Shifting reconciliation up from manual to automated

There’s no denying the hard work that goes into the comprehensive automation, consolidation and streamlining of reconciliation solutions. But once the resulting efficiencies have been obtained by an institution, is the job done? Well, not quite.

For banks, efficiency certainly has the potential to be the gift that keeps on giving, helping reduce operational costs and risk on a long-term basis. Its continuance, however, relies on ongoing commitment. In fact, leave any automated process to its own devices and, over time, the level of automation will actually degrade.

Without intervention or monitoring, this natural reduction in efficiency can occur for any number of reasons, from stale account data and lack of upgrades to internal systems to changes in external data feeds or regulation. To continue at an optimal level and achieve true operational maturity means constantly revisiting and analyzing systems and processes. With this in mind, progressive banks are beginning to focus much more on business process re-engineering and analytics – a point highlighted in a recent blog post from CEB TowerGroup analyst, Gert Reaves.

Banks must not only make sure they continue to achieve efficiency through automated reconciliation solutions and exception management software, but also try to find opportunities for further improvements. Put another way, there’s always a chance that the efficiency levels of today may not be as high as they could be. A 96% automated matching rate for nostro reconciliation, for example, could possibly be improved upon; just a 1% improvement would actually mean a 25% decrease in the number of exceptions.

It is therefore clear that the ability to identify opportunities for further automation through enterprise reconciliation software can create significant value for organizations. Optimization can also be a question of ensuring that end-to-end  process automation remains synchronized with changing data flows, counterparties and systems to deliver reliable long term cost and risk reduction.

The success of banks’ “review and refine” strategies relies on capabilities in three key areas.

1. Access to high-quality management information: the detailed metrics that are critical to tracking and trending the effectiveness of resources, rules, processes.
2. Ability to configure flexible business rules: This allowa line of business owners to create and manage their own rules and workflows, to in turn reduce dependencies on IT experts.
3.  A more interactive, dynamic approach to managing processes and performance: This is through online dashboards and real-time alerts or notifications.

By approaching optimization not as a project but as a sustained process, clever banks can ensure the continued agility and efficiency of their consolidated reconciliation solutions. This in turn will strengthen their ongoing ability to manage growth. The operational challenge is to start as they intend to continue, with a view to on-going improvement, and choose efficiency not just for now but for good.