Advancing retrieval-augmented generation for financial question answering

Abstract

Retrieval Augmented Generation (RAG) systems show promise for financial question answering, yet high accuracy on benchmarks such as FinanceBench (19% baseline, 32% updated) remains challenging [1] [8]. This paper presents a systematic, multistage approach to significantly improve the performance of the RAG pipeline for financial QA.We first established a robust curated baseline using Gemini-2.0, Docling parser, Google’s text-embedding-004, and a vector database, achieving an initial accuracy of 43%. Subsequent architectural and component-wise optimizations were then iteratively implemented. Firstly, a metadata filtering strategy, which utilizes a fine-tuned NER model to extract company names and years from queries, improved accuracy to 72%, demonstrating that targeted retrieval can simulate the benefits of a single-store per-filing approach [1]. Secondly, a hybrid chucking technique, which preserves the structure of the document and utilizes tokenization sensitive refinements, further increased the accuracy to 80%. Third, the implementation of a Hybrid Search mechanism, combining dense and sparse retrieval methods, advanced performance to 84%. Finally, LLM-based query expansion, which transforms user queries into answer formats, yielded a final accuracy of 88%. This research demonstrates that a carefully designed RAG pipeline, incorporating intelligent metadata filtering, layoutaware chunking, advanced similarity search, and query semantics enhancement, substantially improves financial QA, significantly outperforming existing baselines.