Optical Character Recognition (OCR)

OCR technology is mainly used for automation, particularly in streamlined data extraction from printed, written, or digital documents (such as image files). OCR works like a scanner to convert the physical form of a document into digital text. For example, an OCR software can operate as a web-based service, a built-in program, or an API. OCR is able to convert the text into a machine-readable format for further data processing, such as searching or editing.

OCR text recognition allows companies to integrate scanned documents into a big-data system that can read client data from legal agreements, bank statements, and other important printed documents. It supports multiple formats (such as PDF, JPG, JPEG, PNG),  extraction of text from images, and later saving that text file. For example, in banking, specialists no longer have to manually review countless documents because the system does the job for them. 

OCR technology is important because it revolutionized how businesses deal with documents and turned actions like dealing with authentication, scanned legal documents, and various forms or invoices into a more automated and efficient procedure. For example, OCR can recognize complex ID documents despite variations in format and structure. So, OCR digitizes documents, allowing to improve productivity and accuracy of various document handling operations. This way, organizations can save time and costs. 

OCR for KYC, or Know Your Customer, is the technology that automates data extraction from images, particularly ID documents during the remote identity verification process. In this context, OCR technology helps verify user identities online faster, by not only capturing their personal details,  but also interpreting and processing it, making ID verification software swift and accurate, compared to traditional, manual KYC processes. 

No. While the most simple ID verification form is based on identity documents (passports, driver’s licenses, and IDs), OCR can be used for various documents. For example, OCR can extract data from utility bills, which are a form of Proof of Address (PoA) used in address verification (which is also a part of KYC compliance), or bank statements used in the bank account verification process. 

The key benefits that influence businesses to implement KYC solutions with OCR technology include:

• Automation. OCR can automate document processing and routing, streamlining various processes, including remote user verification.
• Centralization. OCR helps securely store customer information by centralizing and digitizing data.
• Speed. Different workflows, including OCR-based ID verification can be more efficient when coupled with AI-powered software due to the streamlined data extraction capabilities. 
• Improved end-user experience. Since OCR technology makes the process more efficient and accurate, users that are providing their documents are verified and onboarded in seconds instead of waiting for hours in line during processes like KYC checks.