Investing in the Excellence of Reconciliation Services

For banks, investing in a centralized reconciliation factory has become a popular way to build a best-practice reconciliation environment. Time after time it's also proven to be a wise and worthy investment: introducing new levels of automation and efficiency, and reducing time to market for new business processes. But reconciliation excellence requires more than a point-in-time investment.

To bring reconciliations to the next level, it's just as important to look beyond the initial introduction of reconciliations automation as it is to get the setup right. In developing a true reconciliation center of excellence, a bank needs to recognize that ongoing optimization is the key to long-term success.

In other words, investment in automation shouldn't stop at the building stage. In redefining the reconciliation service they provide to internal customers, banks also need solutions that help them get the best from the reconciliation environment on an ongoing, long-term basis. After all, the day-to-day execution of reconciliations represents a much greater proportion of costs than the upfront creation of new processes.

The reconciliation factory should ensure that the optimal automation and other benefits that it enjoys on day one are carried through in its everyday performance. To this end, robust monitoring, trending and analysis capabilities can provide just the enterprise-wide, real-time view of the reconciliation service that is critical to ensuring its continued efficiency and the satisfaction of the bank's lines of business.

Without such vigilance and insight, the initial high levels of automation will degrade over time – and so will the standards of the reconciliation service. A recent survey found that only 17% of banks have an automated means of monitoring reconciliations at the enterprise level. It is perhaps no coincidence that, in the same survey, most reconciliation teams said that fewer than half of their enterprise reconciliation needs were currently being met by the systems and processes in place.

To run an optimal service, bank reconciliation factories are required to monitor the execution of hundreds or thousands of scheduled activities. These include data pre-processing, data imports, translations, matching, enrichment, duplicate checking, reporting, workflow and more. It's not just the execution of these tasks that defines the success or failure of a reconciliation service, it's the service's ability to meet the expectations of its customers. Every reconciliation must be delivered in exactly the way that the relevant line of business requires it.

In many cases, such expected business outcomes are neither captured nor monitored. To remedy this situation, there must first be a clear definition of agreed outcomes for each line of business. The reconciliation factory then requires the ability to monitor – in real time – the execution of tasks against all agreements and expectations, and determine any deviations or issues. Critically, to drive improvements in service quality, the reconciliation service must also be in a position to respond to and resolve these issues rapidly. Over time, this should help reconciliations to become more efficient, and enable the service to make longer-term adjustments to automation and business processes.

Often, too much focus is placed on the building of reconciliation automation, and the ongoing execution discipline remains an afterthought. It's time for both disciplines to get the attention they deserve, as they are each important components of a successful reconciliation service. By excelling beyond the build and into the longer-term delivery of processes, a bank can create a true center of excellence for reconciliations.