What is Document Understanding?

In a world where data is the new gold, the ability to use information efficiently is critical to business success. However, much of this data is hidden in documents that exist in unstructured or semi-structured form. This is where

Document Understanding comes into play, a technology that enables the automated reading, interpretation and subsequent processing of document-based data.

What is Document Understanding?

Document Understanding is a field of artificial intelligence that focuses on interpreting text and documents as a human would. It understanding the context, meaning, and intent behind words and using that information in a way that is valuable to business processes.

Why is Document Understanding important?

The importance of Document Understanding cannot be overstated, especially in areas such as compliance, risk management, and customer service. Through automatically understanding documents, organizations can:

  1. Save time: Manual processes are minimized or eliminated.
  2. reduce errors: Accuracy of data extraction and interpretation is improved.
  3. reduce costs: less manual work means lower labor costs.

Core components of Document Understanding

  • Optical Character Recognition (OCR)
    Optical Character Recognition (OCR) is the technology that enables text to be extracted from images and scanned documents.
  • Text analysis
    Text recognition is followed by text analysis, in which the extracted text is broken down into smaller units such as sentences, words or phrases.
  • Semantic analysis
    Here the text is analyzed in terms of its meaning. The system recognizes which information is important and which can be ignored.
  • Data extraction and classification
    Finally, the relevant data is extracted and classified in order to make it available in structured form for further analysis or business processes.

Application examples

Contract analysis: Automatic identification of key clauses in contracts.

Customer support: Fast and accurate response to customer inquiries by understanding the concerns in emails or chat messages.

Compliance monitoring: Review documents for compliance with legal requirements.


Document Understanding is a revolutionary technology that is fundamentally changing the way companies deal with their data. By automating the reading, interpretation and processing of documents, companies can work more efficiently and effectively. Best of all, you don’t have to be an expert in Machine Learning or data scientists to use this technology. There are tools like DocBits that make it easy to get started and integrate seamlessly with existing systems.

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document understanding

What is Document Understanding?

Image credits: Header- & Featured image by Freepik