requirements. This way, banks can comply with regulations more quickly and efficiently while reducing the risk of non-compliance. 

Loan Processing 

IDP can enable the extraction of information from loan applications and other related documents such as income statements, credit reports, and real estate appraisals. It can help automate the loan review process, making it faster and more accurate. 

Fraud Detection 

IDP can be used to extract information from documents and match it with other sources to detect potential fraud. In this way, banks can reduce the risk of fraud and losses. 

Read more: The Top Use Cases for Banking Automation

IDP vs RPA 

The choice of automation for document processing boils down to IDP vs. RPA. RPA and IDP are two different technologies used in automation but are sometimes confused with the other.   

The main difference between RPA and IDP is that RPA does not have the native intelligence of AI. RPA cannot consume and analyze data on its own. RPA is limited to mimicking repetitive actions performed on computer screens with a mouse and a keyboard. It is helpful for tasks that don’t require high-level decision-making and is largely outdated. It is often said that AI is ‘the brain’ while and RPA is ‘the hands.’ 

On the other hand, IDP takes automation up a notch by automating documents and absorbing and understanding data to extract actionable insights. Thus, IDP can be considered the future of banking automation. 

RPA works better with structured documents (e.g. claim forms, tax forms ) where IDP works better with unstructured documents (e.g. contracts, handwritten notes). Ideally, an organization should use a combination of RPA and IDP to achieve better operational efficiency. 

What is OCR? 

OCR is a technology used in both RPA and IDP, that reads, extracts, and converts data from images and scanned documents into text for electronic automation and importation. When integrated with automation solutions like IDP or RPA, OCR can efficiently process structured data, eliminating the need for manual data entry and thus minimizing errors. OCR technology also enhances image quality to produce more accurate results.  

While OCR is a step towards automation, it is not very effective in processing unstructured data that most banking institutions deal with every day in large volumes.   

IDP vs RPA vs OCR

IDP vs RPA_Blanc Labs

Blanc Labs’ Document Processing Solutions for Banks 

Blanc Labs’ helps financial institutions like banks, and credit unions fast-track their way to digital transformation. We can help you integrate powerful automation technologies into your processes to increase productivity and reduce manual labor and the scope for errors.   

Our team provides a customized combination of machine learning and artificial intelligence for automating complicated tasks like document processing so that you can save your resources and provide faster and better financial services. 

If your financial institution deals with a ton of documents every day, let us help you put your processing on auto. Book a discovery call with us today, and we will create a seamless document processing solution unique to your needs. 

 

Articles

Top Use Cases for Banking Automation

Top Use Cases Banking Automation_Blanc Labs
Illustration by Storyset

Did you know that the World Bank uses Banking Automation including robotic process automation (RPA) for many of its functions? That’s how powerful it is. 

Modern businesses rely on automation to reduce costs and improve efficiency, but how can banks use automation? In this article, we explain the most common use cases of banking automation. 

What is Banking Automation? 

Banking automation involves handing over repetitive business processes in financial institutions like banks and credit unions to technologies like robotic process automation (RPA), artificial intelligence (AI), and machine learning (ML). 

Why Banks Need Intelligent Automation

As a banking professional, you know that a good chunk of your daily tasks is repetitive and mundane. Banking automation eliminates the need for manual work, freeing up your time for tasks that require critical thinking. 

Here are seven reasons why banks needs intelligent automation:

  1. Better Customer Experience
  2. Automated KYC
  3. Faster Mortgage Application Processing
  4. Accurate Report Generation
  5. Anti-Money Laundering Prevention
  6. Audits and Compliance
  7. Faster Decision Making

Below we dive deeper into banking automation use cases so you can get a closer look at how automation can transform your workflow.

1. Customer Experience 

A robust Customer Experience has never been more important. As the world moves online, you’ll need to re-engineer your Customer Experience to make it friction free, faster and more efficient. 

Consider a customer’s first experience with the customer onboarding process. If this isn’t a painless experience, you risk turning away a customer in the first interaction. 

Sure, you might need to invest some money to improve the customer experience and make it seamless and efficient, but the potential ROI is excellent. Think about it. Automation will eliminate much of the manual and low-value in-person interaction, saving your sales reps plenty of time to focus on running effective sales campaigns. 

Automating processes reduce the potential for errors, allowing you to onboard customers faster. Automation also reduces costs because it eliminates the manual labor and paperwork associated with customer onboarding. 

Moreover, your customers will be able to use their accounts faster, which improves customer experience. As a McKinsey report explains: 

“Automation and artificial intelligence, already an important part of consumer banking, will penetrate operations far more deeply in the coming years, delivering benefits not only for a bank’s cost structure, but for its customers.”

2. KYC

Most banks perform KYC (Know Your Customer) by manually verifying customer details. The problem? Manual verification can take plenty of hours. 

The KYC process doesn’t end at verification. You must manage KYC documents for a long time to comply with regulatory requirements. Using automation in banking operations can help free up the hours you spend on manual verification. 

Moreover, automation also eliminates the risk of human error. By eliminating room for error, automation ensures improved customer experience, increased quality assurance, and the number of cases processed each month, according to a McKinsey study.

3. Mortgage Application Processing

Mortgage application processing involves plenty of paperwork. Manually checking details on each document is time-consuming and leaves room for error. On the other hand, intelligent document processing (IDP) helps streamline document management. 

Remember those desks full of paperwork? That’s a thing of the past. Modern banks use IDP to manage documents digitally. IDP helps automate the generation of customer risk profiles and mortgage document processing, reducing processing time to a few days. 

An Accenture study found that 47% of customers prefer opening a new bank account online using a computer, while 37% prefer using the bank’s app or website. 

The shifting consumer preferences point to a future where loan requests and processing are online and automated. Now is a great time to prepare your bank for that future.

4. Report Generation

All financial institutions need to generate reports for various purposes. For example, you might need to generate a report to show quarterly performance or transaction reports for a major client. 

RPA can help generate reports automatically. The system can auto-fill details into a report and prepare an error-free report within seconds. An automated system can perform various other operations as well, such as extracting data from internal or external systems and fact-checking the reports.

5. Anti-Money Laundering (AML) Prevention

In Canada, banks need to ensure they are complying with the statutes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2000. Depending on your location, compliance requirements might include ongoing risk-based assessment, customer due diligence, and educating staff and customers about AML laws. 

A single AML investigation can take 30 minutes or more when assigned to an employee. However, automation can complete the same investigation much faster and minimize errors. 

Using automation ensures you don’t spend too much money on AML investigations and stay compliant, so you don’t have to pay hefty fines.

6. Audits and Compliance

The cost of maintaining compliance can total up to $10,000 on average for large firms according to the Competitive Enterprise Institute. 

Maintaining compliance is expensive but less so than being non-compliant. For example, banks must ensure data accuracy when producing loan facility letters. However, instead of requiring employees to spend time meticulously verifying customer data, you can use intelligent document processing to save time and guarantee data accuracy. 

Banking automation can help you save a good amount of money you currently spend on maintaining compliance. With automation, you can create workflows that satisfy compliance requirements without much manual intervention. These workflows are designed to automatically create audit trails so you can track the effectiveness of automated workflows and have compliance data to show when needed. 

For example, you can set up a system to auto-freeze compromised accounts. Once the account is frozen, RPA can automatically complete the steps in your fraud investigation process. The system also creates an audit trail in the process. 

Unlike humans, RPA can be active 24/7. Using RPA in banking can help ensure the accuracy of compliance processes, ensuring you’re compliant at all times without investing a lot of human resources towards compliance.

7. Decision Making

Managers at financial institutions need to make decisions about marketing, operations, and sales, but relying on raw data or external research doesn’t provide full context. RPA can help compile and analyze internal data to track client spending patterns and preferences. 

AI and RPA-powered automation can help make decisions about timing marketing campaigns, redesigning workflows, and tailor-making products for your target audience. As a result, you improve the campaign’s effectiveness, process efficiency, and customer experience. 

For example, when introducing a mortgage loan product, you can use RPA’s data analysis capabilities to identify location-specific and borrower-specific risks. RPA can compile a summary of the risks on a document, allowing the credit manager to study risk profiles without the associated manual work. 

 

Blanc Labs’ Banking Automation Solutions 

Blanc Labs works with financial organizations like banks, credit unions, and Fintechs to automate their processes. 

We can create tailor-made automation software solutions based on your banks’ needs to minimize manual work and improve process efficiency. Our team can help you automate one or multiple parts of your workflow using technologies like RPA, AI, and ML. 

Book a discovery call with us to see first-hand how automation can transform your bank’s core operations. We’ll create an automation solution specifically for your organization that works in tandem with your current internal systems. 

Articles

The Transformative Power of Banking Automation

Automation for banks
Image credit: vectorjuice on Freepik

McKinsey expects machines to be responsible for up to 10% to 25% of a bank’s functions. The reasons? Banking automation minimizes the need for your team to work on repetitive tasks, allowing them to focus on high-profile and strategic aspects of the business. 

Automation also improves accuracy, which can save you a ton of money — a major reason why 80% of finance leaders have implemented or plan to implement Automation (including Robotic Process Automation). 

Curious about how banking automation can help? We explain everything you need to know about how automating your banking workflow can help reduce costs and improve efficiency. 

What is Banking Automation?

Banking automation involves using software powered by multiple technologies like AI (artificial intelligence) and ML (machine learning) to automate repetitive tasks. Automation has three primary benefits: 

  • Frees up your team’s time for more strategic tasks 
  • Improves process accuracy 
  • Improves the Customer Experience (CX) and the Employee Experience (EX) 

 

For example, you can automate your account opening process. A customer requests a new account via the chatbot on your website. The chatbot provides an application form. The applicant fills out the form, and it’s sent to your RPA robot. The robot performs the basic procedures, including checking the credit score and KYC verification. 

Next, the robot scans the applicant’s documents using OCR (optical character recognition) for data extraction. The robot matches the information in the documents and the application form. It flags any details that don’t match and sends them for manual approval. 

The robot continues to validate uploaded documents using NLP (natural language processing). It finds key data points in the document’s free text, categorizes them, and uses them in the automated process. 

The robot then updates the bank’s backend system to create a new business account, provided the customer’s data meets the bank policy. Once approved, the customer receives an automated welcome email. 

Why Banks Need Banking Automation 

Banks need automation to compete in the modern banking environment. Now, that’s a broad statement, so here are specific reasons why a modern bank needs automation: 

  • Allowing employees to focus on tasks that require a human touch: Most banks were set up long ago. Manual forms and workflows were a foundational pillar for legacy banks, and as a result, employees spend countless hours on things like data entry and account verification. Automation allows employees to “hand over” repetitive tasks to software, freeing up their time for high-profile tasks that require a human touch. 
  • Record management: RPA can generate and check expense records for compliance. It auto-logs all transactions and prepares the necessary financial records to get an overview of your business’s financial performance and position. 
  • Meeting customer expectations: The need for speed is a key driver of a modern customer’s experience. If you’re taking too long for basic operations like opening a bank account, you’ll lose customers fast. Automation can help speed up your processes and help deliver on your customer’s expectations. 
  • Faster customer support: Your customers hate waiting hours to get an answer. Automating your support using RPA helps you respond faster. You can answer customers’ questions at scale using a chatbot. Also, you can use an AI-powered chatbot to answer questions you haven’t added as an FAQ. 

 

These factors make automation more of a necessity than a nice-to-have — you need automation to compete neck-and-neck with other banks. 

How Banking Automation Can Transform Your Bank 

Transforming your bank’s value network with automation offers many benefits in various business aspects, including finance, legal, and customer experience. Here are the benefits of using RPA in banking: 

Banking Automation Leads to Efficiency 

You can improve productivity by up to 80%, especially if you identify the most impactful productivity levers. The efficiency improvement is a result of two factors: 

  • Low manual effort: Employees have more time available once they hand over repetitive tasks to software. They can do more in the same amount of time, helping you scale your operations. 
  • Improved accuracy: Errors are expensive because you spend time and resources on correcting the errors. Fewer errors = improved productivity. 

 

A great example of efficiency is automated document processing. As a banker, you probably spend a good number of hours reading documents and inserting relevant data into your systems, depending on your role at the bank. However, you don’t have to spend all those hours manually entering data if you use intelligent document processing. 

Better Customer Experience 

An average company takes over 12 hours to respond to customer service requests. That’s a recipe for dissatisfied customers, especially if you’re a financial institution. 

Your customers expect their money to be in the hands of a reliable entity, and guess what you communicate when you don’t answer customers for over 12 hours? 

Using RPA to automate your customer support helps minimize response times. In most cases, the chatbot can provide real-time answers to the most commonly asked questions. 

Speed is also critical for other client-side processes. For example, you want to be as fast as possible in opening accounts, processing personal investment requests, or enabling additional services for an account. Automating these processes (while ensuring accuracy) helps improve customer experience. 

Compliance and Risk Reporting 

According to Deloitte, the cost of compliance for retail and corporate banks has increased by over 60% since the pre-financial crisis spending levels. Non-compliance is even more expensive, but automation can help lower your spending on compliance. 

RPA builds compliance into your processes. Automating compliance ensures you’re always meeting regulatory requirements without requiring teams to spend extra time double-checking for compliance. 

Automation also creates an audit trail and automatically generates risk reports that give you added insights. The system can identify and flag suspicious activities so that you can investigate them. 

Reduced Costs

It’s easy to see how banking automation using RPA can reduce costs. Reduced administrative load, saving time on repetitive tasks, and speeding up processes all yield dividends. 

For example, Radius financial group reduced loan processing costs by 70% by using AI to automate their process. 

Banking automation also removes human error, so you’ll spend less on fixing those mistakes. 

Without automation, you’d need to invest a large amount of money in building more teams as you scale. However, automation empowers you to scale faster. You can continue investing in training current teams and save on costs you’d incur to accommodate a larger workforce. 

Automation and Adaptability 

Banking automation helps banks adapt faster to a client’s needs or the business environment. 

For example, the increasing popularity of Fintech is one of the most significant concerns for banks. Fintechs are quickly gaining market share at the expense of legacy banks. Customers appreciate how a fintech offers better, faster services. 

Fintechs aren’t the only factor banks need to consider, though. Your bank might want to integrate banking solutions with a new partner’s ecosystem to offer additional services like tax consulting. Or your bank needs to process offshore transactions faster, especially when the transaction is subject to jurisdictional restrictions on the amount of transfer allowed. 

Adaptability is critical for banks to succeed, and automation can make adapting to changes seamless. Implementing an automation solution will improve your adaptability to changes and allow you to quickly catch up with your modern competitors. 

The Bottom Line 

Over the past five decades, banking has gone from paper-based to almost entirely digital. Next up? Automation. 

Automation makes banking frictionless for both internal and external stakeholders — it’s a win-win. The only problem banks face with automation is the lack of a reliable partner who can guide them through the transformation journey. Book a discovery call with us, and we’ll answer all your banking automation questions. 

Interested in hearing how we can accelerate your digital transformation?