Automatic Reconciliation in Asset & Wealth Management

Sandy is a manager at an asset management firm.  One of the daily activities that she performs is to reconcile data from different sources like internal databases, bank statements, and distributors.  Majority of her time is spent in fetching, unbundling, and cleaning the data, whereas the actual reconciliation process takes only a fraction of the total time.  Even after completing the process, she has to rummage through siloed spreadsheets for reporting and auditing.  This anecdotal experience has been supported by a report from EY which states that up to 59% of resources of finance departments are spent on managing transaction-intensive, manual operations.

At the foundational level, reconciliation essentially is about comparing or matching at least two data sets.  The main objective of the reconciliation exercise is to unearth and resolve any inconsistencies in the compared records.

In reality, however, a significant amount of work happens a lot before even the reconciliation process can be commenced.  Data from different sources invariably comes in different formats which then need to be changed into a singular format.  Data from sources like distributors and payment gateways has to be unbundled from bulk settlements to pull transaction details at a very granular level.  And, then only, the data can be reconciled for any inconsistencies.

Softwares can completely automate not only the reconciliation process but also the pre-work that goes into data preparation.  They definitely lead to significant savings by reducing hours going into daily mundane work.  They also drastically improve other aspects like tracking, monitoring, reporting, data security, and auditing.

Major benefits of the automating reconciliation process are:  

Save Time

Automated reconciliation softwares are exponentially faster than manual reconciliation approach.  They can effectively cut down time spent at least by 99%.  Once the foundational work of formatting and matching the data is taken care of, other use cases like reporting and inter-team communication workflows can also be automated, leading to further improvement in time saving and efficiency.

Avoid Errors

Manual reconciliation as its name suggests is prone to human-induced mistakes, especially if there are a significant number of transactions.  Once set up, automated reconciliation processes get rid of any manual dependency, thus ensuring consistency in actions and results.

Reliable, Transparent Bookkeeping

Auto reconciliation softwares guarantee that all account history is documented and that there is a digital trail with accurate, consistent logs.  Moreover, the bookkeeping process also gets completely automated by directly inputting data into bookkeeping or accounting systems.

Curb Inconsistencies

One of the main objectives of the automated reconciliation process is to identify inconsistencies and help with auditing and compliance.  Record mismatches can arise due to many reasons like poor handoff between two entities and variable settlement times.  These inconsistencies then can lead to other issues like poor revenue collection and longer working capital.  Automated reconciliation processes thus help in curbing the inconsistencies and their snowball effects.

Control Access

Financial data can be required by the teams outside the finance department like customer support while addressing a customer query.  With an auto reconciliation software, different accesses (like create, read, update, delete) can be provided to internal and external stakeholders.