Check out this article to learn all about document verification process, technology, and the techniques used to make application processing easier.
Processing documents remotely is a double-edged sword in the finance industry: It empowers you to accept applications faster, which is excellent for improved customer service. But the ease of submitting documents also means your pile of work grows astronomically.
Throw on top the need to verify documents before pushing them through for processing, and you have an ongoing headache.
Thankfully, there are AI tools available to help with document verification.
In this article, we'll discuss the document verification process and the techniques used to make application processing easier.
Document verification is a process for document authentication and proving document ownership. For example: verifying that financial statements, passports, licenses, utility bills, and certifications are real and actually belong to the applicant who submitted them.
The goal is to determine if the document presented (e.g., an identification card) is authentic or not by comparing it to official records.
If a financial institution doesn't verify documents, they are putting themselves at risk of being defrauded. Scammers consistently attempt to fool credit card companies, banks, and loan agencies to extort money. They often do this using a mix of stolen and counterfeit documents.
When a con artist gets approved for a loan or credit card, they'll spend the money and disappear. Enough of these defaults, and a financial institution will fall into bankruptcy.
Unfortunately, this is an issue that persists in the financial sector. Studies show identity fraud in 2020 led to an astonishing $43 billion in losses (this typically sits around $13 billion). The pandemic has also increased fraud incidents for government agencies (e.g., false unemployment claims).
The most common types of financial information verified by lenders include:
Having a way to determine an applicant's identity is critical to preventing identity theft. If someone does make it into your system with a stolen identity and defrauds you, then the burden is on you to find the culprit.
Verifying identities was easier to do in the past with things like building cameras and fingerprinting. But now that online submission is available for many types of applications, those tools no longer work.
With digital identity verification, financial institutions can safeguard against money laundering, identity theft, and cybercrime. This requires real-time ID verification, since many lenders offer fast approval times.
Approving more applications is your primary goal, but you want to do it without putting your company at risk of fraud and financial loss. Adopting identity verification software makes it possible.
Here's a look at some ways financial services companies benefit from it:
During the application approval process, lenders must determine the client's ability to repay the loan. The best way to know is to look at their financial records. Not only does this verify their income—it also showcases their ability to save.
With AI tools like Inscribe, you can authenticate bank statements and analyze spending habits. This allows you to make better and faster lending decisions.
Insurance agencies, credit unions, credit card companies all face similar problems amid the digitization of application processing. While this helped increase business for these entities, it also invited a sleuth of bad actors, including thieves, fraudsters, and criminals.
Here's an overview of the issues we see in the finance industry:
In the finance industry, the loan originator verifies documents before sending the application into processing. This includes asking for necessary documents, identifying if the records are accurate, and whether anything's missing or skewed.
Document verification is critical to ensure no one gets approved using the wrong identity or falsified financial documents.
Traditional forms of document verification were time-consuming and tedious. They slowed down processes and frustrated customers.
Before digitization, customers visited local businesses or branches to submit applications and documents. They were verified in person with the individual present, making matching ID photos with the face easier. However, verifying documents wasn't as fast, taking weeks to process.
Identifying fraudulent documents was challenging, since fraudsters had printers and skills to create counterfeit documents (e.g., bank statements, W2 forms, and other financial paperwork). So ensuring the documents used were 100% valid was next to impossible.
Modern document verification technology to makes this possible. These tools use artificial intelligence and machine learning to identify documents, authenticate them using a database of original documents, and parse personal details (name, address, etc.).
Using AI tools to verify documents speeds up processes and ensures regulatory compliance (not to mention enhances fraud detection, which can save institutions millions in losses). Inscribe’s AI-powered solutions, which include document verification, help customers in the finance sector save $80 million per month.
There are several methods software used to detect fraud:
Using software that checks for these issues minimizes identity theft and fraud. But how does it work? It uses optical character recognition (OCR) technology to read text and handwriting in images (and even turn photos into editable PDFs).
Let's say a customer sends a document to prove their address: They upload a photo of an electric bill and a bank statemen, then the AI software extracts the address from both documents within seconds. If the addresses match, then the verification check is complete.
When determining the validity of documents, the software matches the format, logos, colors, fonts, and other data with original documents. If anything's amiss or photo editing is detected, the verification fails and is flagged for human review.
Filling out an application for insurance, loans, and credit cards is time-consuming. Some potential customers may drop out of the application process because of the numerous steps required. So making it faster and easier for customers is critical.
With AI-powered tools like Inscribe, the account opening and underwriting process is simple. Your applicants can use their mobile devices to submit photos of documents and upload them to your system. Inscribe verifies the information instantly, allowing you to process the application must faster.
This improves the customer experience and alleviates the headache of manually wading through mounds of applications. In addition, Inscribe analyzes the documents submitted for fraud — saving your team time that would have been spent on manual reviews and money that could have been lost to fraudsters.
The machine learning aspect of this type of software gives it the ability to evolve. Over time, tools like Inscribe learn from mistakes and continuously improves fraud detection. The benefits of using machine learning and AI for this include:
Are you dealing with too many applications to process and clients who are getting frustrated with sending in documents and waiting weeks for approval?
Adopting AI technology for document verification can help eliminate these issues while preventing fraud. Inscribe does this for its clients throughout the financial services industry, using AI and machine learning to accept and verify documents. Plus, the software parses data and helps you determine an applicant's creditworthiness.
If you need to enhance your document verification workflow and approve customers with confidence, speak to one of our experts today.