Reconciliations and control teams face multiple challenges - A higher volume of trades, more complex products, and increasing regulatory and audit scrutiny. However it is becoming clear that legacy reconciliation systems are unable to keep up with the demands of this new world. Firms are increasingly turning to innovation projects and new technologies, but which of the many 'silver bullets' up for discussion are actually worth your time and investment? And how do you make sure they can deliver?
Gresham CTO Neil Vernon joins Gert Raeves of Adox Research to explore these questions. Neil shares his thoughts on simplifying complexity in legacy controls, building collaborative innovation partnerships, and becoming confident in the quality, accuracy and availability of your data.
Enjoy the podcast in four bite sized parts at the links, or listen to the full conversation and read Neil's summary below.
One of the key themes of the podcast was just how much the reconciliations landscape has and still is changing. In the past 25 years we have gone from manually matching print outs of paper statements to, at least for some firms, highly automated reconciliation systems. As complex products such as OTC derivatives began to enter the picture, it became apparent that more sophisticated technology would be required in order to adapt to the richer, dynamic data of the front office. This makes it vital for business users to be able to create their own data controls, something which Gresham's Clareti Transaction Control (CTC) makes straightforward.
With more focus on controlling and optimizing costs, firms would be remiss if they did not identify opportunities to make their operations teams more effective and efficient. Speed and getting results to the business faster is key to making this happen. However, speed and complexity are far from the only reconciliation challenges emerging. Regulators and auditors now take far more interest in controls and, crucially, the quality and consistency of the data which feeds into them. ‘Data integrity’ is a term which should speak to everyone involved – if the data you are basing your decisions on is not of sufficient quality then what kind of problems are you setting yourself up for further down the line?
Confidence is also vital when it comes to overhauling legacy reconciliations systems. When trying to untangle a complicated legacy web, sometimes switching things off and seeing what happens - of course with the appropriate risk mitigation measures in place - is sometimes the only way to really identify what you need and what you don't, particularly when controls have been in place for a long time and may have been set up by staff who have long left the organisation.
It is always tempting to look for ‘silver bullet’ solutions and there is certainly no shortage of technologies claiming to be such in the reconciliations space. AI, possibly the most talked about technology of our times, is receiving a lot of attention, but is artificial intelligence where you should actually be investing? A more pertinent question is how you decide when is too early to commit to any of these new technologies and when is too late? The secret to finding your ‘sweet spot’ lies in leveraging the expertise of your network, particularly trusted vendor partners for whom assessing these new technologies is second nature. The right partner can help you to ‘fail fast’ and turn a shiny and exciting piece of tech into something which actually adds value to your business, improving the quality of your data and controls.
However, blindly partnering with buzzword driven third parties is likely to end in tears, which is why testing your vendors to see if they can handle your complex use cases is vital. In a strong innovation partnership, you can collaborate with your vendor on those ‘what do you think?’ moments to truly create something transformative. Ultimately it is these partnerships which are likely to allow financial institutions to capture the best value from new tools and deploy them effectively in the new controls environment.
To understand how collaborative partnerships, a practical approach to legacy, and the right kind of innovation can make your reconciliations function data confident, speak to one of our experts below