What are the Risks for Banks that Fail to Embrace OCR Technology?
Remember Kodak? It was the largest camera company in the world, a Fortune 500 firm, and for a time, it had a monopoly on the American photography market. Despite inventing the first digital camera, the company eventually filed for bankruptcy in 2012 due to its hesitation to fully embrace the digital transition. The story of Kodak is a tale of the devastating consequences of the failure to embrace new tech.
Something similar is happening today in the world of global trade: new technologies such as Optical Character Recognition (OCR) have emerged to revolutionize the operations of their adopters. But this is only the beginning: OCR leads to digitization which lays the foundation for the full incorporation of Artificial Intelligence and digitalization. It is an on-ramp to competitive advantage.
The well-worn Kodak story tells us what the end result of a failure to innovate could be – but what does this mean in practice? What risks, penalties, and inefficiencies will a bank face if they fail to optimize their trade ops? Let’s first take a quick look at OCR.
What is OCR?
OCR (Optical Character Recognition) is an emergent technology with roots as far back as 1929. It presents serious benefits for the trade finance industry, enabling the conversion of physical documents, such as invoices, bills of lading, and other trade-related paperwork, into machine-readable, editable, and digital formats.
Overall, OCR empowers trade finance professionals to be more efficient, accurate, and compliant in their document processing and data management. The benefits of OCR extend beyond time and cost savings; they contribute to improved decision-making and enhanced customer experiences in the dynamic world of trade finance.
This is undoubtedly a disruptive technology capable of dramatically restructuring the trade finance ecosystem.
Risks, Penalties, and Inefficiencies of Failing to Adopt OCR:
- Expensive and slow document processing: Without OCR, the laborious manual process severely hampers document processing times. Lengthy processing delays hinder critical trade finance transactions, leading to frustrated customers, lost opportunities, and damaging the bank’s ability to seize time-sensitive deals.
- Pervasive manual errors and inefficiencies: Relying solely on manual data entry exposes the trade finance department to a higher frequency of errors, significantly impacting accuracy. Costly mistakes in transaction processing and compliance documentation can result in financial losses and regulatory penalties, tarnishing the bank’s reputation.
- Heightened compliance risks and legal consequences: The lack of OCR increases the probability of compliance violations. Non-compliance with stringent regulatory requirements could expose the bank to hefty fines, legal disputes, and the potential suspension of trade finance activities.
- Old-fashioned record-keeping and data retrieval: Out-of-date manual record-keeping leads to inefficient storage and retrieval processes. Important trade finance information becomes difficult to locate, negatively impacting decision-making, and increasing the risk of transactional errors.
- Plummeting customer satisfaction and loyalty: Cumbersome processing times and recurring errors frustrate customers. Dissatisfied clients seek alternative banking partners, leading to a substantial drop in customer loyalty and an irreversible dent in the bank’s reputation.
- Incapable of handling growing demands: The manual data entry process buckles under the pressure of escalating trade finance activities. The inability to scale efficiently results in significant backlogs, unfulfilled customer expectations, and lost business opportunities.
- Missed potential for automation and process optimization: The lack of OCR prevents the bank from embracing automation and digitalization opportunities. Consequently, the bank remains burdened by time-consuming manual processes, missing the chance to enhance operational efficiency and cost-effectiveness.
- Severe competitive disadvantage and market erosion: In a dynamic financial landscape driven by technological advancements, the bank’s resistance to adopting OCR technology leads to a swift competitive disadvantage. Failing to keep up with tech-savvy rivals results in lost market share, diminished market relevance, and diminished growth prospects.
If these risks and inefficiencies don’t sound appetizing, let’s have a chat about optimization, new tech, and 10x increases in processing speeds.
At TradeSun, we’ve produced the world’s smartest digital trade finance solution in collaboration with a top 5 US bank. We’re the market leader in OCR for trade finance, working right across the globe. We have a habit of trailblazing new tech for trade, having recently acquired the world’s first and only fully automated ESG risk assessment system.