For years now, fintech companies have been using the latest innovations in tech to solve financial problems, but plenty of them are still losing money year in and year out.
How could this be?
Well, as it turns out, one of the reasons for this is that manually extracting financial information from receipts is a massive resource drain that is often overlooked.
The problem is the massive transaction volume. Even for smaller, local businesses, manually extracting vendor names, item details, amounts, and transaction dates requires lots of staff to handle data entry - and the more humans in the loop there are, the more points of failure.
This is where Receipt OCR (Optical Character Recognition) technology can help.
These automate the process of extracting critical financial information from receipts, removing as many humans in the loop as possible. This saves you from inflated operating costs and errors leading to inaccurate financial forecasting and helps you comply with regulatory requirements.
There are many OCR solutions on the market, but guess what? It's not the 1970s anymore.
Let's use TAGGUN to demonstrate why going with the next-gen approach - with AI-powered, cloud-based OCR technology - can help your fintech company overcome the traditional pain points related to receipt scanning and the limitations of traditional OCR software.
Why Go For An AI-Powered Solution?
In 2023, using OCR to scan receipts isn't a big deal - you can even do it using your phone. The mode of delivery is also not the issue - your users take pictures of a receipt and upload the image to your company's app.
Your servers can then read the receipt, extract relevant information such as the amount, the transaction date, time, etc. and save the data. Now, you are free to use that data for different purposes.
The real issue is that conventional OCR can scan a document and extract a giant wall of text for you, but using it on receipts will not give you useful information as a business. In the end, you'll still have a bunch of text that your employees need to go through manually.
Template/Zonal OCR remedies this somewhat but does not scale, as you'd need to create separate templates for the receipts of each new store or vendor.
There's a need for something more, then. Something that understands the context of receipts without blindly extracting everything it sees. Something that scales well saves you costs in time and manpower and remains accurate without needing custom templates.
This is the need that TAGGUN's AI-powered solution addresses.
Automating records keeping and accounts payable, and implementing loyalty programs, for example, are two of the many ways fintech companies can leverage TAGGUN to promote their products and services and incentivize consumers to use them.
→ Learn more about the benefits of using TAGGUN for accounts payable automation.
How TAGGUN Works
TAGGUN is powered by a combination of AI, machine learning, regular expressions and fuzzy matching to extract information from receipts. Meaning you can easily identify and extract information - such as invoice numbers, amounts, and dates - with high levels of accuracy and automate the data-entry process.
When scanning receipts, fintech companies frequently need to invest in expensive hardware that must be maintained and updated, resulting in additional IT costs to hire staff with the necessary know-how to manage such infrastructure.
TAGGUN, however, offers a cloud-based REST API, so there's no need for your company to bring your own dedicated hardware or worry about additional resources and maintenance. Instead, you can easily scale your usage as needed and have access to the latest features and updates without additional IT costs.
Scan a receipt, send the image over to TAGGUN's API endpoint, and get back actionable data in a structured JSON format, ready to consume in anything - it's as simple as that.
In addition, TAGGUN is highly flexible and can be integrated into a variety of systems, and can have multiple use cases, whether that's a desktop software, mobile app, or browser-based solution.
So, whether you're looking to improve your accounting software, expense management, or document management systems, TAGGUN can help you do it.
Benefits of Using an AI-Powered Receipt OCR in Your Fintech Company
Now that we have a handle on the basic features of TAGGUN's AI-based receipt OCR technology let's look into what specific benefits it can provide to your fintech company.
1. Highly Accurate, Automated Financial Record Keeping
Manual data entry and verification need hundreds of man-hours. Not only is this a tedious, time-and-resource-consuming process, but more importantly - humans are fallible - this can and will lead to inaccuracies in the data.
Records of financial transactions are key to forecasting a company's business plan and ensuring compliance with regulatory laws.
It goes without saying, then, that errors in financial record-keeping can land a company in hot water.
TAGGUN also makes use of statistical benchmarks to constantly work on and improve its own accuracy. All of this ensures that an extremely high degree of accuracy is maintained in the data obtained.
TAGGUN's API can extract key information from receipts and invoices of any format, in any language, and include any relevant fields you want - vendor registration, total amount, tax amount, date, reference number, invoice number - and even custom ones, once you get in touch with TAGGUN's engineers.
2. Preventing Fraud
Fraudulent receipts are one of the biggest challenges fintech companies face in manually entering data from bills and receipts. According to a 2021 report by The New York Times, the global cost of loyalty program fraud exceeds one billion dollars. Due to invoice fraud, Amazon ended up paying $19 million in 2020 for products that were never actually purchased.
It is vitally important for your fintech company to detect and remove fraudulent receipts and invoices.
Now OCR technology, in general, is pretty helpful when it comes to fraud detection. You can easily check for anomalies, such as Photoshopped receipts, and automate the fraud detection process.
The problem, though? Traditional OCRs use template-based security measures. These are able to run validation checks but do not take into account the possibility that an original invoice may have been submitted for reimbursement more than once.
TAGGUN's AI-powered OCR solution, however, operates by generating a digital signature, called an MD5 hash, for each receipt added to the system. By comparing the hash values, the system can automatically flag any duplicates for further review, saving time and effort for the Accounts Payable and Fraud teams.
Moreover, TAGGUN can also validate receipts as proof of purchase for suppliers. This is done using the Levenshtein Distance of keywords to accurately determine the validity of the receipt for a rebate campaign.
Thus, not only do you get the usual benefits of receipt scanning software - such as Photoshop detection and EXIF/metadata analysis - but it also fills in the gaps where traditional OCR technology falls short.
Learn more about improving fraud detection using TAGGUN: How to detect and avoid fraud using AI-powered OCR
3. Scalability and Flexibility
Let's rewind a bit and go back to what we said about fintech companies needing to invest in IT infrastructure and hardware for receipt scanning.
Such an approach requires your own on-premise AI/ML hardware, which requires its own upkeep and maintenance, some of which might need specific hardware vendors, which, in turn, requires hiring more skilled professionals. This kind of traditional scanning architecture is a nightmare regarding scaling.
Here's where TAGGUN's cloud-based REST API technology comes in handy. It allows for easy integration with other systems, eliminating the need for both on-premise hardware and additional resources for maintenance and updates. This makes it very easy to integrate - all you do is make REST API calls - and scale usage as needed to adapt to changing business needs.
Moreover, since TAGGUN's data is in a universal format - JSON - you can easily integrate TAGGUN with your existing expense management and accounting software to offer OCR and automated receipt scanning capability to your users.
Additionally, TAGGUN supports all popular file formats, including JPG, PNG, GIF, and PDF, making it flexible for any format for receipts and invoices. Whether it's an over-the-counter sales receipt or a digital receipt in a PDF format, TAGGUN can handle it for you.
Conclusion
Fintech companies are facing major challenges with regard to manual data extraction from receipts which can be not only error-prone but also involve huge organizational overhead and even increase the risk of fraud.
To solve this, fintech companies can leverage AI-powered OCR technology which is especially beneficial when it comes to scaling - an arena where traditional OCR solutions can usually fall short.
An AI-powered OCR tool, such as TAGGUN, can automate the entire process of extracting critical information from receipts and mitigate concerns ranging from resource drain to fraud.
All in all, upgrading to an AI-powered OCR solution is worthwhile if you want to cover all of your bases regarding receipt scanning issues and help your fintech business reach new heights.
You can try TAGGUN out for free here
Further Reading
Improve Fraud Detection Using AI-Powered OCR
Automating Accounts Payable: Template OCR vs. AI-Powered OCR with TAGGUN
