This guide covers the benefits of document digitization, how it works, and how banks and other financial institutions can use it to detect more fraud.
The banking industry relies on extensive document workflows to execute multiple business processes.
Lending, client services, information security, regulatory compliance, and supplementary services like foreign cash orders or global money transfers all depend on proper, genuine documentation.
But the volume of documents you have can cause issues. Like slowing down banking processes within different departments while increasing the risk of fraudulent activity. In fact, a 2020 Report To The Nations study found that 10% of fraud schemes in the banking and financial services industry came from financial statement fraud.
So, it's no surprise that banking organizations are digitizing their paperwork to automate internal processes, increase efficiency, and prevent fraud.
This guide covers the benefits of document digitization, how it works, and how banks can use it to counter fraud.
Document digitization uses various tools and techniques to convert physical documents into electronic or digital formats computers use to automate workflows or processes.
For example, scanning physical papers to convert to digital documents, capturing critical information, and storing the file in a single repository. It's much easier to retrieve and process data compared to manually searching for information on paper maintained in physical file cabinets.
Document digitization is the big step in your digital transformation journey. To prepare for future automation initiatives, banks are digitizing parts of their processes, such as loan or claims processing, for faster and more accurate execution.
Digitization also contributes to increased and enhanced security, compliance, and auditability, reducing incidences of fraud in banks.
Banks of all sizes need to manage and store large loads of paper records and data throughout every phase of their workflows—loan applications, policy quoting, claims processing, and more.
This heavy reliance on paper became an obstacle, particularly during the pandemic. Banks and other financial institutions with paper-based operations slowed to a crawl or halted altogether.
Fortunately, banks no longer have to rely on paper documents.
Instead of storing records in filing cabinets and boxes, or on shelves—negatively impacting efficiency and employee productivity—it's easier and more convenient for banks to digitize paper documentation. And with customer experiences becoming more seamless and intuitive, document digitization enables banks to optimize costs and meet high customer expectations.
A 2022 Key Issues study by the Hackett Group found digital transformation is a top priority among finance leaders and a critical area for development. That's because digitizing documents brings benefits that boost financial institutions, including:
Traditionally, banks couldn't provide great user experiences while reducing fraud rates.
With 82% of people using digital payments online or via mobile, and customers expecting seamless experiences, banks are now focusing more on delivering superior user experiences.
Yet fraudsters are getting more sophisticated in their craft. For instance, during the global health crisis, there were increased reports of criminals using falsified information and submitting fraudulent documents to obtain money in relief funding under the CARES Act.
The U.S. Department of Justice says that international organized criminal groups targeted the $860B in federal funds using stolen identities to file for unemployment insurance benefits.
As document fraud increases, digitizing the system prevents criminals from perpetrating fraudulent activities. Banks can automate things from end to end and impose access controls for document submissions in paper-based processes.
In this way, complete document digitization reduces cybersecurity risks and bottom-line fraud-related losses, bolstering revenues for banks and lending institutions. Add to that authentication technologies such as device identity, biometrics, and behavior pattern analysis, and you get greater security and optimal customer experiences.
Fraud detection tools like Inscribe quickly and accurately detect fraudulent documents through forensics and machine learning. This way, banks can trust their customers and grow faster.
Inscribe offers fraud detection in various financial documents, including bank statements, through:
Many banks are planning their journey and participation in the digital economy, and one of the most common questions is about potential use cases for document digitization in the financial services industry.
Here are some examples:
The loan application process needs to be simple enough for your customers. Document digitization creates easy avenues, such as auto-populating web portals or mobile image capture, which help customers upload the initial set of application documentation.
Customers don't have to do much work, and they can process their applications anywhere and anytime they want, helping banks deliver delightful user experiences.
Document digitization also provides banks with a dependable resource to handle entry-level risks.
An operational process with an automated rules engine automatically considers and takes care of such risks during the early stages of lending, helping banks make instant decisions.
This results in faster banking processes and lending decisions, especially when handling applications and appraisals.
Converting paper documents is slow, resource intensive, and stressful.
Document digitization tools eliminate these drawbacks, plus the possibility of human errors during data entry.
Digitization gives banks the technical capability to achieve high document management accuracy levels, introducing quality assurance capabilities that'd be impossible through traditional means.
Seamless loan closing requires accurate information and automated compliance checks.
Document digitization helps banks:
Banks also benefit from the real-time updates of the various loan approval stages because document digitization enhances data integration across multiple systems, applications, and departments.
KYC is critical in every bank as it safeguards them from anti-money laundering (AML), fraud, terrorist financing, corruption, and other fraudulent activities.
By digitizing documents, banks can:
Paper documents might be good, but digital files are better and will help your bank or financial organization get ahead. Choosing the right tools and strategies can make document digitization efforts in your organization nearly effortless.
Ready to enjoy the benefits of document digitization? It's easy with Inscribe. Talk to an expert to discover how Inscribe can streamline document digitization and management in your organization.
Check out our other guides on document processing:
See how you can automate manual document reviews, improve fraud detection, and start approving more customers with confidence.
