Top-tier financial firms consolidating reconciliation

Top-tier financial firms consolidating reconciliation

With regulatory requirements driving reconciliation at top-tier financial institutions, many are consolidating through centres of excellence, according to a report from SunGard and Aite.

Of 82 firms quizzed, two thirds have established reconciliation centres of excellence following a recent wave of consolidation of the reconciliation function within these institutions.

Compliance and regulatory reporting are the largest factors driving reconciliation, according to 40% of respondents, as institutions race to work through a significant backlog of requirements.

And, while the report says there have been great strides made, there remains a third of financial institutions with more than three in-house built reconciliation tools, and almost the same with more than three vendor supplied tools. More than three quarters say they are employing a tactical approach to all or part of their reconciliations.

Firms with centres of excellence are seeing big financial benefits; 12% of respondents with established CoEs claiming 40% in cost savings.

Aite says that regulation, and in particular Basel III and MiFID, are forcing middle- and back-office processes to adapt to an intraday environment. The majority of respondents say real-time reconciliation support was important.

Virginie O’Shea, senior analyst, Aite, notes: "Regulatory reporting is expanding asset coverage, and increasing the frequency of reconciliation. However, internal and system-to-system reconciliation now represents the next frontier for centres of excellence."

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