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Paper-based operations are straining businesses and their workforce, and OCR technology is now to the rescue!
A report by the market research company IDC states that enterprises and corporations lose from 20% to 30% of their revenue annually due to inefficiencies in their operational processes. Document handling can be one of the causes. Fortunately, in the digital age, OCR technology provides an impactful solution that eases the burden of manually entering and managing data.
Understanding OCR
OCR, which stands for Optical Character Recognition, is the conversion of papers and images that contain texts into machine-readable, editable, and searchable documents. Its reading capability is now applicable for even low-resolution input, such as road signs or license plates in a video. Moreover, it can perform auto-translation and recreate the layout, fonts, etc., of the original text.
A wide variety of business functions involve the reading and processing texts in large volumes and unstructured formats, which is a major challenge for human staff. Before OCR, the digitalization of texts and documents used to be limited in either manually re-typing them, or turning them into scanned, still images. The former is time-consuming and error-prone, while the latter generates files that are not searchable or editable. OCR confronts this matter by introducing the rapid digitalization of information from photocopies and archives, turning them into usable texts.
For businesses, the first primary benefit of leveraging this technology is bolstering productivity. The technology can reduce the time spent on doing paperwork by up to 75%, hence allowing human staff to focus on tasks that require greater degrees of expertise. The second advantage is avoiding error-related expenses. As mentioned above, the manual technique of handling documents may imply a risk of human error and mistakes. Meanwhile, as it gets increasingly refined (e.g., with built-in AI to perform automatic evaluation), it becomes more and more accurate with its outputs, further proving its reliability. Another notable advantage is security. Using OCR is associated with transferring information into digital databases, such as cloud storage. It can be argued that compared to physical filing cabinets, this option is far more secure, better protected against information leakages, and allows easy data recovery.
How OCR digitizes paper-based processes across industries
In Banking
Banking has a significant number of functions to leverage this new technology. Since the industry has long been paper-based, achieving the digitalization of printed or handwritten text inputs is crucial to improving the workflow.
First, OCR assists customer onboarding by scanning for important information from identity documents, bank statements, and cheques in real time. Data such as dates of birth, gender, pictures, and signatures will be extracted and verified quickly and safely. For example, previously, when a customer wishes to perform a transaction or open an account, remote validation takes up to 24 hours and can imply a risk in sensitive data transfers. With it, the process can be completed almost instantly.
Second, it enables the scan-to-pay functionality. Instead of requiring someone to enter cheques or credit card information (such as the holder’s name, card numbers, and expiry dates), these details can be picked up by an OCR-based software, ensuring error-free and quick transfers. This feature is especially important when errors from human and manual processes account for 20-30% of revenue loss.
Additionally, using OCR to scan and analyze documents speeds up processing applications for loans and mortgages, which deal with large volumes of unstructured and varied data formats. It enables bankers to check document validity, enter data into case management systems and make judgments with an increase in efficiency of up-to-70-percent.
In Healthcare
In reality, a report from McKinsey estimates that less than 10% of medical records are reviewed automatically. Also, on average, the manual process of a medical claim takes 40 minutes and costs $15. Hence, process automation is crucial to help institutions achieve smarter operations.
With OCR, the processing of unstructured medical documents, from clinical trial reports, test results, and medical history to prescription slips and receipts, will be transformed. The technology scans mountains of forms to pick up meaningful insights and store them in centralized digital databases within institutions. Below is an illustration of the steps in the process of using this technology to extract data to create a personal health record.
The unification of medical data is beneficial to the diagnosis and treatment of diseases, the storage, and usage of drugs and equipment, as well as serving as a meaningful reference for designing healthcare policy and legislation. A research paper pointed out that an OCR system could “read” scanned pathology reports with a character accuracy of up to 99.12% and word accuracy of 98.95%. The system’s output was beneficial to the automatic classification of these reports into notifiable groups.
In Retail
On a daily basis, people working in the retail industry need to handle paper-based documents that are overdue, overpaid, fraudulent, wrongly calculated, or contain printing and typing errors. However, OCR can complete this task at a higher speed with greater accuracy, whether the texts are unstructured or structured, printed or handwritten. Bills of lading, invoices, purchase orders, etc., will be translated into digital datasets to facilitate a streamlined retail service.
For instance, a retailer can integrate this technology into their mobile application. Barcodes and invoices are scanned easily to carry out purchases and, thus, create a convenient and effective self-shopping experience, whether at a physical store or in the form of a curbside pickup service.
In Finance
When integrated into accounting software, OCR recognizes and extracts data from invoices before placing them in suitable categories of an organization’s database. First, this feature frees financial experts and accountants from mundane work and shifts their focus to tasks of high priority, such as in-depth audits. Consequently, it will boost productivity and reduce human error. For instance, an OCR-powered platform is reported to be capable of processing more than 50,000 driver licenses per month with an accuracy of 95%.
Second, it can help businesses enhance their financial management. The output information can be used for further analytics to spot overpricing, underpricing, or overpayment.
Additionally, with OCR, information will be quickly transferred to cloud storage, allowing greater collaboration and accessibility for human staff, especially those who need to work remotely.
In legal procedures
Procedures in the legal industry are usually paper-intensive with stringent regulatory requirements. An OCR-powered scanning software addresses this challenge by creating a paperless environment, where data is kept systematically in digital spaces instead of physical storage rooms. Thus, the technology will increase the accessibility and searchability of legal documents, which are critical features for attorneys, lawyers, and judges in their work.
For instance, when the legal notes of a certain case need to be retrieved, they can be easily found by typing certain keywords into a search tool. This is clearly much more convenient than manually browsing and reading through files folders or scanned images.
Closing thoughts
OCR supports a state-of-the-art solution to capturing values and insights from printed and handwritten materials. As a result, humans are no longer bound to paper-based, non-editable documents, while companies save costs and maximize efficiency. Therefore, effectively utilizing and aligning it with their goals will constitute a business’s long-term success.
Let’s unlock the power of OCR in driving business efficiency
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