Mastering OCR Technology: How to Convert Scanned Documents into Editable Text

Discover the power of OCR technology in converting scanned documents and images into editable, searchable text. Learn how OCR works, its significance in modern data handling, and its diverse applications that streamline workflows and enhance document management across various sectors.

  • Brianna Valleskey
    Head of Marketing
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OCR technology is pivotal in turning scans and images of text into fully editable and searchable documents, streamlining workflows and upgrading document management. This guide uncovers how OCR works, its significance in modern data handling, and its diverse applications that aid businesses and individuals in extracting valuable information locked within paper-based archives.

Key Takeaways

  • OCR technology transforms scanned documents into editable texts using AI algorithms, enabling searchable texts and efficient data processing.
  • The OCR process involves image acquisition, preprocessing, text recognition, and post-processing, with each stage crucial for converting documents into machine-readable text.
  • Different types of OCR technologies, ranging from Simple OCR to Intelligent Character and Word Recognition, cater to various applications like automation, accessibility, education, and legal compliance.

Understanding OCR Technology

Document management has been revolutionized by OCR technology, which transforms unstructured documents such as images and physical paper documents into accessible and editable texts. Leveraging artificial intelligence, OCR technology facilitates specific word searches within documents and across folders, thus enhancing usability and accessibility.

The text recognition in OCR utilizes algorithms such as pattern matching and feature extraction to accurately identify and convert glyphs into machine-readable texts.

OCR's Purpose

Extracting text from scanned documents to enhance their usability is the primary purpose of OCR technology. This technology automates the data extraction process, reducing dependency on manual input and intervention.

Efficiency in handling and processing scanned documents is greatly improved by OCR, which can convert scanned documents, leading to significant time and resource savings.

OCR's Evolution

Originally developed as an assistive tool for the visually impaired by Ray Kurzweil in 1974, OCR technology has evolved over time. Today, it provides nearly perfect accuracy and is integrated into workflows to automate document processing.

The key advancements in OCR technology have been driven by artificial intelligence (AI), machine learning (ML), and computer vision, with neural networks playing a crucial role in the development.

The OCR Process

Four major stages are involved in the OCR process:

  1. Image acquisition
  2. Pre-processing
  3. Text recognition
  4. Post-processing

These stages work in synergy to convert physical documents into machine-readable texts. Each stage plays an essential role and significantly contributes to the OCR process’s efficiency and accuracy.

Image Acquisition

The image acquisition phase is the first step in the OCR process. Here, a scanner or digital camera is used to capture the physical document, converting it into an image file, such as a bitmap or raster image. Each pixel in the image contains color and brightness information, which is used in the recognition process. This conversion allows for easier management and storage of image files.


The pre-processing phase prepares the scanned image for text recognition. Techniques used in this phase include:

  • De-skewing: adjusting the alignment of the text lines
  • Noise reduction: removing disturbances or speckles in the image
  • Binarization: simplifying the image into black and white pixels
  • Normalization: adjusting pixel intensities to a standard range.

Text Recognition

Optical character recognition, often referred to as text recognition, is the core of the OCR process. It uses algorithms like pattern matching and feature extraction to identify and convert characters in the scanned document into machine-readable text. The optical character recognition OCR system clusters character images based on similarities to improve recognition and examines gaps between words or lines to segment the document into items like addresses or phone numbers.


The final stage in the OCR process is post-processing, which involves converting the extracted text into a computerized file. The OCR software employs dictionaries for word recognition, matching entire words to increase the accuracy of the converted text. Further, the technology refines accuracy by enabling contextual text corrections automatically, thereby reducing the need for manual error checking.

Types of OCR Technologies

Based on their capabilities and applications, OCR technologies can be classified into the following categories:

  1. Simple OCR technology: This uses stored templates and pattern matching algorithms for text recognition.
  2. Intelligent Character Recognition (ICR): This utilizes machine learning and neural networks to analyze text.
  3. Intelligent Word Recognition (IWR): This processes entire word images.

Simple OCR Software

Simple OCR software operates by storing a library of font and text image patterns, which it then uses to identify characters in scanned documents through pattern-matching algorithms. However, ocr optical character recognition may face limitations in recognizing all text forms due to the multitude of font styles and handwriting variations.

Intelligent Character Recognition (ICR)

ICR represents a significant step in OCR’s evolution. It employs machine learning and neural networks to analyze and interpret text, working through multiple processing layers to enhance text recognition. ICR technology has significantly refined its performance over time, with advancements in deep learning enabling it to:

  • Decipher diverse handwriting styles
  • Improve accuracy in recognizing handwritten text
  • Handle cursive writing and different languages
  • Adapt to different writing surfaces and conditions

Intelligent Word Recognition (IWR)

Unlike the character-by-character recognition method, Intelligent Word Recognition (IWR) processes entire word images as a single unit. Designed for recognizing unconstrained handwritten words and phrases, IWR offers greater flexibility and improves accuracy when combined with OCR and ICR technologies.

Optical Mark Recognition (OMR)

Optical Mark Recognition (OMR) is an advancement in document analysis that focuses on identifying non-textual elements such as logos, watermarks, and text symbols. OMR simplifies the process of collecting information from paper documents by detecting the presence or absence of marks, not characters, making it distinct in its operation from optical word recognition, which focuses on identifying textual elements.

Practical Applications of OCR Technology

Various sectors find use in OCR technology, including:

  • Business automation
  • Accessibility for visually impaired users
  • Education
  • Legal and compliance scenarios

OCR technology, including ocr systems, has a transformative impact on these sectors by automating data entry activities, streamlining workflows, and enhancing efficiency.

Business Automation

In the realm of business automation, OCR technology leads to significant time and resources savings. By integrating OCR into digital workflows, businesses can streamline the verification, editing, and analysis of hand-filled forms, thus enhancing the retrieval of documents from databases.

Accessibility for Visually Impaired Users

OCR technology plays a pivotal role in enhancing accessibility for visually impaired users. It employs adaptive technologies to recognize characters and convert them into digital formats, thereby enabling visually impaired individuals to navigate digital environments more effectively.


In the field of education, OCR technology aids in creating an inclusive learning environment, particularly for students with learning disabilities. It streamlines studying and note-taking by converting handwritten texts and physical documents into digital forms, enabling students to access their materials in various formats.

Legal and Compliance

In legal and compliance settings, OCR technology processes a variety of documents, including:

  • legal documents
  • contracts
  • invoices
  • government documents

It automates the extraction of data from scanned legal documents, transforming them into searchable and manageable text.

Top OCR Tools and Software

Advanced features and high accuracy in text recognition are provided by several OCR tools and software. These include:

  • Adobe Acrobat Pro
  • Kofax OmniPage Ultimate
  • Abbyy FineReader
  • Readiris
  • Tesseract
  • Rossum

Each of these tools and software has unique features and capabilities, catering to different user needs and preferences.

Integrating OCR Technology with Other Systems

Document management processes can be streamlined, data analysis can be enhanced, and operational efficiency can be improved by integrating OCR technology with other systems. By directly transferring scanned images to databases, OCR technology enables automated analytic processes, thus increasing operational efficiency and enhancing productivity.

Overcoming Challenges in OCR Implementation

A set of challenges come with the implementation of OCR technology, such as the accurate extraction of unstructured data from documents with varying print quality and complex layouts. However, these challenges can be overcome by addressing issues with unstructured data, using human-in-the-loop post-processing for validation, and employing exception management in OCR to audit and resolve discrepancies in documents during post-processing.

How Inscribe AI can help with Document OCR 

Inscribe AI streamlines the process of handling financial documents during onboarding and underwriting by leveraging advanced OCR technology. Its intelligent algorithms accurately convert scanned financial documents and images into editable, searchable text, enabling quick extraction and validation of critical information such as income verification, account statements, and identification documents. 

Inscribe AI enhances efficiency, reduces manual data entry, and accelerates decision-making for financial institutions, making it a powerful tool for improving customer experiences and streamlining the entire document management process. 

Want to get started? Request a demo to see how Inscribe can transform your financial document processes and drive success in your operations.

Frequently Asked Questions

What does OCR stand for in banking?

OCR in banking stands for Optical Character Recognition, which is the use of technology to convert printed or handwritten text into digital form.

Is OCR considered AI?

Yes, optical character recognition (OCR) is considered a part of artificial intelligence (AI) due to its use of AI algorithms for automated processing and understanding context.

What is OCR technology used for?

OCR technology is used to recognize text within digital images and scanned documents, converting them into accessible electronic versions with text. It is commonly employed for this purpose.

What are the different types of OCR technologies?

OCR technologies encompass simple OCR software, Intelligent Character Recognition (ICR), Intelligent Word Recognition (IWR), and Optical Mark Recognition (OMR).

How can OCR technology be used in business automation?

OCR technology can be used in business automation to streamline processes, improve document retrieval, and save time and resources.

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