Optical Character Recognition

Optical Character Recognition: What you need to know

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Optical Character Recognition: What you need to know

Optical Character Recognition is the process of reading and transforming written, printed, or scribbled characters into machine-encoded texts or anything else a computer can alter. It is a subset of image recognition and is typically used as a kind of data entry with printed documents or data records, such as financial records, sales receipts, passports, portfolios, and business cards, as input. The application is responsible for recognizing the characters and producing a written document from a digitized or scanned document.

What is OCR's role? 

Using technology that detects characters and letters and converts them into words and phrases, the OCR process allows you to convert a picture into a searchable text. We have the capacity to glance at a page and nearly instantly recognize and comprehend the distinct letters, words, and phrases, which is beyond the capabilities of machines. When a computer "sees" a picture, such as a page of printed text, the image consists of meaningless black and white pixels; the computer has no innate knowledge of the letters and words. 

OCR software processes the characters in such a way that a computer can now read and recognize text: letters, symbols, words, etc. After OCR processing, a user can search scanned documents for certain keywords and phrases. When you combine document scanning with document recognition and text recognition, you transform your stack of paper records into digital files that are searchable. 

In addition, a scanned document that has been OCR-processed can be utilized as an editable document, allowing you to modify the text as needed (in certain situations). This is the case when libraries digitize their historical collections and OCR the scanned documents so that volunteers may read and edit articles as needed. This approach is labor-intensive, as it consists primarily of human data entry, yet it is particularly effective for some applications. 

Another instance would be if you needed to study some data, say from a report, but there are too many files to manually go through each one to get the data you require. You could scan the printed text and use OCR to produce searchable files; from there, it would be a matter of extracting research-relevant data. It's not perfect, but it's likely a lot more efficient than reading dozens or even hundreds of pages to discover a few pieces of information! 

How exactly does Optical Character Recognition function? 

OCR algorithms may be based on classic image processing and machine learning-based approaches or on deep learning-based methodologies. 

There are three fundamental steps in the optical character recognition process:- 

Step 1: Image Pre-Processing

Typically, OCR software pre-processes pictures to increase the likelihood of successful recognition. The objective of picture preprocessing is to enhance the real image data. In this manner, undesired visual distortions are reduced and particular image characteristics are emphasized. These two procedures are essential for the subsequent phases. 

Step 2: Character Recognition

For true character recognition, it is essential to comprehend "feature extraction." When input data is too vast to process, just a subset of characteristics is chosen. The selected traits are presumed to be the most significant, while those deemed superfluous are disregarded. The performance is enhanced by utilizing the smaller data set as opposed to the initial huge one. 

This is essential for the OCR process since the algorithm must identify certain areas or forms of a digital image or video stream. 

Step 3: OCR Post-Processing 

Post-processing is an additional mistake correcting approach that contributes to OCR's high accuracy. A lexicon can be used to restrict the output and increase the precision. So, for instance, the algorithm can fall back on a list of terms that are permitted to appear in the scanned page. 

In addition to identifying appropriate words, OCR can also read numbers and codes. This is helpful for detecting long sequences of numbers and letters, such as serial numbers used in a variety of sectors. 

Some providers have begun to build specialized OCR systems in order to better manage varying types of input OCR. These systems are able to cope with specialized pictures, and in order to increase recognition accuracy even further, they have merged a number of optimization strategies. 

Use-cases for OCR by industry 

Although the majority of sectors continue to rely on legacy systems, the growing interest in digitalization makes OCR technology essential for enterprises. 

1. OCR in Communication 

Among the most common applications for OCR is the digitization of books and unstructured materials, which facilitates human-to-human communication. Google Translate's OCR technology, which allows users to read in any language, is one such example. 

2. OCR in Banking

OCR also has potential for the banking industry. 

Checks may be deposited digitally and processed within a few days with OCR-based check depositing tools in mobile banking applications. 

Monitoring and evaluating your customers' data, including personal and security information, is another application of OCR in the banking sector. 

Bank statements need a substantial quantity of data input for banking activities. With consistently accurate text recognition, OCR-based technologies will aid in sustaining an effective workflow. 

In addition, OCR may be utilized to extract sensitive information from mortgage applications and pay stubs. 

3. OCR in Insurance

 Business OCR can also contribute to the rapidly expanding insurance industry. Specifically, OCR can automate the processing of insurance claims for speedier transactions. 

4. OCR in Legal

OCR enables legal businesses to scan their printed documents, including affidavits, judgments, files, declarations, and wills, among others. 

5. OCR in Healthcare 

The OCR may contribute significantly to the healthcare business. OCR technology may digitize data from X-ray reports, patient histories, treatments or diagnoses, tests, and overall hospital records. 

6. OCR in Tourism 

Due to OCR, travelers and hotel guests may now check in instantly by scanning their passports to a hotel's website or mobile app. 

7. OCR in Retail

With mobile OCR, users may now redeem certificates by scanning their mobile phones for serial numbers. 

Unquestionably, outsourcing data collecting is required to improve the management of actionable data. Even more advantageous is the introduction of corporate automation processes, notably machine learning, which can function 24 hours a day, seven days a week, and substantially quicker than human specialists, automatically improving data collection outsourcing procedures. 

As machine learning evolves, it extends beyond data collecting and has major applications in several sectors. 

OCR's advantages for enterprises 

Lending and Insurance enterprises use tons of data for underwriting and claim settlement. Similarly, logistics, healthcare, law, IT, and commercial real estate are heavily dependent on data. OCR makes it easier to extract data from all these documents and use it for analysis:-

1. Effortless access 

With OCR technology integrated into their systems, businesses enjoy faster data access. The information recorded in photographs is now searchable as text, which improves accessibility. 

With OCR implemented in the system, it is simple to search through big databases including numerous photos and other data. Users can search for documents using names and reference numbers without saving an electronic copy of the document beforehand. 

2. Usability and storage 

Optical character recognition software turns photos into readable text and word files, from which users may effortlessly pick information. This enables the storage of enormous datasets as electronic files that can be modified and shared. 

With simple storage, the information at hand becomes far more accessible. Employees may access historical client information and case files straight from the electronic database, without having to open any paper folders. 

3. Increased precision in data interpretation 

When firms use OCR to their data, the quality of the data they store improves. Customers may receive correct solutions to their questions with the assistance of OCR that searches documents for their questions. This ultimately increases client satisfaction. 

In many instances, businesses may also utilize OCR to extract information from forms and other physical documents and instantaneously confirm it with existing databases. This facilitates the establishment of security checks and the protection of user data. 

4. Saves time 

In contrast to conventional approaches, in which data had to be manually entered, the OCR capability can quickly sift through a large number of photos to identify essential information. This saves a substantial amount of time for corporate processes, since information from physical papers may be instantly retrieved from a computer. In a number of instances, personnel must manually examine the information from physical papers. With an OCR system, all document verification may be performed automatically. 

5. Greater velocity 

In any business, a significant portion of the workday is devoted to organizing physical papers into separate folders and physically filing them in word documents. With OCR technology in place, staff can quickly auto-fill web forms and databases from real documents. This provides employees more time to concentrate on their task, hence improving their output. 

6. Enhancement of productivity 

As stated in the preceding section, with OCR image recognition software in place, the amount of daily paperwork an employee must manage is drastically reduced. This facilitates their access to digital information that can be shared and modified inside the company. Providing employees with a simpler work environment ultimately increases the company's productivity and profitability. 

7. The processing costs of OCR are cheaper than those of conventional technologies. 

Additionally, it is conveniently available on any camera-equipped mobile devices. This is extremely advantageous for businesses, since no special configuration is necessary to respond with OCR image recognition software. With numerous challenges, businesses may design applications with this functionality to receive direct client feedback. 

8. Improvements to client services 

The primary objective of businesses is to maximize customer pleasure for greater market relationships and company. Customers should have the ability to access, amend, and update the information they supply to the firm as part of effective customer service. 

Optical Character Recognition makes all of this straightforward. Customers may fill out a variety of forms, but with the use of OCR, personnel is able to gather this information into a single folder and offer it to customers as needed. 

9. Better customer support 

All services on the market require a solid customer support service in order to be really effective. With the use of clever data collection technologies, businesses may deliver superior customer service and question resolution. 

Due to the fact that OCR image recognition software turns all information into digital files, any inquiry may be answered by accessing this information. This results in clients receiving prompt solutions to their issues and leaves a highly favorable impression of the organization. 

10. Customer retention

As illustrated in the preceding section, the client has a good view of the firm as a result of quicker service speeds and better communication. This encourages customers to conduct more business with the firm in the future and increases the company's conversion rates. All of this is achievable through the use of Optical Character Recognition, which ensures that clients are catered quickly. 

Best OCR software in 2022 

Now is the time to look at best OCR software in the industry:-

1. Docsumo 

Using artificial intelligence, Docsumo is an intelligent document processing program that focuses on data extraction and financial document processing. This comprehensive solution addresses the enterprise-level document processing automation requirements of a business. 

2. ABBYY Flexicapture 

Scan images and PDFs and convert them to editable text, tables, and digital files. ABBYY Flexicapture is excellent for large organizations. This optical character recognition software is precise, efficient, and manages batch processing in a manner that is unparalleled. It is ideal for decreasing manual data entry and input, giving you more time to focus on optimizing and expanding other parts of your organization. 

3. Amazon Textract 

Textract has the ability to extract information from scanned documents, printers, forms, and tables. It is perfect for scanning professional papers such as resumes, contracts, and books. Formatting is automatically identified and maintained, allowing you to prepare documents without having to manually modify the layout. Amazon Textract is one of the most effective OCR programs for medical records, financial reports, and other documents with abundant structured data. 

4. Google Doc AI

Google is often the greatest at virtually everything, but their OCR technology is fairly restricted. According to several reports, the PDF tool is not precise enough for corporate use; hence, it has been ranked one of the top OCR programs for individuals. It is free to use, and you may employ rudimentary document editing and formatting tools. Additionally, you may convert your content to searchable PDFs. Important portions like tables, footnotes, and columns may not be detected by Google Doc AI.

5. Docparser 

Docparser is an OCR program best suited for financial documents based on a template. It is among the most sophisticated OCR tools on the market for processing financial documents. 

Limitations of OCR

Real-world constraints of OCR data extraction are as follows:- 

1. Data structuring requires more than just OCR 

Multiple processes are necessary to extract and arrange the information when consumers take a photo of their ID with their smartphone or webcam. The first step is to properly identify the type of identification present. This enables the engine to appropriately arrange the information read by the OCR, which includes determining the first name, last name, date of birth, and any other relevant field. Without additional AI or technology specifically trained to distinguish ID types, OCR alone will lack the precision required to combat fraud and provide a positive user experience. 

2. OCR must incorporate image correction 

When individuals snap photographs of their ID papers with their cell phones or webcams, the images must typically be de-skewered and reoriented if they were not correctly aligned, so that the OCR system can extract the data. 

3. IDs with colored backgrounds might be problematic for OCR 

OCR must frequently transform a color/grayscale picture to black and white to eliminate fuzzy text and better distinguish black and white text from its backdrop. 

4. Glare and blur can lead to errors 

What happens if there is glare or the user moves slightly when their ID is being photographed? When there is glare or blurriness in the ID image, the likelihood of data extraction errors increases dramatically. 

5. Webcams provide a problem for conventional OCR 

By enabling customers to collect identification documents across a number of channels, optical character recognition (OCR) presents a further difficulty for businesses seeking to provide an omnichannel experience. While the majority of smartphone cameras are of great quality and produce high-resolution images, this is not the case for webcams incorporated in desktop computers and tablets. If a corporation allows its users to verify their IDs via webcam, the quality and clarity of the ID image would suffer, hence compromising OCR's ability to accurately extract the data. 

How Intelligent Document Processing(IDP) differs from OCR? 

As we mentioned earlier, "Data structuring requires more than just OCR" can't be more true. OCR can recognize characters but it can't assign context to the text. In a way, OCR reads characters but it doesn't understand it. With the help of Artificial Intelligence and Machine Learning, IDP not only reads text but assigns context in order to provide more accuracy and usable data for analysis.

Let's take a look at where IDP fairs compared to OCR:-

1. High rate of data processing 

Not only does IDPs rapid processing save time and money, but it also allows team members to focus on other business objectives. It's quite a revolution to be able to extract and categorize data in seconds as opposed to hours, which is why organizations constantly desire fast speed. 

2. Simple to configure and initiate 

The future of technology favors products that adhere to simplicity and the "easy-to-use" phenomena, particularly in the technology sector. Even the most complicated systems seek easier solutions for their clients; this is not rocket science. In light of OCR and Acodis, OCR is considered to be less "easy" to set up and begin than the AI processes. 

3. Capable of totally automating document processing 

While a completely automated data processing system is not on the wish list of every organization, this feature is crucial to your and your company's productivity. This aspect is absent from OCR, necessitating that users regularly submit templates and monitor data processing. This is, in all honesty, a waste of time.

4. IDP Understands your data like a person 

OCR is capable of interpreting simple text, numbers, and symbols, but it lacks Acodis' cutting-edge contextualized knowledge. Using OCR technologies to contextualize and alter important dates on an insurance policy, for example, would not be feasible. 


OCR can identify some pixels as the integers 1 9 8 0; however, it does not comprehend that this is a year and part of your Date of Birth. 

IDP does, though. As humans, we rapidly comprehend the meaning of particular words, and IDP does the same for you. It can interpret text and documents. 

5. Auto-teaching system 

When it comes to integrating data automation, the capacity to be efficient is a recurring topic. Unlike regular OCR, IDP is able to learn and evolve without the need for ongoing assistance. 

6. Quickly and easily compatible with other current systems 

Unlike OCR, IDP makes it possible to install the program into your organization with minimal to no complications or concerns. This function can save both time and money. Being readily integrated relieves you and your team of responsibility if you lack technological expertise. 

How does OCR benefit your company? 

As a step towards digitization, OCR provides several benefits. Contracts, shipping slips, government papers, licenses, certifications, tariff sheets, catalogs, etc. typically contain a great deal of information and paperwork. 

You may quickly obtain the best pricing, services, terms, and conditions, etc. by comparing papers once they have been digitized and compared to other digital documents. 

Using OCR, you may examine your signed contract for deviations from the original terms and conditions. Checks may also be confirmed for the correct amount, and invoices can be compared, etc. 

In addition, by digitizing documents, you make them accessible for the most sophisticated research, which may notify you of long-term company improvements. You may discover loss leaders, tax evasion, overpaying, and much more, resulting in substantial cost savings. 

These are the true benefits of digitization, yet OCR is a crucial initial step in the transition of analog records.

Suggested Case Study
Automating Portfolio Management for Westland Real Estate Group
The portfolio includes 14,000 units across all divisions across Los Angeles County, Orange County, and Inland Empire.
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Pankaj Tripathi
Written by
Pankaj Tripathi

Helping enterprises capture data for analytics and decisioning

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