How Advanced Bank Statement Analysis can help you Grow Your Business

If banks and other financial institutions can strategise and organise their analytical muscle, it is sure to become a true business disciplinary tool in the near future. The lending and borrowing business has been going on since the  beginning of time. However, one should not deny that this can be a risky  proposition to delve into.

With pros come cons and one should be able to be a fair judge of the situation – knowing and judging each side, fair and equal. This is where a bank statement analysis tool has been a boom in the Fintech space. Several banks have used these tools and benefited from them massively.

A large section of people in India do not have a proper credit history and they make the maximum population in the country. However, access to these tools has made it easier to analyse payment behaviours amongst lenders and borrowers and most importantly, has brought access to the non-banking sector of the community. In this article, we will find out how you will benefit by investing  in a bank statement analysis tool for your future transactions.

What Are The Use Cases Of Bank Statement Analysis?

It might look like bank statement analysis is only used by banks but that’s not the case. Various other parties can make good use of them.

To Assess Creditworthiness Of Borrowers: For any financial institution, the majority of the revenue operations be it commercial banking or retail banking comes from the lending of finance. Before lending any loan, a financial institution will always run a background check that speaks about the creditworthiness of the borrower. 

This helps them ascertain if the borrower is capable enough of returning the money in the stipulated period. Bank statement analysis helps the lender assess the creditworthiness of the borrower in real-time.

Identify Red Flags Of Customers: High cash deposit and withdrawals, negative account balance, crossing overdraft limits, and bounced checks are a few of the signs that might classify under the red flag zone. 

With the help of a bank statement analysis, one can eliminate time-consuming manual verifications, automate the identification of income and expense patterns and provide a customized output that leads to segregated information about balances, recurring income, and expenditure, bounced cheques if any, etc which determines the accurate financial health of the borrower making it easier for them to make informed decisions. 

Identify Tax Evaders: Income tax officers and other tax officials can figure out if all the transactions have been disclosed by the assesses using the bank statement analysis tool. This helps in understanding if all the returns have been paid per the transactions and eliminate any chance of tax evasion by the assesses. 

Fraud Checks For Vendors: If an organization believes that vendors or other parties have undertaken some fraudulent activities, they can check the same with a bank statement analysis tool. This also lets the organization know if the bank-provided PDFs have been tampered with in any form, in turn, maintaining a proper fraud check in place. 

Identify Banking Patterns Of Customers: If you are looking to derive and identify the banking patterns of an individual, a bank statement analysis tool can help you do so. Right from predicting and forecasting deposits to withdrawals, this statement provides you with all of the data.

This can help banks identify customers who take a longer time to pay back. Furthermore, one can also generate deviations between sales and bank collections. 

What Kind Of Analytics Can Be Generated By Bank Statement Analysis?

 “There is no reason and no way that a human mind can keep up with an artificial intelligence machine by 2035.” — Gray Scott

Every industry is using AI and other advanced technology to take its business forward and the finance industry is no exception. Moving forward towards profit is the only way we know and here are three analytics generated by bank statement analysis that takes us one step closer to achieving our goal – profit.

Enhancing Traditional P&L Levers: Even in an anaemic environment, bank statement analysis helps in accelerating growth. It helps in deepening detailed profiles of customers by assessing transactional and trading analysis which in turn improves the acquisition and retention of clients along with cross-selling and up-selling.

For instance – credit card transactional data used by a bank to develop offers give customers the incentive to make regular purchases from these merchants. This not just boosted the commission of the bank but also provided more value to its customer and added revenue to merchants. Moreover, this also helps the banks to enhance overall productivity and improve risk control through bank statement analytical aided techniques. 

Improving Risk Control: Through bank statement analysis solutions, banks can reduce their risk control. Banks can reduce fraud losses and save up to $400 million annually. Bank statement analysis solutions like Pirimid are helping financial institutions provide error-free analysis at a low cost. 

New Sources Of Growth: Bank statement analytics can help find new sources of growth and even newer business models. Furthermore, banks might also be able to generate data by sharing their customer analytics with their new ecosystem partners. 

What’s The Challenge & How Can Bank Statement Analysis Solutions Win Over Them?

Lending and borrowing money can get tedious sometimes. Every bank lists advanced technologies like bank statement analysis solutions as its top priority. Having said that, many challenges are met in the process like – 

  • Lack of uniformity
  • Cumbersome introspection of data
  • Tedious and time-consuming process
  • Reduce cost and frauds
  • File formats of bank statements 

However, there are various solutions that a bank statement analysis solution offers through its periphery through a good bank statement analysis solution tool. 

Like the one offered by Pirimid, the tool has helped various financial institutions reduce costs, automate the entire process, offer a greater assessment of risk, and keep tabs on default repayments. An impactful tool should help by offering the following features – 

  • An analysis solution via API should be able to integrate your existing system
  • Support all formats of bank statements by being able to convert these formats into machine-centric languages through Optical Character Recognition (OCR)
  • Provide accurate analysis
  • Saves time and cost by eliminating manual processes
  • Multitasking dashboard facilities
  • Should be able to comprehend complex transitions and provide the most comprehensive report
  • Should be able to provide cost-correlation with GST data furnished with it.

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