ATM Reconciliations: sounding the alarm for potential risk

Banks are under pressure to deliver growth to ensure long-term survival. But growth initiatives of new services and products are dependent on the application of new operational processes, including reconciliation and exception and dispute management.

Here’s the catch-22 – growth represents both an opportunity and a challenge for banks. While innovation in the expansion of a bank’s offerings can spur growth, a failure to act fast and deliver supporting operational processes can prevent initiatives from going live or even cause the termination of projects. To further compound this, banks must also ensure that capital and operating costs, as well as project delivery risk, are kept to a minimum.

The search for growth has led Asian, African and Middle Eastern banks to a relatively new phenomenon which is transforming the retail payment landscape and the services of traditional payment channels. Over the last year mobile money and mobile payment volumes have increased dramatically, especially in Africa, Middle East and South East Asia. Banks in these regions are responding by providing greater levels of service through their on-line channels and increasing the capabilities of their traditional ATM and card networks. The net effect of these shifts is a dramatic increase in transactional volumes across on-line, mobile, card and ATM networks that require greater operational sophistication. The downside of this growth is apparent when looking at recent examples of ATM fraud, network and bank vulnerability.

With diversity and sophistication comes operational complexity. The current scope of ATM services requires an operational elegance that must sit behind the terminal. This needs to ensure customers are not only able to withdraw cash (across multiple currencies), but check statements, make deposits, top up mobile phones, and pay utility bills. The lynchpin of a solid supporting operational process is the provision of transparency and control over transactional flows. However, complexity breeds cost and encourages error prone and inefficient manual processes. It is no surprise then that the number one investment that banks believe they need to make to their ATM networks is not addressing risk, but reducing operational costs. Banks are, therefore, faced with two opposing forces when considering their ATM and card networks; the need to provide greater control and transparency across their networks, versus significantly lowering operational cost. It is here that reconciliation and exception management tools earn their salt.

Through the automated collection of replenishment, e-journal and network balance and transaction activity, validation of transactional activity, dispute and escalation management, and transactional analytics, reconciliation tools can now provide cost effective end-to-end delivery of accuracy and balancing for ATM and Card networks.

One bank in Asia Pacific that is leading the industry is Techcombank. The Vietnamese joint stock commercial bank has automated its cash, ATM and card reconciliations for increased business efficiency and growth. The bank’s priority is being at the forefront of innovation and sees reconciliation as a key way to do so.

This proactive approach is the future of Asian, Middle Eastern and African reconciliations. Banks are striving for ATM network processes that proactively identify and resolve issues and patterns. A predictive approach in guarding against failure gives banks the operational agility and maturity to maximise customer and market opportunities as and when they present themselves. Having a reconciliation solution that ‘sounds the alarm’ will help Asian, Middle Eastern and African banks seize these opportunities and also ease the operational headaches that could potentially stunt growth.