Managing bank statements can be a tedious task for financial teams everywhere, however, it remains an essential part of the task for finance teams, accountants, and businesses of all sizes. From reconciling accounts to tracking transactions, bank statement processing often requires significant time and effort.
But what if you could automate this process using AI? In this blog, we’ll explore how automating bank statement processing can streamline your approach to bank statement processing, improve financial operations, and free up valuable resources for more strategic tasks.
What is Bank Statement OCR?
Bank Statement OCR (Optical Character Recognition) is a technology that automatically extracts data from bank statements, transforming scanned documents, PDFs, or images into structured, machine-readable formats.
Bank Statement OCR is a core component of automated bank statement processing, as it enables the seamless extraction of financial data without manual intervention. By converting bank statements into structured formats, this technology lays the foundation for fully automated workflows, where data can be instantly processed, categorized, and reconciled with other financial systems.
Now that we have a clear idea of what it is, let’s dive into the crux of this blog and explore how bank statement extraction software can streamline and simplify the process.
How to Automate Bank Statement Processing with Klippa DocHorizon
Klippa DocHorizon is an Intelligent Document Processing (IDP) platform that enables you to automate all kinds of document workflows, from bank statement verification to document digitization. And the best part? You can try it out for free!
Let’s take you through the process step by step.
1. Sign up on the platform
The first thing to do is to sign up for the DocHorizon Platform. Simply fill in your name and email address to get started. You will instantly receive a free credit of €25 to test all the platform’s capabilities.
2. Select your Input Source
Here, you determine the input source of the bank statements you want to be processed. By selecting the input source at this step, you grant the platform access to retrieve the bank statement for processing. Therefore, they must be digitized and ready for retrieval. This way, they can be processed in bulk if necessary. The source can be Google Drive, email attachments, or your organization’s database, for example.
For this example, we’ll demonstrate these steps using a Google Drive folder as the input location and we will select “findfileorfolder” from the dropdown menu presented on the left. However, you can choose to select, export a file, and much more.
3. Capture and Extract Financial Data
Now’s the time to extract the essential information from your bank statements. You have a choice of different document capture models. However, as we are processing bank statements, we can use the financial document capture which is configured for scanning and processing financial documents. Our solution can capture standard data fields including but not limited to:
- Account number
- Bank name
- Opening balance
- Closing balance
- Transaction details
You can also customize the data fields you wish to be extracted.
4. Convert to Business Ready Format
Now your bank statement has been scanned and the data has been extracted, it is time to convert it into a format that you can use and make informed decisions on. Select the Converters from the list of utilities and decide on the format you would like the data to be extracted into.
You can convert the extracted data to the format of your choice. Considering the document type is bank statements, you’ll most likely need the data converted and exported to an XLSX or CSV format. You can make your choice from the list of conversion possibilities in the dropdown menu you are presented with.
5. Define The Output Location
After having extracted and converted your bank statements to your desired format, it is time to export it. You can choose the location where you want the output to be sent, be it Excel, Google Sheets, or Google Drive. You can also export it to an ERP, accounting software, or FTP. Simply drag and drop the component and your flow is ready to be launched.
That’s it! The flow is complete and ready for you to use!
Need to visualize the process? Check out our detailed tutorial on how the process works with our platform.
Benefits of Automated Bank Statement Processing
Automating bank statement processing offers a host of advantages that go beyond just saving time. Leveraging AI and OCR technologies can transform the way businesses handle financial data, enhancing everything from accuracy to compliance.
Here are the key benefits of automated bank statement processing:
- Improved Data Accuracy: Manual data entry is prone to errors, especially when dealing with complex statements or high transaction volumes. AI-powered automation ensures that data is extracted and processed accurately, reducing the risk of mistakes that could lead to financial discrepancies, compliance issues, or customer dissatisfaction.
- Improved Time Management: Manually processing bank statements can take hours, if not days, especially for businesses with large transaction volumes. Automation can extract, categorize, and reconcile data within minutes, freeing up valuable time for finance teams to focus on more strategic tasks like financial analysis and forecasting.
- Cost Savings: Automating repetitive tasks such as data extraction and reconciliation can lead to significant cost savings by reducing the need for manual labor. Additionally, the improved accuracy of automated processes means fewer costly errors and less time spent on correcting mistakes.
- Scalability: As your business grows, so does the volume of financial transactions. Automating bank statement processing ensures that your financial operations can scale efficiently, without the need to hire additional staff.
- Enhanced Compliance: Staying compliant with financial regulations such as anti-money laundering (AML) and Know Your Customer (KYC) can be challenging. Automated bank statement processing helps ensure compliance by automatically extracting and analyzing transaction data, and flagging any anomalies or suspicious activities for further review.
- Increased Security: AI-powered systems come with enhanced security features that help protect sensitive financial data. Automated tools can be configured to ensure that only authorized personnel have access to bank statements, reducing the risk of data breaches or unauthorized use.
The benefits of automating your bank statement processing can be far-reaching and revolutionary for your business. In the next section, we will go over some of the most prominent use cases of automated bank statement processing.
5 Use Cases for Automated Bank Statement Processing
Here are five example use cases of how automated bank statement processing can be utilized and how they can benefit your business.
- Source of Funds Verification: When verifying the legitimacy of funds for high-value transactions, financial institutions need to track the flow of money over time. Automated bank statement processing facilitates easy extraction of transaction histories, allowing for a quicker review of incoming and outgoing funds. This helps compliance teams verify whether the source of funds is legitimate, reducing manual oversight and improving compliance with anti-money laundering (AML) regulations.
- Know Your Customer (KYC) Compliance: KYC processes require detailed financial documents to validate a customer’s identity and financial health. With OCR technology, you can simplify this by automatically extracting and analyzing data from bank statements. Instead of manually sifting through statements to verify account ownership, transaction patterns, and risk factors, OCR can pull the necessary data in seconds.
- Proof of Income Verification: For businesses like banks, insurance, or rental services, verifying an individual’s income is crucial to assess risk and eligibility. Automated bank statement processing can automatically pull relevant details, such as salary deposits and recurring payments, to generate an accurate picture of an individual’s income.
- Mortgage and Rental Applications: During mortgage or rental applications, verifying an applicant’s financial stability is crucial. OCR technology can automate the extraction of data such as monthly income, recurring expenses, and account balances from bank statements. This streamlines the application process, enabling faster decision-making for property managers and mortgage lenders while ensuring all necessary financial details are considered.
- Financial Auditing and Reporting: Organizations that conduct internal or external audits need to meticulously review financial statements. Automated bank statement processing reduces the time spent manually processing these documents by automatically extracting and categorizing transactions. This ensures that auditors can quickly access the necessary financial information, identify discrepancies, and prepare detailed reports, leading to more efficient and accurate financial auditing.
Automate Your Bank Statement Processing with Klippa
With Klippa DocHorizon, you can automate all your financial document workflows. Our platform lets you customize your bank statement processing workflows using an intuitive drag-and-drop builder tailored to your needs. Plus, you can leverage our human-In-the-loop functionality for 100% data accuracy, ensuring you only process valid bank statements.
- Data extraction – Automatically extract data from your bank statements.
- Document conversion – Convert bank statements into many data formats, such as JSON, XLSX, CSV, TXT, XML, and many more.
- Data anonymization – Comply with privacy regulations by masking and anonymizing sensitive data, such as client names or financial information.
- Document verification – Automatically verify documents in numerous ways and detect document fraud effortlessly.
Ready to find out more about how our bank statement processing solution can benefit your business? Book a free demo below or contact our experts for any questions you might have!