Does automated income document verification really work?

Payslips, bank statements and tax assessments remain a prevalent method for income verification due to their widespread use and acceptance by lenders. Yet, the process of manually reviewing income documents is time-consuming and hampers fast decisions. Automated document verification fills a crucial gap by providing a practical and accessible solution to streamline processes, reduce manual effort and expedite decision-making. 

We often encounter lenders who express their reservations about implementing automated document verification, citing reasons such as “We have tried OCR” or questioning whether they need a long-term solution. Let’s explore if automated income document verification actually works.

What sort of performance can be expected from an automated document verification solution?

Firstly: the coverage and success rates

Many clients want to understand “how many documents” Fortiro can automate, with previous OCR projects creating a perspective that extensive “templates” and “training” are required.

We’ve worked hard with the industry to create a unique solution for income document verification, which works out of the box without any templates or training. Our dedicated focus on solving this challenge has seen us achieve:

• Recognition of at least 95% of income documents lenders process (such as payslips, bank statements and tax assessments)
• Fully automated, straight-through processing of 80% – 85% of documents our solution recognises
• Ability to handle complex document types and verification rules even for less-than-perfect documents

Secondly: the hard stuff can’t be ignored

The statistics above are important because Fortiro sets itself apart by not cherry-picking easy documents, such as perfect digital documents.  All lenders understand that documents come from many places, so this performance is based on a wide spread of document types and over 65% being images (scans, photographs, screenshots, etc). Our comprehensive solution addresses all of the typical challenging scenarios lenders face on a daily basis.

Our solution handles complex cases that often arise during payslip processing, such as: 

• Dealing with different document formats
• Extracting data from poorly scanned documents
• Handling documents which are combined with other documents (in a single file)

OCR doesn’t solve the problem

A common misconception is that OCR technology alone can solve the problem. 

Unfortunately, income documents like payslips and bank statements lack standardised formats and layouts. Thousands of organisations and employers issue these documents in ever-changing formats. 

OCR solutions can tell you every word and number on those documents. But they cannot reliably tell the difference between the ‘net pay’ and ‘gross pay’ amount with the accuracy needed for automation at scale. 

Fortiro Accelerate is able to identify and understand the difference between each field on documents that come through – even if the system hasn’t seen a particular document layout before.

Our technology is designed to handle a wide range of document types commonly received by lenders, including, original documents, clean electronic copies, scanned documents, photos of documents and screenshots. This flexibility ensures that our solution can seamlessly integrate with existing document workflows.

Build Your Own (BYO) doesn’t solve the fraud problem

Using technology to accelerate providing your customers with an unconditional decision on their loan applications in minutes/hours can be problematic if the documents being verified are fake. Document Fraud is an industry problem and we are competing with increasingly sophisticated criminal syndicates and fraudster networks, who are increasingly using sophisticated document tampering technology and services to make money.  

In-house developed solutions are usually limited to perfect, digital documents, and so False Positives and Detection Rates particularly impact scanned documents and Broker originated applications.

Building a solution in isolation from the industry should help prevent document fraud for a limited set of customers, usually that financial organisations have identified, but it will not help prevent fraud that hasn’t yet been experienced by that organisation.

So, why should you be implementing automated document verification?

Transaction scraping, Open Banking, Singe Touch Payroll/Super data matching – there’s a whole host of other income verification methods – why should you consider investing in the automation of income document verification? 

The key considerations which our customers share with us as to why they’ve taken a Fortiro route are:

a) Borrower and broker experience

While it is true that alternatives are available, the importance of documents in certain contexts remains unchanged. In many cases, borrowers still rely on submitting documents to verify their income because it’s easy, they’re comfortable with sharing such data and most lenders will accept them. This also makes life easier for brokers. 

Documents offer a tangible form of proof that can be directly handled and controlled by the borrower. This can provide a sense of security, as they have more control over who has access to their sensitive financial information.

b) Minimal impact on current lending processes

Most lenders (if not all) have either gone through or are going through a digital transformation which enables them to integrate with different API-enabled services. Our customers are plugging our solution in to rapidly remove the manual steps associated with income document verification, without needing to substantially re-engineer their processes.

c) Effective verification often still requires documents

Transactional income verification can work for certain deal types and complexities, as well as applicant circumstances. Our clients often deploy our solution alongside other verification methods (such as screen scraping), however also share that they have “maxed out” the transaction-based auto-decisioning potential, and so require another method to verify customers who may be broker-originated or “new to lender”.

Are you ready for an automated solution?

Getting to the stage of implementing automated income verification capability is exciting and if done right, can deliver great outcomes for lenders.

If this is where you’re at in your journey, then get in touch to chat with us about the role we play in helping our clients to advance their loan processing and income verification capabilities.