How To Automate Bank Statement Analysis With Cygnet Fintech

By Author: Aakash Parikh
Total Articles: 9
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Customers' loyalty to banks has significantly dropped as a result of today's informed and sophisticated customers. They contact lenders providing the best lending terms and interest rates. As a result, a person's bank account may be with a different bank from the one from which he has requested for the loan. Before deciding to offer a loan, banks must evaluate their bank statements. To save manual labour and save man-hours, about 95% of banks employ bank statement analysis software.

Due to the lack of automated bank statement analysis, the banking sector is confronted with difficulties because many borrowers hold accounts at several institutions. In order to extract information from bank statement format and perform what is known as partially automated bank statement analysis, the existing system has to be provided with a bank name basis. Additionally, the extraction skills are subpar, which causes data loss and additional reporting inconsistencies. The overabundance of information being given makes it difficult for users to complete tasks. All of these result in bad judgements and the distribution of subpar credit lending.

Essential ...
... Information captured from bank statements

The bank statement is typically the first document that gives us a glimpse into the finances of a potential borrower. All of the verified financial transactions made to or by our borrower are provided to us in the bank statement. This provides detailed information on the borrower's cash flow and aids in combining inflows and outflows to create a broad picture of people's financial health, including

How much of a balance does the borrower typically keep?
What is their salary?
How much do they spend?
How many of the presented checks bounced?
What EMIs are they consistently paying?

While the study of the bank statement may provide us with the answers to the questions above, the data revealed only serves to emphasise a portion of the bigger picture. Many things are unknown to us, including

How many EMIs is the borrower responsible for?
Are they using their credit cards to cover the total amount owed?

Has any of the prior debt been forgiven?
Is the bonus or other payments included in the salary received?
The income reported is it supported by the tax return?
Does the claimed turnover in the instance of enterprises match the GST filings, and are the taxes on such turnover truly being paid?
We need to examine bank data from additional angles in order to arrive at a firm conclusion.