The four-letter word that your business doesn't want to hear
There are many words and phrases that strike fear in the hearts of financial organisations managing reconciliations and data – regulatory change, month-end processing, volume growth, hiring and turnover concerns. But one of the most frustrating words, and the one we should be eliminating from the language of operations entirely, is ‘silo’.
We all know that disparate, compartmentalised systems and processes aren’t the right way to run things. But here’s the problem: tackling silos is difficult. It requires resources and energy that over-burdened businesses don’t always have. So is such an initiative worth pursuing?
Quite simply, a business built this way will eventually fail. Here’s why.
Siloed operations greatly reduce your control over your business – effectively the opposite of what your reconciliations should be doing. Silos prevent transparency and clear line-of-sight with the left hand never really knowing – or caring – what the right hand is doing. As a result, the risk of errors and omissions increases dramatically. Exception management becomes significantly more challenging without a single point of reference available. The multitude of different systems and platforms firms depend upon stands in the way of enterprise-level audit trails. In an industry which has spent years trying to mitigate operational risk, clinging to organisational structures which actively increase risk is madness.
At a time when organisations are going out of their way to minimise or eliminate repetitive, low-value tasks, siloed operations are standing in the way by duplicating the same efforts across multiple parts of the business. In fact, many firms are siloed to the extent that they are not even aware that this duplication is taking place. Break down the silos and you remove many of these wasteful processes in one go.
Time is money
The increased time taken to manage multiple reconciliation systems and platforms comes with a real cost attached. The initial investment required to tackle the problem can rapidly deliver a healthy ROI with substantial cost savings if the right approach – and partner – is chosen.
Ready to grow
It’s simple: Siloed systems don’t scale. With the frequent use of spreadsheets and user-developed applications (UDAs), firms looking to achieve meaningful growth will quickly run out of room, and increasing trading volumes and complexity being experienced across the industry will become even more problematic.
Out of date
The ultimate reason that firms should be looking to address their silo issues is this: Siloes are incompatible with the goals and objectives of a modern business.
In the words of one of my colleagues, this is legacy thinking, but we are not in legacy times. Data is arguably a financial institution’s number-one asset. Therefore, we need systems and structures which allow it to be controlled centrally and leveraged across the organisation, with the firm having true confidence that the right controls are in place.
To discover how we can help your business break out of its silos, contact us here.