Guide to Choosing the Right Bank Statement Verification Software

The 2022 Occupational Fraud Report finds financial statement-related frauds account for a median loss of $593,000. Overstated expenses and liabilities, improper disclosures, and improper asset valuations were the prominent ways to manipulate statements.

Frauds aren't the only challenge sustained by manual verification. Challenges like lengthy verification timelines, human errors, and data redundancy also translate into loss of capital, productivity, and reputation.

Amidst rising risks, scalability barriers, and operational inefficiencies, organizations seek better alternatives to manual bank statement verification. Solutions that reduce risks, increase cost savings, and improve efficiency are much needed.

Switching to an automated verification process is a step in the right direction. It not only helps to conquer the challenges but unlocks advantages that are impossible to gain with traditional verification methods.

This article has compiled the five best software programs for automating the bank verification process. Read on to learn in detail their key features, pros, and cons.

What is bank statement data verification?

Bank statement verification is the process that validates the authenticity of a bank statement to ensure the information is genuine, accurate, and consistent with other financial records.

Here's how an organization proceeds through a bank statement verification process:

• Confirming account holder's ownership by matching it against name, address, and contact information
• Scrutinizing the documents to identify suspicious alterations
• Analyzing transaction history, deposits, and withdrawals
• Cross-checking with other financial documents
• Doing a consistency check for reconciliation
• Contacting the bank to authenticate stamps, logos, and information

Imagine when multiple borrower or customer documents go through the same steps. The process can become 10X difficult.This is where bank statement verification software comes into the picture—simplifying the end-to-end process.  

What is Bank Statement Verification Software?

Bank statement verification software captures, extracts, and validates data from bank statements using OCR (Optical Character Recognition), AI (Artificial Intelligence), CV (Computer Vision), ML (Machine Learning), and more. These technologies automate data verification while maintaining maximum accuracy, speed, and security.

Benefits of automated bank statement verification 

As discussed before, the manual verification process has several challenges, which is where automated data extraction comes to the rescue. Automation removes those challenges and brings multiple benefits to your organization, including:

a. Faster verification cycles

Manual processes have prolonged verification timelines. Underwriters need even more time to authenticate statements with irregular transactions or long credit history. Also, in a manual setup, you can only perform verification during working hours, which delays the process. Not to miss, customers might bounce off in between.

Automation speeds up the process through precise data capture and validation. With 24/7 verification, the process timeline turns shorter. As a result, customers’ bounce-off rates decline.

b. Reduced Human Error 

The common manual method to identify fake/fraudulent bank statements is reconciliation. All the deposits, withdrawals, fees, and checks in the borrower’s account are summed up and matched against account balances. Humans are liable to make calculative mistakes. Approving manipulated statements incurs losses 

Automation minimizes errors. On days when a large number of statements are verified, employees might miss digits and statistics. The software will still perform the task error-free.

c. Lower Fraud Risk

Manual verification is susceptible to fraud. Most bank statements are received as easily editable PDFs. Therefore, locating altered statements manually is easy, if possible.

Automated verification solutions are powered by technologies that detect fonts, digits, and image irregularities. They lower the chances of manipulated bank statements going unnoticed.

d. Increased Profitability 

Gauging the borrower's ability to repay the loan is a major concern for financial institutions. The manual process needs to include insights into spending behavior and cash flow, limiting the ability to assign exact credit scores to the borrower. Failing to identify bad debt impacts an organization’s profitability.

Automation enables faster loan approvals with intelligent insights. You can identify profitable opportunities by assessing borrowers’ spending behavior and assigning proper credit scores.

e. Enhanced Compliance and Security 

The banking sector is highly regulated and risk-enduring. A single non-compliant instance can compound into penalties, legal issues, and reputation damage. Also, when multiple people handle your data, the data breaching risk is high.

Most bank statement verification software is compliant with industry standards. They prevent risks and protect data integrity.

f. Greater Scalability

The higher the number of bank statements, the more staff you hire. Assessing complicated bank statements requires experienced underwriters who charge higher. The cost of hiring neutralizes the increase in revenue. Hence, scaling becomes a challenge.

Automation helps you scale faster. It empowers your existing staff to process more statements, even complex ones, in less time and with less effort and resources.

g. Increased cost-saving

The manual process makes storage costs for paper-based/physical documents inevitable. Moreover, you can't cut hiring costs. Automation decreases hiring needs and increases cost-saving opportunities.

h. Improved Efficiency 

The manual process needs ways to organize data. The statements are received in various formats (PDF, Excel, images). Each one of them needs to be processed differently. Verifying this inconsistent data with a standardized format makes the process efficient.

Automated solutions can convert any statement format into a single standardized format (JSON/CSV). This raises efficiency, saving time and capacity for other important tasks.

i. Cross-functional Integration

According to statistics on repetitive tasks at work, 50% of employees' time is wasted on repetitive manual work. Manual verification workflows are segmented. They involve copy-pasting bank statement data back and forth between multiple financial systems. 

Automated solutions possess a marked ability to integrate with existing financial systems. They can simultaneously capture data from bank statements and load it into accounting systems. The system streamlines reconciliation by matching bank statement transactions against those recorded in accounting software.

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Selecting the right bank verification software 

What should you look for while investing in the right automated bank statement verification solution? Here are the key factors to consider.

a. Accuracy

Accurate data extraction is the core of the bank statement verification process. Ensure your chosen bank statement verification software generates precise output. If there are missing digits or poor performance with image docs, the purpose of automation fails.

b. Speed

Accuracy shouldn’t come at the cost of speed. Choose software that doesn’t slow down when verifying statements with a high volume of transactions. The system should also generate swift outputs for complex bank statements.

c. User interface

An ideal software comes with easy-to-create verification workflows. Deriving meaningful insights from borrower’s statements must not be another task on the table. Analytics must be easy to understand and simplify income verification.

d. Compatibility with different formats and layouts

Not all bank statements come in the same format. Ensure your bank statement verification software supports formats, including PDFs, images, and CSV files. Further, different banks have different statement layouts. One might have the account holder’s information at the top, while another might contain it at the footer. 

As you must deal with diverse layouts, the software must extract data from all bank statements.

e. Document classification

Organizations receive a variety of documents. When your software can classify a particular document, such as a bank statement, it can be routed to the right person or workflow for further processing, fostering efficiency.

f. Enhanced compliance

An ideal software complies with AML, SOC, and other industry and country-specific regulations. Choose a GDPR-compliant tool to ensure legitimate data handling and protect privacy.

g. Security settings

Software that limits access and enables controlled authorization is a better bet for safer verifications. Also, research any data breaching history related to the platform you pick. The bank statement verification platform should allow fraud detection for risk-resistant bank statement verifications.

h. Cloud support

Cloud-based storage ensures your documents have backup and are stored safely. Moreover, cloud-based solutions offer flexible pricing models (pay as you use), enabling more cost-saving. You can eliminate expensive physical servers or in-house IT infrastructure investments.

i. Customer support

Any software is susceptible to downtimes and sudden issues. This might put verification and related processes on hold. Round-the-clock support ensures timely remedial actions to overcome the problems. 

j. Pricing

Calculating the cost you'll save on hiring and storage is a good idea. Then, compare it against the amount needed to invest in software annually. If the equation is profitable in the long term, it's a rewarding deal.

Best practices for implementing bank statement verification software

In the previous section, we had a detailed walk-through of the best bank statement verification software.

Now, let's also explore how you can make the most out of their implementation.

a. Assess your needs

Begin with identifying friction points in your current verification process. 

Do you need help to process complex bank statements? Do you need help locating fake PDF statements? Or do you have problems sharing the data with your outsourced accounting team for smooth reconciliation?

Once you know what features are non-negotiable and what’s not important at the moment, narrow down the options. Additionally, this helps you pick the right pricing plan that offers needed capabilities.

b. Integration with your business sources 

Look for a bank statement verification software compatible with your existing IT infrastructure. For example, if you’re using Quickbooks as your accounting software and Salesforce as your CRM, choose a software that integrates with these third-party apps for streamlined workflow and fewer data errors. 

c. Effective adoption 

Let's say your software is capable of detecting fraudulent patterns. However, employees must be aware of fake statements' approval rates. Educate your staff on how to vet statements for forgery, tampered texts, and false information. 

d. Establish and track KPIs

Tracking KPIs helps you determine the efficacy of your solution in streamlining verification. The following KPIs uncover areas for implementing refined workflows.

Loan Approval Rate

A reasonable loan approval rate indicates a well-coordinated process. You can measure this using the following equation.

LAR = (Number of loans approved/total number of applications) * 100

If your loan approval rate is low, the process sustains issues and needs improvement.

Operating Efficiency Factor

This factor reveals your efficiency gains from the software. The equation is: 

OEF = (Operating expenses/operating income) * 100

The lower the factor, the better your efficiency gains. This also tells about the ROI of the automated verification process.

Straight Through Processing Rate: This rate determines the ability of your software to perform the entire verification process without manual intervention. 

For instance, Docsumo users experienced a 95%+ STP rate. This means out of 100, it validated bank statements error-free more than 95 times, without involving any human in the process.

Choosing The Best Bank Statement Verification Software? 

Automated solutions are non-negotiable for organizations that want to verify bank statements at the intersection of highest accuracy, speed, and efficiency.

After a detailed discussion about the automated verification process, here are the advantages we discovered:

• Shorter verification timeline due to reduced errors and 24/7 availability
• Accelerated loan approvals with intelligent insights
• Successful customer onboarding with lower bounce rates
• Cost-cutting through paperless procedures and decreased hiring needs
• Better risk management with intelligent fraud detection, enhanced compliance, and more robust data security
• Increased scalability as more documents can be processed with few resources 
• End-to-end streamlined financial systems through integration 

With advanced data validation mechanisms and powerful features, Docsumo delivers all these advantages to your organization. It further offers enormous value in the following ways.

a. Make informed decisions

Bank statement verification software Docsumo’s AI-led algorithms can signal potential red flags like overdrawn accounts, bounced checks, or a history of overdrafts. This information helps you make better decisions regarding loan approvals.

b. Eliminate risks

Docsumo’s AI recognizes changes in the arrangement of data in statements and misalignment. When the exceptions are located, they can be routed for manual validation through custom workflows.

c. Move beyond time-consuming templates

Docusmo’s machine learning algorithms learn different formats and adapt to them faster than humans. When a new bank format is captured, the system learns from it. The software will automatically create a template for that format the next time. This eliminates the need for new template generation every time a new bank statement format is processed. 

d. Experience ever-evolving accuracy

With its cognitive data extraction capability, Docsumo deciphers behavioral patterns from different bank statements. The results become more accurate as the system processes more statements. Over time, the software’s database has various financial information specific to your organization. The system verifies statements with unparalleled accuracy.

e. Derive maximum ROI

Docsumo is designed to make integration easier than ever. Export your CSV or JSON files across other systems. In addition to pre-built APIs, you can create custom APIs using data unique to your organization. By sending outputs drawn from bank statements to your existing software (Zoho, Quickbooks, Xero), you can boost efficiency without investing in add-ons.

Move from inefficient methods to intelligent systems. Automate your bank statement verification with Docsumo. To know more, sign up for a free Docsumo trial. 

Additional FAQs: Bank Statement Verification Software

1. How does bank statement verification software integrate with other financial tools?

Bank statement verification software can integrate with other financial tools through third-party APIs for downstream processing. APIs enable the auto-extraction of details from bank statements. They support input and extraction of data from third-party business sources such as Zendesk, Google Sheets, Quickbooks, etc, to automate your document processing needs. 

2. What are the long-term cost savings of using automated bank statement verification software?

The long-term savings include costs related to reduced labor, storage, and processing time, which leads to a quicker turnaround time. Advanced document AI software for bank statement verification can also flag discrepancies in data. 

3. Is the data processed by bank statement verification software secure?

Bank verification software uses encryption protocols to secure data during transmission and storage. The servers adhere to data privacy regulations, like GDPR, HIPAA, and ISO standards. Look for software that allows role-based access. 

4. How long is the processing time with bank statement verification software?

Verification software takes a few seconds to a few minutes to process the data, depending on the number of pages and the document type. 

5. What types of bank statements are supported by verification software?

Bank statement verification software supports formats such as PDFs, images, Excel files, CSV files, EDI/SWIFT statements, multipage statements, and proprietary formats.