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What is Optical Character Recognition (OCR)?

What is optical character recognition (OCR)

With emerging technologies, online fraud vulnerabilities are limited to the digital assets of businesses. Still, they also target the sensitive data of customers. No matter what industry you’re in, online identity fraud can negatively impact your business.

Consequently, organizations must have an advanced identity verification system to keep the risks of fraud at bay. However, an identity verification system should verify users against their information within a few seconds. Fortunately, OCR technology can play a significant role in it. The technology equips identity verification solutions with instant capture features, improving their capacity to recognize and validate more IDs in little time.

Let’s get to know what exactly OCR is, where it’s used, and why it is an excellent source for identity verification.

What is OCR?

If you ever worked in an organization equipped with a document scanner, you are probably aware of OCR basics. OCR, or Optical Character Recognition, is a technology that helps you recognize text inside images, photos, and scanned documents. This advanced technology is used to convert almost any image having text (printed, typed, or handwritten) into machine-readable text.

OCR technology gained popularity in the early 1990s, particularly when digitizing historical newspapers. Since then, this technology has undergone major improvements. Modern solutions now have the capability to achieve near-perfect OCR accuracy.

The History of Optical Character Recognition

The OCR technology traces its roots back to telegraphy. Physicist Emanuel Goldberg invented the first OCR machine during the 1st World War that could recognize and convert characters into the telegraph. In 1920, Goldberg went one step further and developed the 1st electronic document retrieval equipment. At this time, recovering records from film spools was not possible. 

In 1974, Ray Kurzweil founded Kurzweil Computer Products, Inc. Their omni-font optical character recognition product could recognize text printed in almost any font. Kurzweil believed that the most valuable use of this technology would be to help the blind, so he developed a reading machine that could read text aloud in a text-to-speech format.

In 1980, he sold his company to Xerox, who saw the potential to advance paper-to-computer text conversion and wanted to commercialize the technology further.

Before OCR technology was available, manual retyping was the only way to convert documents into digital format. This process was time-consuming and led to inaccuracies and typing errors. Today, Optical Character Recognition technology is used in several industries for various purposes.

How Does OCR Work?

A basic OCR engine stores various font and text image examples as templates. Then, it uses special algorithms to compare the text images with its own collection. It checks the characters one by one to see if they match. When the system finds a full word match, it’s called optical word recognition.

An OCR engine not only examines the content of a document image but also analyzes its structure. It breaks down the page into different elements like text blocks, tables, and images. The lines of text are further divided into words and individual characters. The engine then compares these characters with a collection of pattern images. After considering all possible matches, the program finally presents you with the recognized text.

OCR technology offers a key advantage by simplifying text searches, editing, and storage, which, in turn, streamlines data entry. It allows businesses, individuals, and other organizations to store files on various devices like PCs, laptops, and gadgets, ensuring continuous access to all their documents.

Verify customers identity within 15 seconds. Schedule a free identity verification demo here.

Advantages of OCR Technology

Saves Time

OCR technology is helping individuals and businesses minimize manual steps in data management. Nowadays, companies receive a large number of documents every single day. Working with them manually is not only time-consuming, but you often end up with some errors. OCR-enabled equipment lets companies collect and verify consumers’ data more efficiently, which improves the overall workflow.

Increases Customer Satisfaction

A lot of businesses don’t realize this, but OCR technology also improves customer experience, which naturally contributes to customer loyalty and retention. Customer support staff can access customer personal data and process it quickly with the help of OCR. Also, OCR processing enables support staff to give clients a rundown when they call to make inquiries.

Produces Accurate Translations

As we’re living in an interconnected world, every small and big business needs translation tools to manage a broader range of languages. Well, OCR is capable of doing that. It can translate different languages and give you accurate information. Not only it saves you time but also money on hiring a translator.

Improves Security

Security is a significant concern for all businesses that manage the digital information of their consumers in any form. The good thing is that state-of-the-art OCR technology is programmed to stop fraud attempts by comparing the provided data with data stored in the database.

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Use Cases of OCR in Different Industries

Banks and other Financial Institutions

Banks and financial institutions are the primary consumers of OCR technology. They use it to verify customer records, monthly statements, and signatures by scanning them through a tool or an app using OCR technology. Technology also played an essential role in modernizing (from paper-based to entirely digital) the banking industry.


OCR technology is helping the hospitality industry in plenty of ways. It allows restaurants and hotels to speed up response times, improve productivity, and enhance customer satisfaction. There are many uses of OCR in the food industry, from the check-in process to generating bills.


We don’t notice, but Optical Character Recognition technology also makes our travels more comfortable than ever. Today, the majority of airports use OCR for security and data storage. From booking a flight to scanning a passport, technology has been used to make the traveling experience frictionless.


The healthcare sector is also using OCR technology to accomplish various time-taking jobs within a few minutes. With a few clicks, medical staff can access essential patient data such as past medical records, treatments, medication, or illnesses. Besides this, technology has also been used to keep up-to-date with logistics and consumables.

These are not the only industries and sectors where OCR technology has been used. It wouldn’t be wrong to say that technology has become part of daily life. Even our smartphones also feature OCR, which helps us convert pictures and images into editable documents.

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OCR Technology for Identity Verification

Like other industries, the identity verification industry also leverages OCR to make its verification process fast, accurate, and smooth. The technology has become a prime ID verification source because of its remarkable data extraction feature.

OCR can extract customer information such as name, date of birth, ID card number, address, gender, and other personal details in no minute, automatically reducing processing time. Besides this, it demands very little information from the end-users – they only need to show their ID card in front of the OCR device.

Know Your Customer (KYC) Workflow with OCR:

  • The customer provides identification documents like a passport, driver’s license, or ID card for verification.
  • OCR technology scans and extracts text from the provided documents.
  • The extracted information is then processed and compared with the required data fields.
  • The system validates the accuracy of the extracted data and checks for any inconsistencies or errors.
  • If the data matches the required criteria and is deemed accurate, the KYC process is considered successful.
  • Once the KYC process is complete and the customer’s identity is verified, the business can proceed with its services or transactions.

Since there is very little human involvement, the chances of errors are quite low. However, if you find an error, you can manually correct it.

We can say OCR is an amazing AI-enabled technology that is automating the identity verification process to a great extent as it auto-fills from documents to a verification system.

Many reputable identity verification providers have employed OCR in their ID detection systems to automate their processes.

iDenfy is one such provider. Our ID document detection system is equipped with OCR technology that can scan and auto-fill all the vital information from an ID document, such as name, document number, nationality, gender, etc., in less than a second. Not only does it make the process smart and fast, but also 100% accurate.

Do you need an advanced verification system that can speed up the process of information collecting and verifying it? In that case, don’t hesitate to book a free demo.

This blog post was updated on the 20th of July, 2023, to reflect the latest insights.
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