How To Automate Background Verification from Bank Statements?

Background verification is a crucial step in ensuring that individuals are genuine. It is required in a wide variety of sectors. Understanding a person's financial behavior goes a long way regarding background verification. That’s where bank statement verification comes in.

In this blog, we will explore how to do background verification with bank statements. Also, how are new technologies making it more accessible?

What is Bank Statement Background Verification?

A bank statement can give a great deal of clarity about a person. Confirm the credited salary, employment details, and financial standing with the bank statement. 

Background verification by employers, financial institutions, and renters is common. It assesses the financial stability, credibility, and reliability of a person. It is crucial to verify bank statements for better background checks of a person.

Bank statement background verification requires bank statements and other financial documents. First, cross-check the bank statements with the other financial documents. Then, they need to be cross-verified with respective banks to prove genuineness. This process can be time-consuming but can help you avoid future troubles.

What is the importance of Bank Statements Verification in background checks?

Bank statement verification evaluates an individual’s financial history. It gives insights into an individual's income, expenses, debts, and financial behavior.

All employers, financial institutions, and established renters conduct a background check. It can be educational, financial, federal records, and family background. But, we are focusing on the financial aspect of background verification. It verifies the authenticity of the bank statements and proves their financial health. 

Similarly, it will help verify the candidate’s present job details for employers. The salary package and tenure of the current job are some information you can extract.

Let’s try to understand the importance of bank statements in background verification;

• If a person is financially stable, they will be less stressed, and it will be reflected in your interaction with them. As a stakeholder, choosing the right person for a job, lending money, or letting your property is crucial. It will ensure a stress-free job performance and on-time payments.
• Bank statements can verify the claims made by individuals about their income and sources. Any discrepancy in the stated income and actual bank transaction are red flags to look for. 
• To identify any potential fraud or discrepancies in an individual’s claims. If bank statements are altered or faked, bank statement verification will reveal it. Strict background checks with advanced technologies must be in place to detect and prevent document fraud.

What to do before Background Verification using bank statements?

If you plan to do background verification using bank statements, keep a few things in mind. Let’s look at three of the most important things you must ensure before this.

• Bank statement background verification requires the consent of the person. Get their consent through a signed form. It will ensure your compliance with privacy laws. It will also show the willingness of the individual in the process.
• Inform the individual about the process and what information will be accessed.
• Understand the legal restrictions surrounding the collection and use of financial information. Make sure the process remains ethical.
• Clearly define the need for background verification, whether financial stability, creditworthiness, or proof of employment.
• Collect personal details like full name and date of birth, and decide the time duration of the bank statement you need for verification.
• Apply a secure data handling process. Keep the financial information of the individual secure and prevent unauthorized access.
• Engage legal counsel if necessary. It will ensure that the background verification process complies with all the laws.

How is Background Verification done with bank statements?

Verify bank statements manually or digitally. The manual process is time-intensive and draining. On the other hand, the digital method gives accurate results in less time. However, bank statements will not be available in a machine-readable format. It needs conversion to a digital format for conducting a thorough background verification.

New technologies are available to accurately extract data from images or PDF documents in any layout. Optical Character Recognition (OCR) and Natural Language Processing (NLP) can efficiently extract relevant information from these documents. 

Digital bank statement preparation involves acquiring, organizing, and managing information from bank statements. Digitally preparing it will streamline the process, enhance efficiency, and ensure data security. 

Manually preparing the document is still prevalent. But it could be more efficient and time-consuming. And it’s high time that you make the switch to digital.

Manually verifying bank statements for background verification is a lengthy procedure. It requires manual data collection and entry after looking at physical bank statements. It is prone to errors and is time-intensive. 

Next, the collected data needs verification from the banks or financial institutions. It requires direct communication with bank personnel and will involve a delay.

After the cross-verification, the step is to analyze the verified data to assess the individual's financial health. Then, again you have to generate a comprehensive report. All this hassle can be avoided if you opt for data extraction software.

How Automating the Background Verification Process Works?

Nowadays, every industry is adopting digitization and automation. Data extraction is no different, and new applications are being launched.

Let’s see how automating the bank statement data extraction for background verification works;

1. Digital consent: Automation allows consent to be collected securely through online platforms. Digital signatures and online consent make it easy for the individual undergoing verification. It will also ensure your compliance with laws regarding background verification.
2. Upload the documents: The bank statement format depends solely on the bank. Upload these documents into the data extraction software of your choice.
3. Technologies for data extraction: Optical Character Recognition (OCR), AI, and Intelligent Document Processing are all vital technologies to extract information from various documents, including bank statements. This eliminates the need for manual data entry. The OCR algorithm can extract the data and convert it into a machine-readable format. It can convert the document into XML, CSV, or JSON as required.
4. API Integration:  Integrate data extraction and processing into financial applications and systems. This allows real-time access to structured data. It eliminates the need for manual verification. Then, download the machine-readable document or send it to other software or databases.
5. Identify trends with ML: Machine learning models are in place to identify trends and patterns in financial behavior. It will give an accurate and quick analysis of the bank statement data.
6. Secure cloud storage: Bank statements have sensitive information that needs security. With automation, you can get secure cloud-based storage solutions.
7. Easy review and human intervention: Choose an easy-to-use interface for data extraction software. It allows easy human intervention when necessary for manual review.

Docsumo is one of the best data extraction software that uses OCR, ML, and AI. It offers an advanced deep-learning algorithm for automatic data extraction. Do it with minimal human interaction and guaranteed accuracy. Docsumo can extract data with high accuracy, even if the document is low-quality. 

Best practices for managing extracted data from bank statements

Bank statements have sensitive information that must be handled with care. Effective management of bank statements will ensure accuracy, security, and compliance with the law. We have gathered some of the best practices for managing the extracted data.

• Safeguard the extracted data with encryption during transfer, storage, and retrieval.
• Limit the number of people who can view, modify, or extract data from the documents. You should have strict access control in place for this.
• Choose secure on-premise or cloud-based storage solutions.
• Implement regular and automated data backups.
• Review the extracted data against original bank statements to identify inaccuracies.

In conclusion, background verification is evolving with automation and the integration of software solutions. The shift to automation improves the efficiency and speed of the verification process. It also enhances the accuracy and reliability of outcomes.

As technology continues to advance, more sophisticated tools are in the making. It has made background verification a seamless aspect of decision-making. Embracing these advancements ensures that organizations stay resilient in the future.