Welcome to the next blog in our T+1 series, focusing on Reconciliations. This is part one, which aims to help you negotiate the complexity of the reconciliations process.
Reconciliation is an often overlooked and undervalued activity. Reconciliation is essential to client satisfaction and data consistency, where multiple copies of the same trade data are maintained across firms. Unfortunately, at many firms it remains a laborious and time-consuming task, with teams aggregating data and performing reconciliations manually using spreadsheets. This approach is risky, inefficient, and unsustainable and severely limits the firms’ ability to compete.
Complexity requires a single solution
Traditionally viewed as a middle and back-office process, reconciliations occur across any financial services enterprise with various levels of complexity. Traditional financial services reconciliations include positions, transactions, cash, and other categories that support essential components of a financial services business. There are many systems and tools to support these traditional and legacy reconciliations that may occur with high volumes (more than 1 million records a day) and run daily or even throughout the day. In addition to standard reconciliations using fixed reconciliation tools, there are often many reconciliations to be done “offline” using spreadsheets or macros. These may not make it into a larger reconciliations tool for several reasons.
- Unstructured documents: a traditional reconciliations tool may not have the ability to ingest PDF documents, semi-structured data, or even unstructured data (this may require the tool to run OCR or possibly NLP)
- Data curation: upfront data preparation or transformation may be needed to clean the data to avoid false breaks. An example of this might be pulling in an unsettled trades report as reference data into a positions reconciliation, to avoid false position breaks due to a timing issue
- IT development: setting up a reconciliation within a traditional tool may require a lot of time and effort, with input needed from IT to configure the required reconciliation rules
- “Non-standard” financial services reconciliations: such as Security Master reconciliations, regulatory reconciliations for SFTR or invoice reconciliation, may be forced into a data structure that is not representative of the reconciliation type (e.g. forcing an invoice reconciliation into a cash reconciliation)
Partly because of the complexity of this “offline” reconciliation space, firms often find themselves with several reconciliation providers. These are inefficient and expensive to maintain. They may find themselves paying multiple licence fees for legacy systems which are unfit for purpose, with platforms taking too long to onboard new reconciliations or being unable to handle the complexity and size of reconciliations required. This means that manual intervention is required to rectify failed transactions, causing delays, incurring costs, and exposing the firm to further market risk. Additionally, reconciliations teams need to wait for IT to create new and complex reconciliations, a process which can take several months.
The solution is to consolidate reconciliations onto a single platform like Xceptor’s which can offer:
- Speed to market
- Accuracy and error reduction in data reconciliation
- Flexibility and agility: one platform which can adapt to the needs of individual users
- Complex reconciliation capabilities
The cost savings and greater functionality provided by Xceptor will allow firms to run operations more efficiently and cost-effectively by managing all new reconciliations on one platform. Xceptor users can create reconciliations with just 10-12 days’ training, without relying heavily on overstretched IT resources, and re-assemble and update existing reconciliations and add new ones quickly.
Xceptor Reconciliations automates simple to complex reconciliations in a single platform, end-to-end. Our powerful data engine ingests and transforms any data and document type in readiness for reconciliation – quickly identifying exceptions for rapid remediation. Once the reconciliation is complete, the output can be shared with any internal or external system. Xceptor Reconciliations eliminates the need for multiple, disparate systems, resulting in reduced costs and a faster reconciliation process.
In part two of our T+1 reconciliations series, we will discuss how you can take control of data aggregation, validation and enrichment, ensuring accuracy from the outset, and paving the way for frictionless reconciliations.