Automated reconciliations: build the business case for change

Reconciliations: Build the business case for change

Trade reconciliation is a mature function, long accepting of its place as a costly, yet necessary, part of the trade lifecycle that is set to only achieve incremental change. Fortunately, there is appetite for transformational change in the reconciliations world and a strong business case for automated reconciliation can be made.

Looking specifically at the Xceptor data automation platform, we explore the benefits that automated trade reconciliation can offer trading companies, and how to go about building a business case for changing the trade reconciliation process, leveraging automated reconciliation software. 

Building a business case for automated reconciliation

An approach that prevails across the industry is to tinker with existing trade reconciliation processes to optimize what is already in place, perhaps achieving some incremental automation. This approach is understandable, particularly in recent times, but now is the time to step back and make a difference in the reconciliation function and how it operates and automates.

Taking a data-first approach

The boldest move in changing your reconciliation process would be to take a data control approach. When exploring how to put data at the forefront of their reconciliations, your operations team should ask:

  • When, where and how does our data touch the trade cycle?
  • How can we minimize reconciliations throughout the whole lifecycle by focusing on the data right at the start of the process?
  • How can we reimagine the process, so we leverage data automation throughout?

Knowing when, where and how data is used throughout the trade and reconciliation lifecycle can help companies identify opportunities for optimization using automation. After all, fragmented data, sitting across all sorts of systems and spreadsheets, is still a key cause for low automation.

Taking a process optimization approach

Still transformational and less incremental, is to do a business process review and focus on process optimization and harmonization. What often stops reconciliation automation in its tracks is not the ‘standard’ reconciliations, but that last 20% that requires subject matter expertise to interpret. 

Consider if there are any key dependency bottlenecks that repeatedly come up in your reconciliation process – can automation help address these obstacles? The right automated reconciliation solution should be able to help you optimize your process by effectively addressing these dependencies. 

Forrester TEI study of Xceptor's automated reconciliation solution

Xceptor’s data automation platform is helping companies automate their reconciliation processes, and the results speak for themselves. Let’s start with some numbers a recent Forrester TEI study on Xceptor came up with. Forrester’s TEI study is a widely accepted industry standard methodology that provides a cost-and-benefit analysis framework around the use of a particular technology and demonstrates the business flexibility and associated risk.

The example numbers are based on real-life examples from Xceptor customers with between two and more than ten years of experience using various components of the Xceptor platform. Forrester created a composite organization of a typical Xceptor client, Deagon Capital, to illustrate the quantifiable benefits and costs of investing in Xceptor. Based on the characteristics of the interviewed customers, Deagon Capital is a global financial institution with a 50,000-strong workforce and 500 employees working in the global operations team.

Quantified benefits of Xceptor

Improved trade reconciliation productivity (£1,535,394). Prior to using Xceptor, an average employee in the trade reconciliation team spent about 50% of their time engaged in manual work to support the front office. Xceptor’s reconciliation solution fixes trade reconciliation data at the outset, ensuring any reconciliation steps needed are simplified, so with the use of Xceptor, these employees can now build their own reconciliation workflows without heavy reliance on the IT team. Overall, the composite achieved a productivity gain of 30% with the reduction in manual work.

Cost savings due to retirement of legacy solutions (£1,259,609). With the adoption of Xceptor, Deagon Capital retired two legacy solutions, yielding cost savings of nearly £1.3 million.

Unquantified benefits of Xceptor

The interviewed organizations experienced the following benefits:

Enhanced employee experience: The deployment of Xceptor involves doing away with manual, time-consuming processes and the use of complicated, non-user-friendly systems, improving employee experience for both the trade operations team and the IT team, enabling upskilling to focus on higher-value work.

Improved cross-team collaboration: The Xceptor platform means that the trade operations and IT teams can develop or modify trade operations applications in a more collaborative and agile working model. Additionally, business users are not only able to configure the solution in an audited environment but also decrease re-key manual risk.

Increased process transparency and operational control: The creation and maintenance of automation and digitization processes in one single platform provide oversight of the multiple trade operations processes running in the organizations, creating great process transparency and therefore, control.

These numbers will, of course, be different depending on the size of your organization, the scale of the project, as well as the appetite for the scale of change. Our team has an in-depth ROI calculator which can rapidly build out some numbers more pertinent to your business case.

Embracing change: choose your approach to reconciliation

Only a shift in mindset will bring about true transformational change in trade reconciliations, but the key to all of this is, indeed, change. By embracing an enterprise data automation platform that has both a powerful data engine and broad process digitization capabilities under one roof, companies can automate their reconciliation processes at their own pace. Be it transformation with a data control and quality approach across the full transaction lifecycle or incremental improvements, both can bring tangible business rewards that will empower the people in your teams to deliver higher-value output.

Read the full Forrester TEI case study for more information on how Xceptor enables automated reconciliation, or get in touch with us to learn more about our platform.